PHN Foods granted 18 million of its no par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $5 per share on January 1, 2012, the grant date.

Required:

1. What journal entry will PHN Foods prepare to record executive compensation regarding these shares at December 31, 2012 and December 31, 2013: (If no entry is required for a particular transaction, select "No journal entry required: in the first account field. Enter answers in millions (i.e., 10,000,000 should be entered as 10).)

1) Record executive compensation regarding these shares.

2) Record executive compensation regarding these shares.

2. When calculating diluted EPS at December 31, 2013, what will be the net increase in the denominator of the EPS fraction if the market price of the common shares averages $5 per share during 2013? (Enter your answer in millions of shares.)

Net increase in the denominator _________________________ million shares