INTERMEDIATE ACCOUNTING <CUSTOM LL>
10th Edition
ISBN: 9781260887068
Author: SPICELAND
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 19, Problem 19.10E
To determine
Employee share purchase plan: This is the plan offered by the company, which permits employees to buy the shares directly from the company, at discounted price. This plan is intended to encourage employee ownership in the shares of the company, and develop loyalty among the employee-shareholders.
Debit and credit rules:
- Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in
stockholders’ equity accounts. - Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.
To journalize: The entry for purchase of shares under employee share purchase plan, in the books of W Distribution
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Exercise 19-11 (Static) Employee share purchase plan; Microsoft [LO19-3]
Microsoft Corporation's disclosure notes for the year ending June 30, 2020, included the following regarding its $0.00000625 par
common stock:
Employee Stock Purchase Plan-We have an ESPP for all eligible employees. Shares of our common stock may be purchased by
employees at three-month intervals at 90% of the fair market value on the last trading day of each three-month period. Employees may
purchase shares having a value not exceeding 15% of their gross compensation during an offering period. Employees purchased the
following shares during the periods presented:
(Shares in millions)
Year Ended June 30,
Shares purchased
2018
13
$76.40
Average price per share.
$142.22
As of June 30, 2020, 96 million shares of our common stock were reserved for future issuance through the ESPP.
No
Required:
Prepare the journal entry that summarizes Microsoft's employee share purchases for the year ending June 30, 2020.
Note: If no…
Exercise 19-11 (Static) Employee share purchase plan; Microsoft [LO19-3]
Microsoft Corporation's disclosure notes for the year ending June 30, 2020, included the following regarding its $0.00000625 par
common stock
Employee Stock Purchase Plan-We have an ESPP for all eligible employees. Shares of our common stock may be purchased by
employees at three-month intervals at 90% of the fair market value on the last trading day of each three-month period. Employees may
purchase shares having a value not exceeding 15% of their gross compensation during an offering period. Employees purchased the
following shares during the periods presented:
(Shares in millions)
Year Ended June 30,
Shares purchased
Average price per share.
2020
9
2019
11
$142.22
2018
13
$104.85 $76.40
As of June 30, 2020, 96 million shares of our common stock were reserved for future issuance through the ESPP
Required:
Prepare the journal entry that summarizes Microsoft's employee share purchases for the year ending June 30,…
Knowledge Check 01
Darlington Incorporated, permits any of its employees to buy shares directly from the company. There are no brokerage fees and shares can be purchased at a 10% discount. During May, employees purchased 14,000 shares at a time when the market price of the shares was $10 per share.
Prepare the appropriate journal entry for the May purchase.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Chapter 19 Solutions
INTERMEDIATE ACCOUNTING <CUSTOM LL>
Ch. 19 - Prob. 19.1QCh. 19 - Prob. 19.2QCh. 19 - The Tax Code differentiates between qualified...Ch. 19 - Stock option (and other share-based) plans often...Ch. 19 - What is a simple capital structure? How is EPS...Ch. 19 - Prob. 19.6QCh. 19 - Blake Distributors had 100,000 common shares...Ch. 19 - Why are preferred dividends deducted from net...Ch. 19 - Prob. 19.9QCh. 19 - The treasury stock method is used to incorporate...
Ch. 19 - The potentially dilutive effect of convertible...Ch. 19 - How is the potentially dilutive effect of...Ch. 19 - Prob. 19.13QCh. 19 - If stock options and restricted stock are...Ch. 19 - Wiseman Electronics has an agreement with certain...Ch. 19 - Prob. 19.16QCh. 19 - When the income statement includes discontinued...Ch. 19 - Prob. 19.18QCh. 19 - Prob. 19.19QCh. 19 - (Based on Appendix B) LTV Corporation grants SARs...Ch. 19 - Prob. 19.1BECh. 19 - Prob. 19.2BECh. 19 - Prob. 19.14BECh. 19 - Prob. 19.15BECh. 19 - Prob. 19.10ECh. 19 - EPS; concepts; terminology LO195 through LO1913...Ch. 19 - FASB codification research LO192 The FASB...Ch. 19 - Prob. 19.28ECh. 19 - Communication Case 1911 Dilution LO199 I thought...Ch. 19 - Prob. 19.12DMP
Knowledge Booster
Similar questions
- To encourage employee ownership of the company's $1 par common shares, Blum, Inc. permits its employees to buy shares directly from the company at a 20% discount. During January, employees purchased 10,000 shares at a time when the market price of the shares was $15 per share. Related to the employee share purchases, how much compensation expense will Blum record for March? Multiple Choice $120,000 $140,000 $0 $30,000arrow_forwardNAME: SCORE: SECTION: PROFESSOR: Pr Problem #10 Subscription of Shares Gabayan, Inc. has been authorized to issue 125,000 shares of P10 par ordinary shares. The following 2019 transactions relate to the initial issuance of Gabayan share: Feb. 1 Gabayan sold subscriptions for 25,000 shares of stock. The shares have a subscription price of P15 per share. One-third of the subscription price was received as a down payment. 15 Gabayan sold 10,000 shares for P180,000. An installment amounting to one-third of the subscription price Mar. 1 was received. 19 Gabayan exchanged 200 shares of stock for a new two-way radio system having a fair market value of P3,800. The final one-third of the subscription price was received and Apr. 1 the share issued. Required: Prepare journal entries to record the transactions.arrow_forwardProblem 4 On December 29, 2018, Blue Company was registered at the Securities and Exchange Commission with 100,00 authorized shares of P100 par value. The following were Blue's transactions: December 29, 2018 May 14, 2019 August 9, 2019 December 31, 2019 Issued 40,000 shares at P105 per share. Purchased 600 of its ordinary shares at P110 per share. 400 treasury shares were resold at P95 per share. Profit for 2019 is P830,000. Dividends paid P200,000. 34. What is the total outstanding shares? 35. What is the balance of treasury shares? 36. How many shares are entitled to receive dividends? 37. What is the total shareholders' equity? Problem 5 Partners A & B have capital balances of P600,000 and P400,000 and share profits and losses in the ratio of 3:2, respectively, before the admission of C. With the consent of B, A sells one-half of his equity to C, with C paying A the amount of P350,000. 38. What is A's capital balance after the admission of C? 39. What is the total partnership…arrow_forward
- n Problem 21-2 (ACP) the following issuance of equity shares: At the beginning of current year, Alegro Company reported 200,000 shares at P20 250,000 shares at P25 shares was a. The share has a P15 par value. b. The share is no par with stated value of P20. per share. at P20, and these shares were reissued at year-end at P25 During the current year, the entity reacquired 50,000 shares Required: assuming: Prepare journal entries to record the foregoing transactions 745 4,000,000 6,250,000arrow_forwardBlock Corporation permits key 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 July, employees purchased 36,000 shares at a time when the established market price was $31 per share. Block will record salary expense associated with July purchases of ________. Group of answer choices $1,004,400 $111,600 $1,116,000 $0arrow_forwardItem3 Item 3 Feldmann Corporation permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokeragefees and shares can be purchased at a 10% discount. During 2024, employees purchased 26 million shares; during this same period, the shares had a marketprice of S20 per share at the end of the year. Feldmann's 2024 pretax earnings will be reduced by: Multiple Choice S52 million. S468 million. S520 million. SO .arrow_forward
- Exercise 19-24 (Algo) New shares; contingently issuable shares [LO19-6,19-12] During 2024, its first year of operations, Kevin Berry Industries entered into the following transactions relating to shareholders’ equity. The corporation was authorized to issue 100 million common shares, $1 par per share. January 2 Issued 75 million common shares for cash. January 2 Entered an agreement with the company president to issue up to 2 million additional shares of common stock in 2025 based on the earnings of Berry in 2025. If net income exceeds $120 million, the president will receive 1 million shares; 2 million shares if net income exceeds $130 million. March 31 Issued 4 million shares in exchange for plant facilities. Net income for 2024 was $125 million. Required: Compute basic and diluted earnings per share for the year ended December 31, 2024. Note: Do not round intermediate calculations. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).arrow_forwardCase 15-11 Accounting for Employee Stock Option Plans (ESOPs) Growth Corporation offered the following stock option plan to its employees: Each employee will receive 1,000 optic stock at an option price equal to the market price of the company's common shares on the grant date, January 1, 20 The market price per share was $22 The fair value of an option was $3 Required: a. Describe how the ESOPS would have been reported under the provisions of APB Opinion No. 25. b. Analyze and explain the consequences of the APB Opinion No. 25 accounting treatment. Your analysis should c i. The conceptual framework ii. Any ethical implications iii. The impact on financial statements iv. The impact on financial ratios c. The FASB now requires companies to use the fair value method of accounting for ESOPs as described in FASB the ESOPS will be reported under this method. d. Analyze and explain the consequences of using fair value to measure and report the ESOPs. Your analysis shou i. The conceptual…arrow_forwardIn 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 15% discount. During March, employees purchased 50,000 shares at a time when the market price of the shares on the New York Stock Exchange was $12 per share. Required: Prepare the appropriate journal entry to record the March purchases of shares under the employee share purchase plan.arrow_forward
- Exercise 19-25 (Static) EPS; new shares; contingent agreements [LO19-6, 19-12] Anderson Steel Company began 2021 with 600,000 shares of common stock outstanding. On March 31, 2021, 100,000 new shares were sold at a price of $45 per share. The market price has risen steadily since that time to a high of $50 per share at December 31. No other changes in shares occurred during 2021, and no securities are outstanding that can become common stock. However, there are two agreements with officers of the company for future issuance of common stock. Both agreements relate to compensation arrangements reached in 2020. The first agreement grants to the company president a right to 10,000 shares of stock each year the closing market price is at least $48. The agreement begins in 2022 and expirés in 2025. The second agreement grants to the controller a right to 15,000 shares of stock if she is still with the firm at the end of 2029. Net income for 2021 was $2,000,000. Required: Compute Anderson…arrow_forwardProblem 16-12 (IAA) During 2020, Reminiscent Company bought shares of another entity to be held for trading. June December 1 1 20,000 shares @ P100 30,000 shares @ P120 2,000,000 3,600,000 Transactions for 2021 January 10 Received cash dividend at P10 per share. Received 20% share dividend. December 10 Sold 30,000 shares at P125 per share. January 20 1. What is the gain on sale of investment using the FIFO approach? a. 1,150,000 b. 950,000 150,000 550,000 с. d. 2. What is the gain on sale of investment using the average approach? а. 950,000 b. 750,000 c. 800,000 d. 900,000 3. What total amount should be reported as income from the investment using the FIFO approach? a. 1,650,000 b. 1,450,000 c. 1,750,000 d. 500,000arrow_forwardProblem #10 Subscription of Shares Gabayan, Inc. has been authorized to issue 125,000 shares of P10 par ordinary shares The following 2019 transactions relate to the initial issuance of Gabayan share: Feb. 1 Gabayan sold subscriptions for 25,000 shares of stock. The shares have a subscription price of P15 per share. One-third of the subscription price was received as a down payment. 15 Gabayan sold 10,000 shares for P180,000. Mar. 1 An installment amounting to one-third of the subscription price was received. 19 Gabayan exchanged 200 shares of stock for a new two-way radio system having a fair market value of P3,800. Apr. 1 The final one-third of the subscription price was received and the share issued. Required: Prepare journal entries to record the transactions.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education