Chapter 16, Problem 13E

To determine

Restricted Stock plans: When a company transfers stock to the employees with a restriction on selling, transferring or pledging these shares unless the vesting happens, they are referred to as restricted stock. Under restricted Stock plans, shares are granted to employees with a condition that these shares cannot be sold or transferred until vesting occurs. These restricted stocks result in lower dilution of existing stockholders. The accounting for restricted stock is the same as stock options. The fair value of the stocks is determined and the expenses are written off over the service period.

(a) To prepare: To prepare journal entries to record restricted stock.

Given information: Shares issued: 4,000.

Fair value: $120,000.

Years: 4.

Par value:$5.

To determine

(b) To prepare: To prepare journal entry to account for this for feature.