On January 1, 2021, Tru Fashions Corporation awarded restricted stock units (RSUs) representing 8 million of...

On January 1, 2021, Tru Fashions Corporation awarded restricted stock units (RSUs) representing 8 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. On the grant date, the shares had a market price of $8.10 per share.

Required:

1. Determine the total compensation cost pertaining to the RSUs.
2. Prepare the appropriate journal entry to record the award of RSUs on January 1, 2021.
3. Prepare the appropriate journal entry to record compensation expense on December 31, 2021.
4. Prepare the appropriate journal entry to record compensation expense on December 31, 2022.
5. Prepare the appropriate journal entry to record compensation expense on December 31, 2023.
6. Prepare the appropriate journal entry to record the lifting of restrictions on the RSUs and issuing shares at December 31, 2023.

Expert Solution

Answer

	Journal entry

1)	Total compensation cost = $80,00,000*$8.10 = $6,48,00,000

	Journal entry

	Date	Account Titles and Explanation	Debit ($)	Credit ($)
2)	01-01-2021	No entry for award of RSU's on Jan 1, 2021

3)	31-12-2021	Compensation expense (6,48,00,000/3)	$ 2,16,00,000
		Paid-in capital—restricted stock		$ 2,16,00,000
		(To record the compensation expense)

4)	31-12-2022	Compensation expense (6,48,00,000/3)	$ 2,16,00,000
		Paid-in capital—restricted stock		$ 2,16,00,000
		(To record the compensation expense)

5)	31-12-2023	Compensation expense (6,48,00,000/3)	$ 2,16,00,000
		Paid-in capital—restricted stock		$ 2,16,00,000
		(To record the compensation expense)

6)	31-12-2023	Paid-in capital—restricted stock	$ 6,48,00,000
		Common stock (8 million*1)		$ 80,00,000
		Paid-in capital—excess of par (Bal fig.)		$ 5,68,00,000
		(To record the lifting of restrictions and issue of shares)


	Please Like

ekkarill92 answered 1 year ago

21- On January 1, 2018, Cobbler Corporation awarded restricted stock units (RSUs) representing 29.7 million of...

21- On January 1, 2018, Cobbler Corporation awarded restricted stock units (RSUs) representing 29.7 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. On the grant date, the shares had a market price of $5.2 per share. Required: 1. Determine the total compensation cost pertaining to the RSUs. 2. to 6. Prepare the...

On January 1, 2016, VKI Corporation awarded restricted stock units (RSUs) representing 9 million of its...

On January 1, 2016, VKI Corporation awarded restricted stock units (RSUs) representing 9 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. On the grant date, the shares had a market price of $7.80 per share. Required: 1.) Determind the total compensation cost pertaining to the RSU's 2.) Prepare the appropriate journal entries...

On January 1, 2018, Patriots Co. awarded restricted stock units (RSUs) representing 30 million of its...

On January 1, 2018, Patriots Co. awarded restricted stock units (RSUs) representing 30 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. On the grant date, the shares had a market price of $3 per share. Required: Determine the total compensation cost pertaining to the RSUs. Prepare the appropriate journal entry to record...

On January 1, 2018, Lawson Brothers Enterprises (LBE) granted restricted stock units (RSUs) representing 40 million...

On January 1, 2018, Lawson Brothers Enterprises (LBE) granted restricted stock units (RSUs) representing 40 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $10 per share on the grant date. At the date of grant, LBE anticipated that 5% of the recipients would leave the...

What is restricted stock? How do restricted stock awards differ from restricted stock units (RSUs)? Describe...

What is restricted stock? How do restricted stock awards differ from restricted stock units (RSUs)? Describe how compensation expense is determined and recorded for a restricted stock award plan?

On January 1, 2021, Rapid Airlines issued $300 million of its 8% bonds for $276 million....

On January 1, 2021, Rapid Airlines issued $300 million of its 8% bonds for $276 million. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Rapid Airlines records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2021, the fair value of the bonds was $290 million as determined by their market value in the over-the-counter market. Rapid determined that $1,000,000...

On January 1, 2021, Rapid Airlines issued $255 million of its 8% bonds for $235 million....

On January 1, 2021, Rapid Airlines issued $255 million of its 8% bonds for $235 million. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Rapid Airlines records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2021, the fair value of the bonds was $244 million as determined by their market value in the over-the-counter market. Rapid determined that $1,000,000...

Under its executive stock option plan, National Corporation granted 20 million options on January 1, 2021,...

Under its executive stock option plan, National Corporation granted 20 million options on January 1, 2021, that permit executives to purchase 20 million of the company’s $1 par common shares within the next seven years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $24 per share. The fair value of the options, estimated by an appropriate option pricing model, is $3 per option. Suppose...

Under its executive stock option plan, National Corporation granted 30 million options on January 1, 2021,...

Under its executive stock option plan, National Corporation granted 30 million options on January 1, 2021, that permit executives to purchase 30 million of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, $27 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Suppose...

On January 1, 2021, Frontier World issues $39.8 million of 8% bonds, due in 15 years,...

On January 1, 2021, Frontier World issues $39.8 million of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. The proceeds will be used to build a new ride that combines a roller coaster, a water ride, a dark tunnel, and the great smell of outdoor barbeque, all in one ride. 3-a. If the market rate is 9%, calculate the issue price. (FV of $1, PV of $1, FVA of $1,...

Question