To create useradd, first create entry in the file "/etc/passwd"
Fields are,
<UserName>:x:UID:GID:Gcos Field:<Home Dir>:<Shell>
x-> This points to the password informative file "/etc/shadow".
Gcos Field-> Corresponds to small information about the user.
Now execute the command "pwconv"
This command create /etc/shadow file.
The created account will be in locked. This can be verified from the command,
passwd -S <user>
<user> LK 2014-09-30 0 99999 7 -1 (Alternate authentication scheme in use.)
LK --> Means the account is in locked state.
The entry in /etc/shadow will be in form,
<username>:x:16344:0:99999:7:::
Now, execute the command
passwd <username>
After that , you could verify that the account is unlocked using the command
passwd -S <user>
<user> PS 2014-09-30 0 99999 7 -1 (Password set, SHA512 crypt.)
Done