ACCT 304 Chapter 16 QUIZ
E16 10 Issuance and Exercise of Stock Options On November 1 2011 Olympic Company adopted
a stock-option plan that granted options to key executives to purchase 40,000 shares of the company-
$10 par value common stock. The options were granted on January 2, 2012, and were exercisable 2 years
after the date of grant if the grantee was still an employee of the company. The options expired 6 years from
date of grant. The option price was set at $40, and the fair value option-pricing model determines the total
compensation expense to be $600,000.
All of the options were exercised during the year 2014: 30,000 on January 3 when the market price was
$67, and 10,000 on May 1 when the market price was $77 a share.
Instructions
Prepare journal entries relating to the stock-option plan for the years 2012, 2013, and 2014. Assume that the
employee performs services equally in 2012 and 2013.
USA 
India