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  3. 4. rutter inc. granted 500,000 stock options to ex

4. Rutter Inc. granted 500,000 stock options to executives and employees on...

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Accounting

4. Rutter Inc. granted 500,000 stock options to executives and employees on January 1,2020. The options have a strike price is $10 per share and expire in 2025. The par value of the common stock is $1. Using an option pricing model, the company calculates a fair value of $30 per share. The expected service period, or benefit period, is 3 years.
14 points
a. Prepare the journal entries for 2020 and 2021.
b. In 2025,30% of the options are exercised and the remaining options expire. Prepare the journal entries to record the exercise and expiration of the options.

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