Exercise 16-13 Shamrock Company issues 4,300 shares of restricted stock to its C

Question

Exercise 16-13 Shamrock Company issues 4,300 shares of restricted stock to its CFO, Dane Yaping, on January 1, 2017. The stock has a fair value of $123,000 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, 2018, the fair value of the stock is $135,000 (a) Prepare the journal entries to record the restricted stock on January 1, 2017 (the date of grant), and December 31, 2018. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit (b) On March 4, 2019, 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 O for the amounts.) Date Account Titles and Explanation Debit Credit 3/4/19

Explanation / Answer

a) Journal Entries (Amounts in $)

b) Journal Entries (Amounts in $)

The whole remaining balance of Unearned Compensation on Mar 4, 2019 will be credited to record the forefeiture and compensation expense for the year 2017 and 2018 of amount $30,750 each ($123,000/4 years) will also reversed on the date of forefeiture.

Date Account Titles and Explanation Debit Credit 01/01/2017 Unearned Compensation (Fair value) 123,000 Common Stock (4,300 shares*$5 par) 21,500 Paid in capital in excess of par-Common Stock ($123,000-$21,500) 101,500 (To record the restricted stock on the date of grant) 12/31/2018 Compensation Expense ($123,000/4 yrs) 30,750 Unearned Compensation 30,750 (To record the compensation expense)

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