T Company has a stock-option plan. Each stock option has the right to purchase one share of $1 par value stock in the future at a price equal to fair value of the stock at date of grant. There are 75K options outstanding that were granted at the beginning of 2017.
Exercise price $31
Market price 31
Value of options 2 per share
Vesting period 4 years
Prepare the following journal entries
a. First year of the plan
b. First year of the plan, assuming that rather than options 2.5K shares of restricted stock were granted at the beginning of 2017
c. Now assume that the market price of T shares were $35 on grant date. Repeat requirements a and b.