Question

Swifty Company issues 4,400 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 $133,000.

(a) Prepare the journal entries to record the restricted stock on January 1, 2017 (the date of grant), and December 31, 2018.

(b) On March 4, 2019, Yaping leaves the company. Prepare the journal entry to account for this forfeiture.

Answer 1

Swifty Company Journal Entery Debit in $ Credit in $ Particulars Date Unearned Compensation a/c To Common Stock (4,400 X $5) To Paid-in Capital Excess of Par 123000 1.1.2017 Dr. 22000 Common stock 101000 (Common Stock issued) 31.12.2018 Compensation Expense a/c 30750 Dr. To Unearned Compensation ($123,000 4) 30750 (Compensation recorded) Common Stock a/c 4.3.2019 Dr. 22000 Paid-in Capital Excess of Par a/c Dr. 101000 To Unearned Compensation 61500 To Compensation Expense (2X $30,750) 61500 |(Forfeiture entry)