Question

Sunland Company issues 11,000 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2017. The stock has a fair value of $550,000 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 $500,000.

(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
1/1/1712/31/187/25/21
1/1/1712/31/187/25/21

(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

Answer 1

(a)

Date	Account Titles and explanations	Debit	Credit
1/1/17	unearned compensation	$550,000
	Common stock (11,000 × $10)		$110,000
	Paid- in capital in excess of par- common stock		$440,000
	(To record issue of restricted stock)
12/31/18	Compensation expense ($550,000÷5)	$110,000
	Unearned compensation		$110,000
	(To record compensation expense)

(b)

Date	Account Titles and explanations	Debit	Credit
7/25/21	common stock (11,000 × $10)	$110,000
	Paid in capital in excess of par - common stock ($550,000 - $110,000)	$440,000
	Compensation expense		$440,000
	Unearned compensation		$110,000
	(To record forfeiture)