Allied Paper Products, Inc., offers a restricted stock award plan to its vice pr

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.

Explanation / Answer

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

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