The journal entriesrecording of compensation expense over the vesting period. Giveninformation: Number of shares as an option is10,000. Par value of common stock is $2. Exercise price per share is $18. Vesting time period is 2 years. Estimated fair value at the grant date is $250,000 ( 10 , 000 shares × $ 2.5 per share ) Initial vesting probability is 100%.

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Answer 1

Question

Chapter 19, Problem 19.2E

a.

To determine

To prepare: The journal entriesrecording of compensation expense over the vesting period.

Giveninformation:

Number of shares as an option is10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share)

Initial vesting probability is 100%.

b.

To determine

To prepare: The journal entries for recording of compensation expense over the vesting period.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

c.

To determine

The recording of expiration of all options and journal entries related to it.

Given information:

Number of shares as an option is 10,000

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

d.

To determine

The recording of compensation expense over the vesting period and journal entries.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 80%.

Vesting probability of year 2 is 80%.

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On December 31, calculated the payroll, which indicates gross earnings for wages ($460,000), payroll deductions for income tax ($48,000), payroll deductions for FICA ($40,000), payroll deductions for United Way ($6,000), employer contributions for FICA (matching), and state and federal unemployment taxes ($4,000). Employees were paid in cash, but payments for the corresponding payroll deductions have not been made and employer taxes have not yet been recorded. Collected rent revenue of $2,100 on December 10 for office space that Sandler rented to another business. The rent collected was for 30 days from December 12 to January 10 and was credited in full to Deferred Revenue. Required: 1. & 2. Prepare the entries required on December 31 to record payroll, the collection of rent on December 10 and adjusting journal entry on December 31. 3. Show how any liabilities related to these items should be reported on the company’s balance sheet at December 31

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Answer 2

Question

Chapter 19, Problem 19.2E

a.

To determine

To prepare: The journal entriesrecording of compensation expense over the vesting period.

Giveninformation:

Number of shares as an option is10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share)

Initial vesting probability is 100%.

b.

To determine

To prepare: The journal entries for recording of compensation expense over the vesting period.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

c.

To determine

The recording of expiration of all options and journal entries related to it.

Given information:

Number of shares as an option is 10,000

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

d.

To determine

The recording of compensation expense over the vesting period and journal entries.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 80%.

Vesting probability of year 2 is 80%.

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Answer 3

Question

Chapter 19, Problem 19.2E

a.

To determine

To prepare: The journal entriesrecording of compensation expense over the vesting period.

Giveninformation:

Number of shares as an option is10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share)

Initial vesting probability is 100%.

b.

To determine

To prepare: The journal entries for recording of compensation expense over the vesting period.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

c.

To determine

The recording of expiration of all options and journal entries related to it.

Given information:

Number of shares as an option is 10,000

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

d.

To determine

The recording of compensation expense over the vesting period and journal entries.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 80%.

Vesting probability of year 2 is 80%.

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Answer 4

Question

Chapter 19, Problem 19.2E

a.

To determine

To prepare: The journal entriesrecording of compensation expense over the vesting period.

Giveninformation:

Number of shares as an option is10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share)

Initial vesting probability is 100%.

b.

To determine

To prepare: The journal entries for recording of compensation expense over the vesting period.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

c.

To determine

The recording of expiration of all options and journal entries related to it.

Given information:

Number of shares as an option is 10,000

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

d.

To determine

The recording of compensation expense over the vesting period and journal entries.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 80%.

Vesting probability of year 2 is 80%.

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Answer 5

Chapter 19, Problem 19.2E

a.

To determine

To prepare: The journal entriesrecording of compensation expense over the vesting period.

Giveninformation:

Number of shares as an option is10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share)

Initial vesting probability is 100%.

b.

To determine

To prepare: The journal entries for recording of compensation expense over the vesting period.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

c.

To determine

The recording of expiration of all options and journal entries related to it.

Given information:

Number of shares as an option is 10,000

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

d.

To determine

The recording of compensation expense over the vesting period and journal entries.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 80%.

Vesting probability of year 2 is 80%.

Answer 6

Chapter 19, Problem 19.2E

a.

To determine

To prepare: The journal entriesrecording of compensation expense over the vesting period.

Giveninformation:

Number of shares as an option is10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share)

Initial vesting probability is 100%.

Answer 7

Chapter 19, Problem 19.2E

a.

To determine

To prepare: The journal entriesrecording of compensation expense over the vesting period.

Giveninformation:

Number of shares as an option is10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share)

Initial vesting probability is 100%.

Answer 8

b.

To determine

To prepare: The journal entries for recording of compensation expense over the vesting period.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

Answer 9

b.

To determine

To prepare: The journal entries for recording of compensation expense over the vesting period.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

Answer 10

c.

To determine

The recording of expiration of all options and journal entries related to it.

Given information:

Number of shares as an option is 10,000

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

Answer 11

c.

To determine

The recording of expiration of all options and journal entries related to it.

Given information:

Number of shares as an option is 10,000

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 100%.

Vesting probability of year 2 is 60%.

Answer 12

d.

To determine

The recording of compensation expense over the vesting period and journal entries.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 80%.

Vesting probability of year 2 is 80%.

Answer 13

d.

To determine

The recording of compensation expense over the vesting period and journal entries.

Given information:

Number of shares as an option is 10,000.

Par value of common stock is $2.

Exercise price per share is $18.

Vesting time period is 2 years.

Estimated fair value at the grant date is $250,000 (10,000 shares×$2.5 per share) .

Initial vesting probability of year 1 is 80%.

Vesting probability of year 2 is 80%.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 19 - What is the allocation period used to expense...Ch. 19 - How do companies account for stock-based...Ch. 19 - Do companies with equity-based compensation plans...Ch. 19 - When accounting for employee stock options, will a...Ch. 19 - Prob. 19.5Q Ch. 19 - Prob. 19.6Q Ch. 19 - Prob. 19.7Q Ch. 19 - Prob. 19.8Q Ch. 19 - Prob. 19.9Q Ch. 19 - Prob. 19.10Q

Solution Summary: The author explains the journaling process of recording the transactions of an organization in a chronological order.

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