Question - On January 1, 2018, Lawson Brothers Enterprises (LBE) granted restricted stock units (RSUs) representing 40 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four 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 $10 per share on the grant date. At the date of grant, LBE anticipated that 5% of the recipients would leave the firm prior to vesting. Ignore taxes.

Required:

1. Record the journal entry for compensation expense on December 31, 2018. Show calculations.

2. Record the journal entry for compensation expense on December 31, 2019. Show calculations.

3. During 2020 third year, LBE revised its estimate of forfeitures from 5% to 10%. Record the journal entry for compensation expense on December 31, 2020. Show calculations.

4. Record the journal entry for compensation expense on December 31, 2021. Show calculations.