Summit Corp. grants share-based compensation to executives.P…

Summit Corp. grants share-based compensation to executives.Part A On January 1, 2024, Summit granted 50,000 stock options. Fair value per option = $12; vesting period = 3 years.Required: Record compensation expense for 2024. (2 points) Assume on Jan 10, 2027, employees exercise 40,000 options when market price = $35 and exercise price = $18.  Par value of the stock is $1 per share. Record the exercise. (2 points)   The remaining 10,000 options expire unexercised.2.         Record the expiration. (2 points) Part B On January 1, 2024, Summit granted 10,000 restricted shares. Fair value at grant = $30 per share; vesting period = 4 years.  Par value of the stock is $1 per share.1.         Record the issuance of the stock on January 1, 2024, and compensation expense for 2024. (2 points)   Assume that 2,000 shares are forfeited during 2026 before year-end adjusting entries were made.2.         Record the forfeiture adjustment. (2 points)

Riverbend Inc. reported net income of $3,485,000 for 2026.Ca…

Riverbend Inc. reported net income of $3,485,000 for 2026.Capital structure changes:- Jan 1: 1,000,000 shares outstanding- April 1: Issued 200,000 shares- July 1: Stock split 2-for-1- Oct 1: Reacquired 120,000 shares as treasury stockPotentially dilutive securities (assume these have been adjusted for the stock split):(1) 40,000 stock options (exercise price $20; avg market price $32)(2) 2,000 convertible bonds, $1,000 face value, 6% interest, convertible into 40 shares per bond (tax rate 25%)(3) 10,000 shares of 8%, $100 par convertible preferred stock; each convertible into 2 sharesRequired:(1) Compute weighted-average shares outstanding (3 points) (2) Compute Basic EPS (2 points) (3) Rank securities and label them as 1) most dilutive, 2) next most dilutive 3) least dilutive.  If any security is anti-dilutive, note that. (1 points) Preferred stock   Bonds:   Options:   (4) Compute Diluted EPS (treasury stock method and if-converted method) (4 points)

Options are used as compensation for employees to better ali…

Options are used as compensation for employees to better align their incentives with those of the owners of the company (the shareholders).  In class, I shared two research studies with you that described 2 different kinds of manipulation that were the unintended consequence of using options to compensate executives.  Briefly describe the two unintended consequences.