An ESOP under which employees
January 18th, 2023
An ESOP under which employees may purchase shares of the companyfor $ 20 per share was established . The option premium is $ .50per share and 20,000 shares were set aside for the plan. On January1, 2020, 12,000 options are purchased by employees. On December 1,2020, all 12,000 options are exercised. Required Prepare thejournal entries to record the above events
Answer:
| Particulars | Debit ( Amount In$) | Credit ( Amount In$) |
|
Employees Compensation Expenseaccount |
400000 | |
| Employee Stock option outstanding account | 400000 | |
| (Being expenses in respect of ESOPrecognised) | ||
| Profit and Loss account | 400000 | |
|
Employees Compensation Expense account |
400000 | |
| (being expenses transferred to Profitand loss account) | ||
| Bank Account | 6000 | |
| Employee Stock option outstandingaccount | 240000 | |
| Equity Share capital Account | 240000 | |
| Securities Premium Account | 6000 | |
| (Being 12000 options purchased andexercised at $0.50 premium) | ||
| Employee Stock option outstandingaccount | 160000 | |
| General Reserve | 160000 | |
| (Being unexercised options consideredlased at the en of the year) |
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