On January 1, 2016, Culver Corporation granted 9,300 options to key executives. Each option allows the executive to purchase one share of Culver’s $5 par value common stock at a price of $20 per share. The options were exercisable within a 2-year period beginning January 1, 2018, if the grantee is still employed by the company at the time of the exercise. On the grant date, Culver’s stock was trading at $25 per share, and a fair value option-pricing model determines total compensation to be $409,000.

On May 1, 2018, 7,440 options were exercised when the market price of Culver’s stock was $30 per share. The remaining options lapsed in 2020 because executives decided not to exercise their options.

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

Explanation:

Jan.1 2016 No entry

Dec.31 2016

Dr Compensation expense [$409,000/2] $204,500

    Cr Paid in capital - Stock options $204,500

Dec. 31 2017

Dr Compensation expense [$409,000/2] $204,500

    Cr Paid in capital - Stock options $204,500

Dec. 31 2018

Dr Cash [7440*$20]   $148,800

Dr Paid in capital - Stock options [$409,000*(7440/9300)] $327,200

    Cr Common stock [7440*$5] $37,200

    Cr Paid in capital in excess of par [148,800+327,200-37,200] $438,800

Jan. 1 2020

Dr Paid in capital - Stock options [409,000-327,200]  $81,800

    Cr Paid in capital from expired stock $81,800

x=3

step-by-step explanation:

this is really simple i saw that there was only one term (5x) and thought if that was 15 what would i have to multiply everything else to get it there? well if 5x became 15 then x would have to be 3 so plug the 3 in the x for the other equations and you get 15 for the other ones. so there you go. : )