On January Kent Company granted executives a performancebased stock option plan that allowed each of them to buy a maximum of shares of the company's $ par value common stock at an exercise price of $ a share. On the grant date, the fair value per option was $ The shares will be awarded based on the increase in sales over a threeyear service period as follows:
Sales Increase
At Least No of Shares
On Dec. the company estimated sales would increase by during the service period and that employees would get vested. On Dec. the company estimated that employees would get vested, and sales would increase by At the end of the threeyear period Dec options actual vested for the remaining executives and sales actually increased only by On this date, the fair value per option changed to $
On June executives each exercised options to buy the company' common stock at $ per share when the stock is selling for $ per share.
Required:
A Compute compensation expense for each of the threeyear service period;
B Prepare the journal entries for this compensatory option plan for and
