On January 1, 2013, Nichols Corporation granted 10,800 options to key executives. Each option allows the executive to purchase one share of Nichols' $6 par value common stock at a price of $22 per share. The options were exercisable within a 2-year period beginning January 1, 2015, if the grantee is still employed by the company at the time of the exercise. On the grant date, Nichols' stock was trading at $30 per share, and a fair value option-pricing model determines total compensation to be $509,400.
On May 1, 2015, 8,640 options were exercised when the market price of Nichols' stock was $40 per share. The remaining options lapsed in 2017 because executives decided not to exercise their options.
Prepare the necessary journal entries related to the stock-option plan for the years 2013 through 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)