Answer the question Q ARS Ltd has its share capital divided into equity shares of Rs - Accountancy - Accounting for Share Capital

Question

Answer the question
Q ARS Ltd has its share capital divided into equity shares of Rs 10
each On 1 s t April, 2015 it grants option for issue of 15,000
equity shares of Rs 60 each under employees' stock option scheme On
this date the market price of share was Rs 150 The options was to
be exercised between 15 t h March to 31 s t March 2016 The
employees exercised their options for 14,000 shares only The
remaining option lapsed
Pass journal entries for the issue of employee stock options

Neha Chopra · Accepted Answer

Dear Student

Journal in the books of ARS Ltd

Date
Particulars

Debit
Credit

Employee Stock Option Expense (14,000 x
(150 - 60))
Dr
1,260,000

To Employee Stock Option Outstanding

1,260,000

(Being Expense booked on 14,000 options
excercised)

Bank A/c (14,000 x 60)
Dr
840,000

Employee Stock Option Outstanding A/c
Dr
1,260,000

To Securities Premium A/c (14,000 x
140)

1,960,000

To Share Capital A/c (14,000 x 10)

140,000

(Being Shares issued as per share on
options)

Profit and lOss A/c
Dr
1,260,000

To Employee Stock option Expense A/c

1,260,000

(Being Expense on issue written off)

Regards

Journal in the books of ARS Ltd.
Date	Particulars		Debit	Credit

	Employee Stock Option Expense (14,000 x (150 - 60))	Dr.	1,260,000
	To Employee Stock Option Outstanding			1,260,000
	(Being Expense booked on 14,000 options excercised)

	Bank A/c (14,000 x 60)	Dr.	840,000
	Employee Stock Option Outstanding A/c	Dr.	1,260,000
	To Securities Premium A/c (14,000 x 140)			1,960,000
	To Share Capital A/c (14,000 x 10)			140,000
	(Being Shares issued as per share on options)

	Profit and lOss A/c	Dr.	1,260,000
	To Employee Stock option Expense A/c			1,260,000
	(Being Expense on issue written off)