Question

Exercise 16-13

Nash Company issues 3,700 shares of restricted stock to its CFO, Dane Yaping, on January 1, 2020. The stock has a fair value of $116,000 on this date. The service period related to this restricted stock is 4 years. Vesting occurs if Yaping stays with the company for 4 years. The par value of the stock is $5. At December 31, 2021, the fair value of the stock is $155,000.

(a) Prepare the journal entries to record the restricted stock on January 1, 2020 (the date of grant), and December 31, 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(b) On March 4, 2022, Yaping leaves the company. Prepare the journal entry to account for this forfeiture. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

(a)
Date	Accounts Titles and Explanation	Debit (in $)	Credit (In $)
Jan 1, 2020	Unearned compensation	$ 116,000
	Common stock                   (3,700 Shares x $ 5)		$ 18,500
	Paid in capital in excess of par                           (Balancing Fig.)		$ 97,500
	(To record the Restricted stock)
Dec. 31, 2021	Compensation expenses ( $ 116,000 / 4 Years)	$ 29,000
	Unearned compensation		$ 29,000
	(To record the Compensation expense)
(b)
Date	Accounts Titles and Explanation	Debit (in $)	Credit (In $)
Mar. 4 , 2022	Common stock	$ 18,500
	Paid in capital in excess of par	$ 97,500
	Compensation expenses                    ( $ 116,000 / 2 Years)		$ 58,000
	Unearned compensation   - Bal. Fig.		$ 58,000
	(To record the forfeiture )