Question

a corporation issued 190 shares of its $5 par value common stock in payment of a $2,700 charge from its accountant for assistance in filing its charter with the state. the entry to record this transaction will include: multiple choice a $1,750 credit to paid-in capital in excess of par value, common stock. a $2,700 credit to common stock. a $2,700 debit to common stock. a $2,700 credit to cash. a $950 debit to organization expenses.

Answer 1

The entry to record the issuance of 190 shares of $5 par value common stock for accounting services would include a debit to Organization Expenses for $2,700, a credit to Common Stock for $950, and a credit to Paid-in Capital in Excess of Par Value, Common Stock for $1,750.

Step-by-step explanation:

The question relates to the accounting entry for a corporation issuing shares to pay for a service. When a corporation issues 190 shares of its $5 par value common stock for a $2,700 charge for accounting services, the entry would include a credit to Common Stock for the par value of the shares issued and a credit to Paid-in Capital in Excess of Par Value for the remainder of the value of the services received.

The correct journal entry to record this transaction would be:

• Debit Organization Expenses for $2,700
• Credit Common Stock for $950 (190 shares x $5 par value)
• Credit Paid-in Capital in Excess of Par Value, Common Stock for $1,750 ($2,700 - $950)