Allied Paper Products, Inc. offers a restricted stock award plan to its vice pre
ID: 2564312 • Letter: A
Question
Allied Paper Products, Inc. offers a restricted stock award plan to its vice presidents. On January 1, 2016 the company granted 12 million of its $1 par common shares, subject to forfeiture if employment is terminated within two years. The common shares have a market price of $5 per share on the grant date Required 1. Determine the total compensation cost pertaining to the restricted shares. (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).) Total compensation cost million 2. Prepare the appropriate journal entries related to the restricted stock through December 31, 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) View transaction list Journal entry worksheet Record the compensation expense Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2016 Record entry Clear entry View general journalExplanation / Answer
· 1. Total compensation expense = Fair value per share x Shares granted
= $5 x 12 million
= $60 million
2. Compensation expense = $60 million / 2 = $30 million
Common stock (12 million shares x $1 par) = $12 million
Journal
Date
Account Name
Debit
Credit
Dec 31, 2016
Compensation expense
$30,000,000
Paid in capital-Restricted stock
$30,000,000
Dec 31, 2017
Compensation expense
$30,000,000
Paid in capital-Restricted stock
$30,000,000
Dec 31, 2017
Paid in capital-Restricted stock
$60,000,000
Common stock
$12,000,000
Paid in capital in excess of par
$48,000,000
Date
Account Name
Debit
Credit
Dec 31, 2016
Compensation expense
$30,000,000
Paid in capital-Restricted stock
$30,000,000
Dec 31, 2017
Compensation expense
$30,000,000
Paid in capital-Restricted stock
$30,000,000
Dec 31, 2017
Paid in capital-Restricted stock
$60,000,000
Common stock
$12,000,000
Paid in capital in excess of par
$48,000,000
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