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13 April, 08:01

Allied Paper Products, Inc., offers a restricted stock award plan to its vice presidents. On January 1, 2021, the company granted 18 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 $6 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, 2022.

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  1. 13 April, 08:22
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    1. $108 million fair value of award

    2. December 31, 2021

    ($ in millions)

    Dr Compensation expenses 54

    Cr Paid-in capital-restricted stock 54

    December 31, 2022

    Dr Compensation expenses54

    Cr Paid-in capital-restricted stock 54

    Dr Paid-in capital-restricted stock 108

    Cr Common stock 18

    Cr Paid-in capital-excess of par (remainder) 90

    Explanation:

    Allied Paper Products, Inc

    1.

    $6 fair value per share x 18million shares granted

    = $108 million fair value of award

    2. Journal entries

    December 31, 2021

    ($ in millions)

    Dr Compensation expense ($108 million : 2 years) 54

    Cr Paid-in capital-restricted stock 54

    December 31, 2022

    Dr Compensation expense ($108 million : 2 years) 54

    Cr Paid-in capital-restricted stock 54

    Dr Paid-in capital-restricted stock 108

    Cr Common stock (18 million shares x $1 par) 18

    Cr Paid-in capital-excess of par (remainder) 90
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