On January 1, 2010, Bartley Company initiated a stock incentive plan for many employees. The plan provides for each qualified executive to receive options for 2,000 shares of common stock. The option is exercisable at any time after four years and prior to expiration, which is five years from the date of grant. Employment with the company is required through the exercise date. The options are not transferable and the specified exercise price is set equal to the grant date market price of the stock. Compensation cost is to be assigned equally to each year from the grant date to the first exercise (vesting) date, which is four years. The company uses SFAS No. 123R to account for stock-based compensation plans.
On January 1, 2013, 1,000 employees were each granted options to acquire 2,000 shares under the plan when the market price of the stock was $30. Management expects a forfeiture rate of approximately 4 percent per year over the service period. Application of an option pricing model results in a fair value of each option at the grant date of $12 per option.
At December 31, 2013, 840 grantees are still employed by the company and will vest with 2,000 options each. All vested options are exercised on December 28, 2014, prior to their expiration on December 31, 2014. The market price of the stock on December 28, 2014, was $50 per share.
Required:
Prepare all entries necessary to account for this stock option plan. Assume that all compensation expense is expensed in each period rather than being held back as part of inventory cost.

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The Answer of On January 1, 2010, Bartley Company initiated a stock incentive plan for many employees. The plan provides for each qualified executive to receive options for 2,000 shares of common stock. The option is exercisable at any time after four years and prior to expiration, which is five years from the date of grant. Employment with the company is required through the exercise date. The options are not transferable and the specified exercise price is set equal to the grant date market price of the stock. Compensation cost is to be assigned equally to each year from the grant date to the first exercise (vesting) date, which is four years. The company uses SFAS No. 123R to account for stock-based compensation plans.
On January 1, 2013, 1,000 employees were each granted options to acquire 2,000 shares under the plan when the market price of the stock was $30. Management expects a forfeiture rate of approximately 4 percent per year over the service period. Application of an option pricing model results in a fair value of each option at the grant date of $12 per option.
At December 31, 2013, 840 grantees are still employed by the company and will vest with 2,000 options each. All vested options are exercised on December 28, 2014, prior to their expiration on December 31, 2014. The market price of the stock on December 28, 2014, was $50 per share.
Required:
Prepare all entries necessary to account for this stock option plan. Assume that all compensation expense is expensed in each period rather than being held back as part of inventory cost.

On January 1, 2010, Bartley Company Initiated a Stock Incentive