The two original shareholders of a LLC issue 40,000 shares of common stock to a valued employee (vice-president of marketing) who was being wooed by a rival company. The employee pays nothing for the shares, but the employee is prohibited from selling the shares for 5 years and did sign a non-compete agreement. Recall that the stock has a par value of $0.50 per share. However, the original partners estimate that the shares have a market value of $25 per share.
Please prepare all the journal entries for this transaction.