Question

In order to encourage employee ownership of the company's $1 par common shares, Washington Distribution permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokerage fees and shares can be purchased at a 10% discount. During March, employees purchased 35,000 shares at a time when the market price of the shares on the New York Stock Exchange was $16 per share. Required: Prepare the appropriate journal entry to record the March purchases of shares under the employee share purchase plan. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the March purchases of shares under the employee share purchase plan. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal

Answer 1

B. D Event Credit Debit $ 5,04,000 $ 56,000 General Journal 1 Cash ($16 * 35,000 Shares * 90%) Compensation Expense ($16 * 35,000 * 10%) Common Stock (35,000 Shares * $1) Paid-in Capital - in excess of par (35,000 shares * $15) |(Being Employee Stock Option Scheme provided to Employees) $ $ 35,000 5,25,000