| Subscriptions | 32,000.00 | |
| Capital stock | 32,000.00 | |
| ———— | ||
| Cash | 3,000.00 | |
| Accounts receivable | 2,000.00 | |
| Merchandise inventory | 15,000.00 | |
| Goodwill | 14,000.00 | |
| Accounts payable | 2,000.00 | |
| Subscriptions | 32,000.00 |
42. When the Gift is Made by an Existing Corporation. We will suppose that the Benson Co. wishes to donate 10 shares of stock to each of three employes, A, B, and C. Having 80 shares unsubscribed, the donation will be made from that stock. Supposing that the company has accumulated a surplus, the transaction will be entered on the "books" as follows:
| Subscriptions | 3,000.00 | |
| Capital stock | 3,000.00 | |
| Subscriptions of A, B, & C per subscription book. | ||
| ———— | ||
| Surplus | 3,000.00 | |
| Subscription | 3,000.00 | |
| Surplus appropriated to subscriptions per resolution of the board of directors Jan. 25th, 1909. | ||
The above would be a rather unusual proceeding as the stock is fully paid, though such gifts are sometimes made. The tendency of the present times is toward profit sharing for the employes of corporations. The plan of profit sharing takes many forms, and there are some notable examples among very large corporations which have given employes stock in the corporation, or afforded them an opportunity to acquire stock on very favorable terms.
Among smaller corporations it is quite common to enable employes to acquire its stock subject to certain special conditions. Frequently employes are permitted to subscribe for stock with an agreement that they are to pay no money, but that dividends declared are to be applied to the payment of subscriptions. In this way the stock is made to pay for itself out of its own earnings. Sometimes provision is made for the payment of small annual installments on the subscriptions in addition to applying the dividends. When stock is issued to employes under these conditions, the contract sometimes specifies that in the event of the subscriber leaving its employ before the subscription is paid in full, the ownership of the stock shall revert to the company, and in such cases the stock, until it becomes full paid, is usually placed in the hands of a trustee. The principal object in issuing stock to an employe and surrounding the transaction with these restrictions is, of course, to insure his continuous service by making it an object to him to remain in the employ of the company.
When stock is so issued, the entry is—
Subscriptions
Capital stock
Subscriptions to stock
by employes, said stock
to be issued subject to the
conditions named in the resolution
authorizing its issue,
passed by the board of
directors January 25th, 1909.