Question

Sarasota Company issues 3,700 shares of restricted stock to its CFO, Dane Yaping, on January 1, 2020. The stock has a fair value of $129,000 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 $131,000.

(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.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1, 2020Dec. 31, 2021Mar. 4, 2022
Jan. 1, 2020Dec. 31, 2021Mar. 4, 2022

(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.)

Date	Account Titles and Explanation	Debit	Credit
Mar. 4, 2022

Answer 1

	Journal entries
(a)
Date	ACCOUNT TITLES AND EXPLANATIONS	DEBIT ($)	CREDIT ($)
January 1, 2020	Unearned compensation	129,000.00
	Common stock (3,700 x $5)		18,500.00
	Paid-in capital in excess of Par-Common stock		110,500.00
December 31, 2021	Compensation expenses (129,000 x 1/4)	32,250.00
	Unearned compensation		32,250.00
	(To record the restricted stock)
(b)
Date	ACCOUNT TITLES AND EXPLANATIONS	DEBIT ($)	CREDIT ($)
March 4, 2022	Common stock	18,500.00
	Paid-in capital in excess of Par-Common stock	110,500.00
	Compensation expenses (32,250 x 2)		64,500.00
	Unearned compensation		64,500.00
	(To record the forfeiture)