Exercise 16-14 Tweedie Company issues 12,900 shares of restricted stock to its C

Question

Exercise 16-14

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.

Explanation / 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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