Answer:
The journal entry for J. Laney to record this transaction is
Dr legal expenses $12,990
______Cr Common stock $3,100
_______Cr Share premium $8,990
Step-by-step explanation:
The common stocks are carried at par value of $1. This implies that any price paid in excess of the par value is made provision for in the share premium account.
Again, the common stocks issued are measured at the price required to settle the legal expenses and are paid in excess of par value of $1.
Share premium = ($3.90 - $1) × 3,100
Share premium = $8,990