Question

xpire December 31, 2025. Each option has a fair value of $1 based on an option pricing model. Which is the correct entry to record the exercise of 70% the options on April 15, 2024, when the market price of the stock was $6

Answer 1

The correct option is 2)Debit Cash 140,700, Debit Paid in Capital- stock options 46,900, Credit common stock 46,900, Credit Paid in capital- excess of par 140,700

Step-by-step explanation:

Preparation of Journal Entry to record the exercise of 70% options

Dr Cash 140,700

(67,000 x 70% x 3)

Dr Paid in Capital- stock options 46,900

[67,000 x 70%)

Cr To Common stock 46,900

(67,000 x 70% x 1]

Cr To Paid in capital- excess of par 140,700