Later in the year, on February 15 when a market change significantly dropped stock prices, Saola's Board voted to repurchase 25,375 shares of common stock. The stock price on the day of the purchase was $8.00/share. Neither the stock options nor this purchase of treasury stock have been recorded. Intermediate 2 FSR Project Part #4: EPS Make the appropriate journal entries to correctly record the stock options and repurchase. Saola's management team has also asked you to determine the correct EPS numbers for the year. Up until the issuance of the options, the company had a simple capital structure. Now, though, the company will need to present both basic and diluted EPS on its Income Statement. In addition, they would like to know the effect of the stock options and additional dividend, if any, on the following ratios: Make any necessary changes to the financial statements. Please see the hints about the special adjustment to the Statement of Cash Flows. Make the appropriate journal entry to correctly record the tax effect of the stock options. Please note that for tax purposes, equity options are treated as long-term deferred tax

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To record the stock options granted and stock repurchase the following journal entries can be made 1 ... View the full answer