On January 1, 2021, Tru Fashions Corporation awarded restricted stock units (RSUs) representing 15 million of its $1 par common shares to key personnel, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. On the grant date, the shares had a market price of $6.00 per share.1. Determine the total compensation cost pertaining to the RSUs.2. Prepare the appropriate journal entry to record the award of RSUs on January 1, 2018.3. Prepare the appropriate journal entry to record compensation expense on December 31, 2018.4. Prepare the appropriate journal entry to record compensation expense on December 31, 2019.5. Prepare the appropriate journal entry to record compensation expense on December 31, 2020.6. Prepare the appropriate journal entry to record the lifting of restrictions on the RSUs and issuing shares at December 31, 2020.

Answer and Explanation:

1. The Computation of compensation expenses is shown below:-

Compensation cost = Restricted stock units × Market price

= 15 million × $6.00

= $90.00 million

The Journal entry is shown below:-

2. No Journal entry is required

3. Compensation expenses Dr, $30 million

(15 million × $6.00) ÷ 3))

       To paid in capital-restricted stock  $30 million

(Being compensation expense is recorded)

4. Compensation expenses Dr, $30 million

(15 million × $6.00) ÷ 3))

       To paid in capital-restricted stock  $30 million

(Being compensation expense is recorded)

5. Compensation expenses Dr, $30 million

(15 million × $6.00) ÷ 3))

       To paid in capital-restricted stock  $30 million

(Being compensation expense is recorded)

6. Paid in capital-restricted stock $105 million

        To common stock $15 million

         To paid in capital - excess of par $90 million

(15 million × $6.00)

(Being common stock issued at grant date is recorded)

answer; ///decision making under risk;