Question

Allied Paper Products, Inc., offers a restricted stock award plan to its vice presidents. On January 1, 2018, the company granted 24 million of its $1 par common shares, subject to forfeiture if employment is terminated within two years. The common shares have a market price of $8 per share on the grant date.

Required:

1. Determine the total compensation cost pertaining to the restricted shares.
2. Prepare the appropriate journal entries related to the restricted stock through December 31, 2019.

Answer 1

1
Total compensation cost = 24*8= $192 Million
2
Dec-31-18	Compensation expense	96		=192/2
	Paid-in capital—restricted stock		96
Dec-31-19	Compensation expense	96
	Paid-in capital—restricted stock		96
Dec-31-19	Paid-in capital—restricted stock	192
	Common stock		24
	Paid-in capital—excess of par		168