On January 1, 2018, Titania Inc. granted stock options to officers and key employees for the purchase of 20,000 shares of the company’s $10 par common stock at $25 per share. The options were exercisable within a 5-year period beginning January 1, 2020, by grantees still in the employ of the company, and expiring December 31, 2024. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be $350,000.

On April 1, 2019, 2,000 options were terminated when the employees resigned from the company. The market price of the common stock was $35 per share on this date.

On March 31, 2020, 12,000 options were exercised when the market price of the common stock was $40 per share.

Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2018, 2019, and 2020.



Explanation:

DateGeneral JournalDebitCredit  

Jan 1 2018No Entry when granting    

Dec 31 2018Compensation Expense ($350,000/2 Years)$175,000  

     Paid in Capital Stock Options  $175,000  

(for Year 2018 - compensation expense)    

Apr 1 2019Paid in Capital Stock Options$ 17,500  

     Compensation Expense  $ 17,500  

(To record termination of stock options)    

$350,000*2,000/20,000*1/2    

Dec 31 2019Compensation Expense ($350,000/2 Years)$157,500  

     Paid in Capital Stock Options  $157,500  

(for Year 2019 - compensation expense)    

$350,000*18,000/20,000*1/2    

Mar 31 2020Cash (12,000*$25)$300,000  

Paid in Capital Stock Options ($350,000*12,000/20,000)$210,000  

     Common Stock (12,000*$10)  $120,000  

     Paid in capital, in excess of par-Common  $390,000  

(To record exercise of stock options)    

step 1: create a plan

step 2: inventory facility equipment/assets

step 3: create preventive maintenance procedures

step 4: create preventive maintenance schedules

step 5: train your maintenanceteam

step 6: analyze – adjust - improve

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step 1 – pm procedure design: doing the effective things

step 2 – pm procedure scheduling: efficient use of people and resources

step 3 – pm lubrication engineering

step 4 – pm training: back on the chain gang

step 5 – pm program management plan

step 6 – communicate, communicate, communicate

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