Question

On January 1, 2018, David Mest Communications granted restricted stock units (RSUS) representing 40 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUS satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $15 per share on the grant date. At the date of grant, Mest anticipated that 6% of the recipients would leave the firm prior to vesting. On January 1, 2019.5% of the RSUs are forfeited due to executive turnover. Mest chooses the option to account for forfeitures when they actually occur. Required: 1. to 3. Prepare the appropriate journal entry to record compensation expense on December 31, 2018. December 31, 2019. and December 31, 2020. (If no entry is required for a transaction/event, select "No Journal entry required in the first account field. Enter your answers in millions (l.e., 10,000,000 should be entered as 10).) View transaction list Journal entry worksheet 2 3 Record the entry for compenstion expense 2018. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2018

Answer 1

1 Record journal entry for compensation expense 2018: Accounts title and explanation Compensation expense (S600/3 years) Paid in capital, restricted stock (To record the compensation expense) Date Debit Credit S Dec 31,2018 $200 $200 Working Note: Determine the total compensation expense Estimated fair value per option Number of RSUS granted Total compensation ($15 $ 40) $15 $40 $600 2. Record journal entry for compensation expense 2018 Accounts title and explanation Compensation expense 31,2018 [(S600 (S600million 5%)) (2/3years)} Credit S Debit S Date $182 Dec $200] Paid in capital, restricted stock (To record the compensation expense) $182 3.

Record journal entry for compensation expense 2018: Accounts title and explanation Compensation expense 31,2018 (S600 (S600million 5%)) (3/3years) - Credit S Debit S Date $188 Dec $200- $182] Paid in capital, restricted stock (To record the compensation expense) $188