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Under its executive stock option plan, National Corporation granted 24 million options on January 1, 2021,...

Under its executive stock option plan, National Corporation granted 24 million options on January 1, 2021, that permit executives to purchase 24 million of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $28 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. Suppose that the options are exercised on April 3, 2024, when the market price is $32 per share.

Ignoring taxes, what journal entry will National record?

Record entry for options exercised on April 3, 2024, when the market price is $32 per share.

Business   Accounting   
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Answer #1
Date Accounts Titles and Explanation Debit ( in $) Credit (in $)
April 03,2024 Cash
( 24 million x $ 28 )		 $ 672
Paid in Capital-Stock options
( 24 million x $ 5 )		 $ 120
            Common Stock
            ( 24 million x $ 1 )		 $ 24
            Paid in Capital-Excess of par - Bal. Fig. $ 768
(To record the Options Exercised )
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