Question
On December 31, 2019, Hirst Inc. granted 5,000 shares of restricted common stock ($1 par value) to its employees. The stock is subject to a
On December 31, 2019, Hirst Inc. granted 5,000 shares of restricted common stock ($1 par value) to its employees. The stock is subject to a three-year vesting period. If an employee leaves Hirst prior to full vesting, that employee forfeits the stock. Market prices of the stock were as follows: December 31, 2019: $27 per share December 31, 2020: $30 per share December 31, 2021: $33 per share December 31, 2020: $26 per share What is the journal entry Hirst should record at the grant date under the fair value method?
1.
DR Compensation expense 135,000 CR Common stock 5,000 CR APIC - common stock 130,000
----------------------
2.
DR Unearned compensation 135,000 CR Common stock 5,000 CR APIC - common stock 130,000
-----------------------
3.
DR Compensation expense 5,000
CR Common stock 5,000
-------------------------
4.
DR Unearned compensation 135,000 CR Paid-in capital - restricted stock 135,000
----------------------------
5.
No journal entry is required at the grant date
----------------------------
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
7th edition
978-1118344262, 111834426X, 1118162285, 978-1118562208, 1118562208, 978-1118162286
