Prepare the journal entry on December 31, 2020, for the issuance of shares to Adams. Hint: The company credited Liability—Employee Stock Purchase Plan at the time of each payroll deduction. Note: The employee cannot purchase partial shares of stock.
Recording Shares Issued through an Employee Share Purchase Plan
Rice Corporation has a stock purchase plan with the following provision. Each full-time employee with a minimum of one year’s service may acquire from Rice Corporation, its common stock, $10 par, through payroll deductions at 5% below the market price on the date selected by the employee for a stock purchase (the exercise date). The exercise decision must be made within one year from the payroll deduction date.
Employee Adams signed a payroll deduction agreement form on January 1, 2020, for $48 per month. At that date, the market price of the stock was $27 per share. At the end of 2020, Adams requested that stock be purchased equal to the amount Adams accumulated as a deposit. At that date, the market price of the stock was $25 per share.
Required
Prepare the
- Note: The employee cannot purchase partial shares of stock.
- Note: List multiple debits (when applicable) in alphabetical order and list multiple credits (when applicable) in alphabetical order.
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