Question

E16

13B

(L0 3)

(Accounting for Restricted Stock)

Holt Company issues 10,000 shares of restricted stock to its new CEO, on

January 1, 2020. The stock has a fair value of $260,000 on

this date. The service

period related to this restricted stock is 5

years.

Vesting occurs if the CEO stays with the company for 5 years. The par value of the stock is $1. At December 31, 2021, the fair

value of the stock is $180,000.

Instructions

(a)

Prepare the journal entries to record the restricted stock on January 1, 2020 (the date of grant) and December 31, 2021.

(b)

On February 22, 2022, the CEO leaves the company. Prepare the journal entry (if any) to account for this forfeiture.

Answer 1

Date	Accounts	debit	credit
(a)
Jan-01	Unearned compensation	260000
	common stock		10000
	10000*1
	paid in capital in excess of par		250000
Dec-31	Compensation expense	52000
	unearned compensation		52000
	260000/5
(b)
Feb-22	common stock	10000
	paid in capital in excess of par	250000
	compensation expense		104000
	Unearned compensation		156000
	52000*3