Ahlbrandt Corporation had the following stockholders’ equity on December 31, 2011:

Common stock: authorized 250,000,000 shares with $.01

par value, issued and outstanding 61,766,000 shares ..... $ 618,000

Additional paid-in capital ............... 694,296,000

Accumulated deficit ................. (162,402,000)

Total stockholders’ equity ............... $532,512,000

In 2011 the company approved an employee stock purchase plan that allows employees to purchase stock at 85% of the fair market value. When employees participate in this plan, Ahlbrandt recognizes compensation expense in the amount of the 15% discount. Compensation expense recognized in 2011 was $816,000. Assume an average market price of $20 per share.

Net income for the year was $35,686,000. No dividends were paid.

1. Prepare the journal entry for the issuance of stock under the stock purchase plan in 2011.

2. At the end of 2011 Ahlbrandt had an accumulated deficit of ($162,402,000). At the current rate of earnings, how many years will it be before Ahlbrandt could pay a dividend of $1 per share without exhausting retained earnings?