Asked by Rayna Kordonowy on May 09, 2024
Verified
The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to
A) Organizational Expenses
B) Goodwill
C) Common Stock
D) Cash
Organizational Expenses
Costs incurred in the creation of a corporation or business entity, including legal fees, state incorporation fees, and promotional expenses.
Legal Fees
Costs incurred for legal services provided by attorneys or law firms to individuals or organizations.
Par Value
A nominal or face value assigned to a share of stock or bond, indicating its worth at the time of issue.
- Learn about the process and implications of issuing stock and the concept of par value.
Verified Answer
JS
jaspreet singh bhinderMay 16, 2024
Final Answer :
C
Explanation :
When a company issues stock as a form of payment, it credits the stock account (in this case, Common Stock) for the par value of the shares issued. Since the stock is issued at par, the Common Stock account is credited with the total par value of the shares issued. There is no cash involved, and the transaction does not directly affect Organizational Expenses or Goodwill accounts.
Learning Objectives
- Learn about the process and implications of issuing stock and the concept of par value.