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Mamont248 [21]
3 years ago
11

Vaughn Company issues 11,300 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2020. The stock has a fair value o

f $565,000 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 $396,000.
1. Prepare the journal entries to record the restricted stock on January 1, 2017 (the date of grant), and December 31, 2018.
2. On July 25, 2021, Tokar leaves the company. Prepare the journal entry to account for this forfeiture.
Business
1 answer:
Firlakuza [10]3 years ago
7 0

I think you made mistakes in the dates which i have corrected in the explanations----Prepare the journal entries to record the restricted stock on "January 1, 2017" (the date of grant), and "December 31, 2018"

Answer: Please see answer in explanation column

Explanation:

To record unearned compensation

Date      Account titles and explanation      Debit          Credit

Jan 1, 2020 Unearned compensation       $565,000  

   To Common stock ( 11,300 shares × $10)                     $113,000  

To Paid in capital in excess of par - common stock      $452,000

To record the compensation expense

Date      Account titles and explanation        Debit              Credit

Dec 31, 2020  Compensation    expenses      $113,000  

   To    Unearned compensation                                             $113,000

Calculation:

Compensation expenses =$565,000 ÷ 5 years=   $113,000

To record the forfeiture

Date             Account titles and explanation          Debit                Credit

July 25, 2021   Common stock                               $113,000

Paid in capital in excess of par - common stock    $452,000

To Compensation expenses                                                             $113,000  

To Unearned compensation                                                            $452,000

Calculation:

Common stock ( 11,300 shares × $10)= $113,000

To Compensation expenses  $113,000  ($113,000 × 1 year) January 1, 2020-July 25, 2021,

Unearned compensation =fair value of $565,000 --Compensation expenses  of $113,000   =  $452,000

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1-a) Current ratio =                          1.88            2.52             2.87

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1-b. The current ratio worsened over the three-year period.

2-a) Acid-test ratio =                      1.02            1.43             1.81

= (Current assets - Inventory)/Current liabilities

2-b) The acid-test ratio worsened over the three-year period.

Explanation:

a) Data and Calculations:

At December 31                        Current Yr     1 Yr Ago       2 Yrs Ago

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Cash                                             $ 31,800    $ 35,625        $ 37,800

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Total current assets                 $244,500    $190,000      $147,000

Plant assets, net                         278,500     255,000       230,500

Total assets                            $ 523,000   $ 445,000    $ 377,500

Liabilities and Equity

Accounts payable                   $ 129,900     $ 75,250      $ 51,250

Long-term notes payable secured by

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Common stock, $10 par value 163,500       163,500       163,500

Retained earnings                      131,100       104,750         79,250

Total liabilities and equity    $ 523,000   $ 445,000   $ 377,500

1-a) Current ratio =                          1.88            2.52             2.87

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1-b. The current ratio worsened over the three-year period.

2-a) Acid-test ratio =                      1.02            1.43             1.81

= (Current assets - Inventory)/Current liabilities

Current assets - Inventory       $132,000    $107,500      $93,000

Accounts payable                   $ 129,900     $ 75,250      $ 51,250

2-b) The acid-test ratio worsened over the three-year period.

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