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 journal entry on December 31, 2020, for the issuance of shares to Adams.Hint: The company credited LiabilityEmployee Stock Purchase Plan at the time of each payroll deduction.

DateAccount NameDr.Cr.Dec. 31, 2020Answer

Cash

LiabilityEmployee Stock Purchase Plan

Preferred Stock

Common Stock

Paid-in Capital in Excess of ParCommon Stock

Paid-in CapitalRestricted Stock

Paid-in CapitalStock Options

Paid-in CapitalExpired Stock Options

Unearned CompensationEquity

Compensation Expense

N/A

Answer

Answer

Answer

Cash

LiabilityEmployee Stock Purchase Plan

Preferred Stock

Common Stock

Paid-in Capital in Excess of ParCommon Stock

Paid-in CapitalRestricted Stock

Paid-in CapitalStock Options

Paid-in CapitalExpired Stock Options

Unearned CompensationEquity

Compensation Expense

N/A

Answer

Answer

Answer

Cash

LiabilityEmployee Stock Purchase Plan

Preferred Stock

Common Stock

Paid-in Capital in Excess of ParCommon Stock

Paid-in CapitalRestricted Stock

Paid-in CapitalStock Options

Paid-in CapitalExpired Stock Options

Unearned CompensationEquity

Compensation Expense

N/A

Answer

Answer