ch. 16.1 #3

Assume that Amazon.com has a stock-option plan for top management. Each stock option represents the right to purchase a share of Amazon $1 par value common stock in the future at a price equal to the fair value of the stock at the date of the grant. Amazon has 4,400 stock options outstanding, which were granted at the beginning of 2020. The following data relate to the option grant. Exercise price for options Market price at grant date (January 1, 2020) Fair value of options at grant date (January 1, 2020) Service period $39 $39 $6 5 years Prepare the journal entries for the first year of the stock-option plan. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Prepare the journal entries for the first year of the plan assuming that, rather than options, 520 shares of restricted stock were granted at the beginning of 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Now assume that the market price of Amazon stock on the grant date was $43 per share. Prepare the journal entries for the first year of the plan assuming that, rather than options, 520 shares of restricted stock were granted at the beginning of 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit