Prepare necessary journal entries related to stock option

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Question - On July 1, 2016, Hooker Financial Corporation granted 50,000 options to key executives. Each option allows the executive to purchase one share of Hooker's $1 par value com- mon stock at a price of $58 per share. The options were exercisable within a 2-year period beginning July 1, 2018, if the grantee is still employed by the company at the time of the exercise. On the grant date, Hooker's stock was trading at $50 per share, and a fair value option-pricing model determines total compensation to be $350,000.

On July 1, 2018, 35,000 options were exercised when the market price of Hooker's stock was $65 per share. The remaining options lapsed in 2020 because executives decided not to exercise their options.

Instructions - Prepare the necessary journal entries related to the stock option plan for the years 2016 through 2020.

 

Reference no: EM132482140

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