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(Solution) - Journal entries for employee stock options Watson Corporation g

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Journal entries for employee stock options. Watson Corporation grants 20,000 stock options to its managerial employees on December 31, 2008, to purchase 20,000 shares of its $10 par value common stock for $25 per share. The market price of a share of common stock on this date is $18 per share. Employees must Work for another three years before they can exercise the options. An option-pricing model indicates that the value of these options on the grant date is $75,000. On April 30, 2012, holders of 15,000 options exercise their options at a time when the market price of the stock is $30 per share. On September 15, 2013, holders of the remaining options exercise them at a time when the market price of the stock is $38 per share.
Present journal entries to record these transactions on December 31, 2009, 2010, and 2011; on April 30, 2012; and on September 15, 2013. Assume that the firm receives any benefits of the stock option plan during 2009, 2010, and 2011 and that the firm reports on a calendar-year basis. Ignore income tax effects.


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