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Unformatted text preview: On January 1, 2010, Sampress Company adopts a compensatory share option plan for its 50 executives. The plan allows each executive to purchase 200 shares of its $2 par common stock for $30 per share after completing a three-year service period. Sampress estimates the value of each option to be $14.00 on the grant date. It has had a 4% employee turnover rate each year and uses this rate in its compensation cost calculations in 2010. Because of higher turnover, at the end of 2011 Sampress changes it estimated turnover rate to 5% per year for the entire service period. At the end of 2012, Sampress determined that the actual turnover was seven executives for the entire service period. On January 6, 2013, eight executives exercise their options. Required 1. Prepare a schedule of the Sampress Company’s compensation computations for its compensatory share option 2. Prepare the journal entries of Sampress Company for 2010 through 2013 in regard to this plan. E16-8 Fixed Compensatory Share Option Plan plan for 2010 through 2012 (round all computations to the nearest dollar) . Name: An asterisk (*) will appear next to an incorrect amount(s) in the outlined cell(s). If you are still getting a red asterisk, and think the answer is correct, but used a formula in the cell try manually typing in the answer according to the rounding instructions. Required 1. Prepare a schedule of the Sampress Company’s compensation computations for its compensatory share option 2010 2011 2012 Estimated (actual) total compensation cost $123,863 $120,033 $120,400 x Fraction of service period expired 1/3 2/3 3/3 Estimated compensation expense to date $41,288 $80,022 $120,400 x Previously recognized compensation expense - (41,288) (80,022) Current compensation expense $41,288 $38,734 $40,378 Estimated (actual) total compensation cost: Fair Value per Option x x No. of Executives x Retention rate x Retention rate x Retention rate $14 200 50 96% 96% 96% Fair Value per Option x x No. of Executives x Retention rate x Retention rate x Retention rate $14 200 50 95% 95% 95% Fair Value per Option x x $14 200 43 2. Prepare the journal entries of Sampress Company for 2010 through 2013 in regard to this plan. January 1, 2010 - Complete the paragraph above by selecting the word, number, or phrase that best fits the corresponding number (you may use an answer more than once). (1) compensatory (2) 30 (3) 200 options (4) $2 (5) common stock (6) $30 per share (7) 3 (8) $123,863 December 31, 2010 - Compensation Expense 41,288 Common Stock Option Warrants 41,288 December 31, 2011 - Compensation Expense 38,734 Common Stock Option Warrants 38,734 December 31, 2012 - Compensation Expense 40,378 Common Stock Option Warrants 40,378 January 6, 2013 - Cash 48,000 Common Stock Option Warrants 22,400 Common Stock, $2 par 3,200 Additional Paid-in Capital 67,200 E16-8 Fixed Compensatory Share Option Plan plan for 2010 through 2012 (round all computations to the nearest dollar) ....
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This note was uploaded on 06/26/2011 for the course ACCOUNTING AC300 taught by Professor Jean during the Spring '08 term at Kaplan University.
- Spring '08