Derrick Company issues 4,000 shares of restricted stock to its CFO, Dane Yaping, on January 1, 2025. The stock has a fair value of $120,000 on this date. The service period related to this restricted stock is 4 years. Vesting occurs if Yaping stays with the company for 4 years. The par value of the stock is $5. At December 31, 2026, the fair value of the stock is $145,000. (a) Prepare the journal entries to record the restricted stock on January 1, 2025 (the date of grant), and December 31, 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record entries in the order displayed in the problem statement.) Date Account Titles and Explanation Debit OOOOO Cred

Derrick Company issues 4,000 shares of restricted stock to its CFO, Dane Yaping, on January 1, 2025. The stock has a fair value of $120,000 on this date. The service period related to this restricted stock is 4 years. Vesting occurs if Yaping stays with the company for 4 years. The par value of the stock is $5. At December 31, 2026, the fair value of the stock is $145,000. (a) Prepare the journal entries to record the restricted stock on January 1, 2025 (the date of grant), and December 31, 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record entries in the order displayed in the problem statement.) Date Account Titles and Explanation Debit OOOOO Cred

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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On January 1, 2024, Sherwood Company granted 97,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2026, and expire on January 1, 2030. Each option can be exercised to acquire one share of $1 par common stock for $8. An option-pricing model estimates the fair value of the options to be $3 on the date of grant. If unexpected turnover in 2025 caused the company to estimate that 15% of the options would be forfeited, what amount should Sherwood recognize as compensation expense for 2025?
Nadal Company has 20 executives to whom it grants compensatory share options on January 1, 2019. At that time, it grants each executive the right to purchase 120 shares of its $5 par common stock at $40 per share after a 3-year service period. The value of each option is estimated to be $8.50 on the grant date. Based on its average employee turnover rate each year, Nadal expects that 2 executives will not vest in the plan. At the end of 2021, Nadal confirms that the actual turnover was the same as expected. On January 5, 2022, 5 executives exercise their options. Required: Prepare Nadal’s journal entries for 2019 through 2022 in regard to its compensatory share option plan.
On November 1, 2017, Windsor Company adopted a stock-option plan that granted options to key executives to purchase 19,000 shares of the company’s $10 par value common stock. The options were granted on January 2, 2018, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $328,000. All of the options were exercised during the year 2020: 4,750 on January 3 when the market price was $67, and 14,250 on May 1 when the market price was $77 a share. Prepare journal entries relating to the stock option plan for the years 2018, 2019, and 2020. Assume that the employee performs services equally in 2018 and 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and…
Sheffield Company issues 3,700 shares of restricted stock to its CFO, Dane Yaping, on January 1, 2025. The stock has a fair value of $129,000 on this date. The service period related to this restricted stock is 4 years. Vesting occurs if Yaping stays with the company for 4 years. The par value of the stock is $5. At December 31, 2026, the fair value of the stock is $131,000. (a) Prepare the journal entries to record the restricted stock on January 1, 2025 (the date of grant), and December 31, 2026. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record entries in the order displayed in the problem statement.) Date Account Titles and Explanation Debit Credit
Nadal Company has 20 executives to whom it grants compensatory share options on January 1, 2019. At that time, it grants each executive the right to purchase 90 shares of its $5 par common stock at $41 per share after a 3-year service period. The value of each option is estimated to be $8.75 on the grant date. Based on its average employee turnover rate each year, Nadal expects that 2 executives will not vest in the plan. At the end of 2021, Nadal confirms that the actual turnover was the same as expected. On January 5, 2022, 3 executives exercise their options.Required: Prepare Nadal's journal entries for 2019 through 2022 in regard to its compensatory share option plan.
On November 1, 2017, Marigold Company adopted a stock-option plan that granted options to key executives to purchase 21,000shares of the company’s $10 par value common stock. The options were granted on January 2, 2018, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $39, and the fair value option-pricing model determines the total compensation expense to be $309,000. All of the options were exercised during the year 2020: 5,250 on January 3 when the market price was $66, and 15,750 on May 1 when the market price was $78 a share. Prepare journal entries relating to the stock option plan for the years 2018, 2019, and 2020. Assume that the employee performs services equally in 2018 and 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and…
Practice Exercises - Restricted Stock 1. Studymore Company issues 4,400 shares of restricted stock to its CFO, Dane Nowork, on January 1, 2020. The stock has a fair value of $123,000 on this date. The service period related to this restricted stock is 4 years. Vesting occurs if Nowork stays with the company for 4 years. The par value of the stock is $5. At December 31, 2021, the fair value of the stock is $133,000. Prepare the journal entries to record the restricted stock on January 1, 2020 (the date of grant), and December 31, 2021. On March 4, 2022, Nowork leaves the company. Prepare the journal entry to account for this forfeiture. General Journal Debit Credit ASH ENC INT
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On January 1, 2024, Swifty Corporation granted 9,100 options to key executives. Each option allows the executive to purchase one share of Swifty's $5 par value common stock at a price of $21 per share. The options were exercisable within a 2-year period beginning January 1, 2026, if the grantee is still employed by the company at the time of the exercise. On the grant date, Swifty's stock was trading at $26 per share, and a fair value option-pricing model determines total compensation to be $402,000. On May 1, 2026, 7,280 options were exercised when the market price of Swifty's stock was $30 per share. The remaining options lapsed in 2028 because executives decided not to exercise their options. Prepare the necessary journal entries related to the stock option plan for the years 2024 through 2028. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for…
On January 1, 2024, Cori Ander Herbs granted restricted stock units (RSUs) representing 300,000 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 $13 per share on the grant date. At the date of grant, the company anticipated that 5% of the recipients would leave the firm prior to vesting. In 2025, 1% of the options are forfeited due to executive turnover. The company chooses the option not to estimate forfeitures. What amount should the company record as compensation expense for the year ended December 31, 2025?
On January 1, 2021, Sweedle Company issues 6,000 shares of restricted stock to its CEO and 4,000 shares to its CFO. The stock has a fair value of $300,000 on this date. The service period related to this restricted stock is 3 years. The shares are subject to forfeiture if employment is terminated within three years. The company chooses to account for forfeitures when they actually occur. The par value of the stock is $10. a. Prepare the journal entries, if any, to record the restricted stock on January 1, 2021 (the date of grant), and December 31, 2021. b. During 2022 the CFO leaves the company. Prepare the journal entry for December 31, 2022. c. Prepare the journal entry for December 31, 2023. d. Prepare the journal entry for January 1, 2024 (vesting period requirements met)
Allied Paper Products, Inc. offers a restricted stock award plan to its vice presidents. On January 1, 2018, the company granted 16 million of its $1 par common shares, subject to forfeiture if employment is terminated within twoyears. The common shares have a market price of $5 per share on the grant date.Required:1. Determine the total compensation cost pertaining to the restricted shares.2. Prepare the appropriate journal entries related to the restricted stock through December 31, 2019