Indigo Company issues 12,100 shares of restricted stock to its CFO, Mary Tokar,
ID: 341687 • Letter: I
Question
Indigo Company issues 12,100 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2017. The stock has a fair value of $605,000 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, 2021. The par value of the stock is $10. At December 31, 2017, the fair value of the stock is $352,000.
(a) Prepare the journal entries to record the restricted stock on January 1, 2017 (the date of grant), and December 31, 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
(b) On July 25, 2021, Tokar leaves the company. Prepare the journal entry to account for this forfeiture. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Date
Account Titles and Explanation
Debit
Credit
7/25/21
Date
Account Titles and Explanation
Debit
Credit
1/1/1712/31/187/25/21
1/1/1712/31/187/25/21
Explanation / Answer
No. Date Account Titles and Explanation Debit Credit (a) 1/1/17 Unearned Compensation $605,000 Common Stock (12,100 x $10) $121,000 Paid in capital - Common stock ($605,000 - $121,000) $484,000 12/31/2017 Compensation expense $121,000 Unearned Compensation ($605,000 /5) $121,000 12/31/2018 Compensation expense $121,000 Unearned Compensation ($605,000 /5) $121,000 (b) 7/25/2021 Common Stock $121,000 Paid in capital - Common stock $484,000 Compensation expense ( $121,000 x 4) $484,000 Unearned Compensation $121,000