Pronghorn Company issues 8,900 shares of restricted stock to its CFO, Mary Tokar, on January 1, 2020. The stock has a fair value of $445,000 on this date. The service period related to this restricted stock is 5 years. Vesting occurs if Tokar stays with the company until December 31, 2024. The par value of the stock is $10. At December 31, 2020, the fair value of the stock is $363,000.
(a) Prepare the journal entries to record the restricted stock on January 1, 2020 (the date of grant), and December 31, 2021.
(b) On July 25, 2024, Tokar leaves the company. Prepare the journal entry to account for this forfeiture.

Explanation:

The Journal entry is given below:-

A 1. On 1 January 2020  

    Unearned compensation Dr,                           $445,000  

             To Common stock (8,900 × $10)                          $89,000

             To Paid-in Capital in Excess of Par -common stock  $3,56,000

(Being the restricted stock is recorded)

2. On 31 December 2021

    Compensation expenses Dr, ($445,000 × 1÷5)    $89,000

                 To Unearned compensation                                           $89,000

(Being the restricted stock is recorded)

B On 25 July 2024

      Common stock                                                      $89,000

       Paid-in Capital in Excess of Par -common stock$356,000

                   To compensation expenses                                          $356,000

                   To  unearned compensation                                          $89,000

(Being the forfeiture is recorded)

answer; /// i do believe the correct answer is (possession utility);