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Calculating EPS and Recording Entries for Restricted Stock Awards As an incentive to retain key employees, on January 1, the board of directors of Master Corp. granted restricted stock awards to 5 executives to acquire 1,500 shares each under the following terms. Restricted stock awards vest in three years on December 31. Grantees must remain employed with Master Corp. to receive the common shares for 3 years (the requisite service period) for the shares to be fully vested. Each stock award represents one share of $10 par, common stock of Master Corp. Master Corp. has 30,000 common shares outstanding during the year. Net income for the year was $150,000. On the date of grant, the common shares were trading at $20 per share. During the year, the average price of its common stock was $20. Required Note: Round answers to the nearest whole number. a. Prepare the journal entry on the date of grant, January 1. Account Name Jan. 1 Unearned Compensation-Equity Common Stock Paid-in Capital in Excess of Par-Common Stock To record grant of restricked stock awards. b. Prepare the journal entry on December 31. Dec. 31 Compensation Expense Account Name c. Calculate basic EPS. Paid-in Capital in Excess of Par-Common Stock To record compensation expense. Net Income Available to Common Stockholders Basic EPS $ + # 150,000/ # S Weighted Avg. Common Shares Outstanding C 30,000 $ Debit Debit 150,000 Per Share 0 0 0 0 5 Credit Credit 0✔ 75,000 ✓ 75,000 ✓ 0x 0x

Calculating EPS and Recording Entries for Restricted Stock Awards As an incentive to retain key employees, on January 1, the board of directors of Master Corp. granted restricted stock awards to 5 executives to acquire 1,500 shares each under the following terms. Restricted stock awards vest in three years on December 31. Grantees must remain employed with Master Corp. to receive the common shares for 3 years (the requisite service period) for the shares to be fully vested. Each stock award represents one share of $10 par, common stock of Master Corp. Master Corp. has 30,000 common shares outstanding during the year. Net income for the year was $150,000. On the date of grant, the common shares were trading at $20 per share. During the year, the average price of its common stock was $20. Required Note: Round answers to the nearest whole number. a. Prepare the journal entry on the date of grant, January 1. Account Name Jan. 1 Unearned Compensation-Equity Common Stock Paid-in Capital in Excess of Par-Common Stock To record grant of restricked stock awards. b. Prepare the journal entry on December 31. Dec. 31 Compensation Expense Account Name c. Calculate basic EPS. Paid-in Capital in Excess of Par-Common Stock To record compensation expense. Net Income Available to Common Stockholders Basic EPS $ + # 150,000/ # S Weighted Avg. Common Shares Outstanding C 30,000 $ Debit Debit 150,000 Per Share 0 0 0 0 5 Credit Credit 0✔ 75,000 ✓ 75,000 ✓ 0x 0x

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Calculating EPS and Recording Entries for Restricted Stock Awards As an incentive to retain key employees, on January 1, the board of directors of Master Corp. granted restricted stock awards to 5 executives to acquire 1,500 shares each under the following terms. Restricted stock awards vest in three years on December 31. Grantees must remain employed with Master Corp. to receive the common shares for 3 years (the requisite service period) for the shares to be fully vested. Each stock award represents one share of $10 par, common stock of Master Corp. Master Corp. has 30,000 common shares outstanding during the year. Net income for the year was $150,000. On the date of grant, the common shares were trading at $20 per share. During the year, the average price of its common stock was $20. Required Note: Round answers to the nearest whole number. a. Prepare the journal entry on the date of grant, January 1. Account Name Jan. 1 Unearned Compensation-Equity Common Stock Paid-in Capital in Excess of Par-Common Stock To record grant of restricked stock awards. b. Prepare the journal entry on December 31. Dec. 31 Compensation Expense c. Calculate basic EPS. Paid-in Capital in Excess of Par-Common Stock To record compensation expense. Account Name Net Income Available to Common Stockholders 150,000/ Basic EPS $ d. Calculate diluted EPS. Net Income Available to Common Stockholders Diluted EPS $ + + 150,000/ + Weighted Avg. Common Shares Outstanding 30,000 = $ Weighted Avg. Common Shares Outstanding 37,500 x Debit Debit 150,000 Per Share 0 0 Per Share 0 5 Credit Credit 0✔ 75,000 ✓ 75,000 ✓ 0x 0x Dilutive or Anti-dilutive 4 Dilutive
Transcribed Image Text:Calculating EPS and Recording Entries for Restricted Stock Awards As an incentive to retain key employees, on January 1, the board of directors of Master Corp. granted restricted stock awards to 5 executives to acquire 1,500 shares each under the following terms. Restricted stock awards vest in three years on December 31. Grantees must remain employed with Master Corp. to receive the common shares for 3 years (the requisite service period) for the shares to be fully vested. Each stock award represents one share of $10 par, common stock of Master Corp. Master Corp. has 30,000 common shares outstanding during the year. Net income for the year was $150,000. On the date of grant, the common shares were trading at $20 per share. During the year, the average price of its common stock was $20. Required Note: Round answers to the nearest whole number. a. Prepare the journal entry on the date of grant, January 1. Account Name Jan. 1 Unearned Compensation-Equity Common Stock Paid-in Capital in Excess of Par-Common Stock To record grant of restricked stock awards. b. Prepare the journal entry on December 31. Dec. 31 Compensation Expense c. Calculate basic EPS. Paid-in Capital in Excess of Par-Common Stock To record compensation expense. Account Name Net Income Available to Common Stockholders 150,000/ Basic EPS $ d. Calculate diluted EPS. Net Income Available to Common Stockholders Diluted EPS $ + + 150,000/ + Weighted Avg. Common Shares Outstanding 30,000 = $ Weighted Avg. Common Shares Outstanding 37,500 x Debit Debit 150,000 Per Share 0 0 Per Share 0 5 Credit Credit 0✔ 75,000 ✓ 75,000 ✓ 0x 0x Dilutive or Anti-dilutive 4 Dilutive
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