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12 December, 04:04

To encourage employee ownership of the company's common shares, KL Corp. 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 12% discount. During May, employees purchased 10,000 shares at a time when the market price of the shares on the New York Stock Exchange was $12 per share. KL will record compensation expense associated with the May purchases of:

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  1. 12 December, 04:11
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    Dr Cash 105,600

    Dr Compensation Expense 14,400

    Cr Common Stock 10,000

    Cr Paid-In Capital - Excess of Par 110,000

    Explanation:

    KL Corp Journal entry

    Dr Cash 105,600

    Dr Compensation Expense 14,400 (10,000*12*12%)

    Cr Common Stock 10,000 (10,000*1)

    Cr Paid-In Capital - Excess of Par 110,000

    (10,000 * (12-1))
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