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Tweedie Company issues 12,900 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2014
Tweedie Company issues 12,900 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2014. The stock has a fair value of $645,000 on this date. The service period related to this restricted stock is 5 years. Vesting occurs if Tokar stays with the company until December 31, 2018. The par value of the stock is $10. At December 31, 2014, the fair value of the stock is $460,000.
(a) Prepare the journal entries to record the restricted stock on January 1, 2014 (the date of grant), and December 31, 2015.
(b) On July 25, 2018, Tokar leaves the company. Prepare the journal entry to account for this forfeiture.
Expert Solution
Answer:
| Date | Account Title and explanation | Debit | Credit |
| 01/01/14 | Unearned Compensation | 645000 | |
| Common Stock | 129000 | ||
| Paid-in Capital in Excess of Par | 516000 | ||
| (To record the issuance of restricted stock) | |||
| 12/31/14 | Compensation Expense | 129000 | |
| Unearned Compensation | 129000 | ||
| (To record compensation expense for the year related to restricted stock) (645000/5) | |||
| 12/31/15 | Compensation Expense | 129000 | |
| Unearned Compensation | 129000 | ||
| (To record compensation expense for the year related to restricted stock) | |||
| 07/25/18 | Common Stock | 129000 | |
| Paid-in Capital in Excess of Par - Common Stock | 516000 | ||
| Compensation Expense | 516000 | ||
| Unearned Compensation | 129000 | ||
| (To record forfeiture of restricted stock) |
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