Question

Sarasota Company issues 10,800 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2020. The stock has a fair value of $540,000 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 $453,000. (a) Prepare the journal entries to record the restricted stock on January 1, 2020 (the date of grant), and December 31, 2021. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit

Answer 1

	Journal entries
(a)
Date	ACCOUNT TITLES AND EXPLANATIONS	DEBIT ($)	CREDIT ($)
01-Jan-20	Unearned compensation	540,000.00
	Common stock (10,800 x $10)		108,000.00
	Paid-in capital in excess of Par-Common stock		432,000.00
December 31, 2021	Compensation expenses (540,000 x 1/5)	108,000.00
	Unearned compensation		108,000.00
	(To record the restricted stock)
(b)
Date	ACCOUNT TITLES AND EXPLANATIONS	DEBIT ($)	CREDIT ($)
July 25, 2024	Common stock	108,000.00
	Paid-in capital in excess of Par-Common stock	432,000.00
	Compensation expenses		432,000.00
	Unearned compensation		108,000.00
	(To record the forfeiture)