On January 1, 2014 (the date of grant), Lutz Corporation issues 2,780 shares of restricted stock to its executives. The fair value of these shares is $78,300, and their par value is $11,400. The stock is forfeited if the executives do not complete 3 years of employment with the company. Prepare journal entries for January 1, 2014, and on December 31, 2014, assuming the service period is 3 years.

Lutz Corporation Journal entry

1/1/14

Dr Unearned Compensation 78,300

Paid-in Capital in Excess of Par 66,900

($78,300-11,400)

Cr Common Stock 11,400

12/31/14

Dr Compensation Expense 26,100

(78,300/3years)

Cr Unearned Compensation 26,100

Explanation:

On January 1 2014 fair value of shares was $78,300, and their par value is $11,400 we have to Debit Unearned Compensation with 78,300 and credit Paid-in Capital in Excess of Par with 66,900 ($78,300-11,400) and Common Stock with 11,400.

On 12 December 2014 the stock will be forfeited if the executives do not complete 3 years of employment with the company which means we have to Debit Compensation Expense with 26,100(78,300/3years) and Credit Unearned Compensation with 26,100.

steering wheels are always situated on the left side of the car.

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explanation:

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