An ESOP under which employees may purchase shares of the company for $ 20 per share...

An ESOP under which employees may purchase shares of the company for $ 20 per share was established . The option premium is $ .50 per share and 20,000 shares were set aside for the plan. On January 1, 2020, 12,000 options are purchased by employees. On December 1, 2020, all 12,000 options are exercised. Required Prepare the journal entries to record the above events

Expert Solution

Particulars	Debit ( Amount In $)	Credit ( Amount In $)
Employees Compensation Expense account	400000
Employee Stock option outstanding account		400000
(Being expenses in respect of ESOP recognised)

Profit and Loss account	400000
Employees Compensation Expense account		400000
(being expenses transferred to Profit and loss account)

Bank Account	6000
Employee Stock option outstanding account	240000
Equity Share capital Account		240000
Securities Premium Account		6000
(Being 12000 options purchased and exercised at $0.50 premium)

Employee Stock option outstanding account	160000
General Reserve		160000
(Being unexercised options considered lased at the en of the year)

ekkarill92 answered 2 years ago

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