Final answer:
The journal entry for the Allen Company receiving legal services in exchange for stock would include debiting Legal Services Expense for $10,000, crediting Common Stock for $1,000, and crediting Paid-In Capital over Par for $9,000.
Step-by-step explanation:
The journal entry to record the transaction where the Allen Company receives legal services in exchange for issuing shares would be to debit the Legal Services Expenses and credit Common Stock and Paid-In Capital over Par. Since the services were worth $10,000 and the par value of the stock given in exchange is $1 per share for 1,000 shares, the entries would be:
This reflects the cost of the legal services received, the nominal par value of the shares issued, and the additional paid-in capital representing the difference between the par value and the fair market value of the stock issued.