Answer:
The journal entries are as follows:
(i) On January 1, 2014
Unearned compensation A/c(2,000 × $65) Dr. $130,000
To paid in capital in excess of par ($130,000 - $10,000) $120,000
To common stock (2,000 × $5) $10,000
(To record the unearned compensation)
(ii) On December 31, 2014
Compensation expense A/c Dr. $65,000
To unearned compensation $65,000
(To record the compensation expense)
Workings:
Compensation expense = $130,000 ÷ 2
= $65,000
(iii) On December 31, 2015
Compensation expense A/c Dr. $65,000
To unearned compensation $65,000
(To record the compensation expense)
