Teague Corporation 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 10% discount. During July, employees purchased 40,000 shares at a time when the established market price was $26 per share. Teague will record an increase in cash of ________ associated with July purchases.

Question

Quizplus · Accepted Answer

The employees purchased 40,000 shares at a 10% discount on the market price of $26, which means they paid $23.40 per share ($26 - 10% of $26). Therefore, the cash received by Teague Corporation is 40,000 shares * $23.40 = $936,000.

Teague Corporation Permits Any of Its Employees to Buy Shares