Question

Culver Company issues 8,900 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2020. The stock has a fair value of $445,000 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, 2024. The par value of the stock is $10. At December 31, 2020, the fair value of the stock is $363,000.

(a) Prepare the journal entries to record the restricted stock on January 1, 2020 (the date of grant), and December 31, 2021.

(b) On July 25, 2024, Tokar leaves the company. Prepare the journal entry to account for this forfeiture.

Answer 1

a)
Date	Accounts titles and Explanation	Debit (in $)	Credit (in $)
Jan - 01 ,2020	Unearned compensation	$445,000
	Common stock                         (8,900 shares x $10)		$89,000
	Paid-in Capital in Excess of Par - Common Stock		$356,000
	(To record issuance of restricted stock )
Dec - 31 , 2021	Compensation expenses ($445,000 / 5 years)	$89,000
	Unearned compensation		$89,000
	(To record compensation expense )
b)
Date	Accounts titles and Explanation	Debit (in $)	Credit (in $)
25/07/2018	Common stock	$89,000
	Paid-in Capital in Excess of Par - Common Stock	$356,000
	Compensation expenses                      ($89,000 x 4 )		$356,000
	Unearned compensation		$89,000
	(To record forfeiture of restricted stock )