Carbon Energy Inc. is a new technology startup. It has decided to adopt a stock option plan for its executive management team, since it does not believe it will have available cash on hand for year-end bonuses. The plan was implemented on July 1, 2023, and provides each of the three participants with the right to purchase up to 4,000 common shares at $30 per share. The current fair value of the shares is estimated at $26.50 per share. Options for the maximum number of shares allowed under the plan were granted to three members of the executive management team on September 15, 2023, for services performed in 2023. The options have an expiry date of January 31, 2024. The compensation expense was estimated at $270,000 for 2023 based on an appropriate option pricing model. Only two of the executives exercised their options in January prior to the deadline before the options expired.
Requirement:
Record all of Carbon Energy’s required entries to properly account for the stock option plan.