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On January 1, 2020, Metlock Corporation granted 2,000 shares of restricted $5 par value common stock to executives. The market price (fair value) of the stock is $65 per share on the date of grant. The period of benefit is 2 years. Prepare Barwood’s journal entries for January 1, 2019, and December 31, 2019 and 2020.

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Answer:

Please see explanation

Explanation:

The following journal entries shall be recorded by the Metlock Corporation in respect of the grant of shares to its executives:

                                                   Debit                   Credit

January 1, 2019

Deferred compensation        $130,000

(2,000*65,000)

Common stock-at par                                             $10,000

(2,000*5)

Paid in capital                                                          $120,000

(2,000*(65-5))

December 31, 2019                                      Debit                   Credit

Employee compensation expense            $65,000              

(130,000/2)  

Deferred Compensation                                                         $65,000

December 31, 2020                                     Debit                   Credit

Employee compensation expense            $65,000              

(130,000/2)  

Deferred Compensation                                                         $65,000

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