Question

EcoMotors’s disclosure notes for the year ending December 31, 2017, included the following regarding its $0.001 par common stock: Employee Stock Purchase Plan Our employees are eligible to purchase our common stock through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The purchase price would be 85% of the lower of the fair market value on the first and last trading days of each six-month offering period. During the years ended December 31, 2017, 2016, and 2015, we issued 221,071, 164,100 and 221,071 shares under the ESPP for $38.0 million, $29.1 million and $14.3 million, respectively. There were 3,620,749 shares available for issuance under the ESPP as of December 31, 2017. Required: Prepare the journal entry that summarizes EcoMotors’s employee share purchases for the year ending December 31, 2017. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

Answer 1

Date General journal Debit Credit

Dec 31, 2017 Cash $38,000,000

Compensation expense $6,705,882

[($38,000,000/85%)*15%]

Common stock [221,071 * $0.001] $221

Paid in capital - in excess of par $44,705,661