The employees of Tenor Corporation exercise 10,000 stock options in 2021. Eachoption has an exercise price of $40, so Tenor Corporation receives $400,000 cashfrom employees. Each exercised option entitles the employee to receive one shareof the company's $0.10 par value common stock. What journal entry does Tenormake to record the stock option exercises?Dr. Cash400,000Cr. Common Stock400,000Dr. Stock Compensation Expense400,000Cr. Common Stock1,000Cr. APIC399,000

Answered: The employees of Tenor Corporation…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 5MC

See similar textbooks

Related questions

Concept explainers

Question

The employees of Tenor Corporation exercise 10,000 stock options in 2021. Each
option has an exercise price of $40, so Tenor Corporation receives $400,000 cash
from employees. Each exercised option entitles the employee to receive one share
of the company's $0.10 par value common stock. What journal entry does Tenor
make to record the stock option exercises?
Dr. Cash
400,000
Cr. Common Stock
400,000
Dr. Stock Compensation Expense
400,000
Cr. Common Stock
1,000
Cr. APIC
399,000

Expert Solution

Step 1

Common stock: These are the shares issued by a company to an outsider. These shares entitle a share of ownership to the person acquired them. The holders of these shares will have voting powers and can elect the board of directors. In the event of liquidation, the holders of these shares will get a right on corporation's assets only after the preferred debts were paid off.

Stock options: It is the right of an investor to purchase or sell a stock at a price and date which is agreed upon.

Additional paid in capital: It is the amount received in excess of par value of shares issued.

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Employee Compensations and Benefits

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions