Question

Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 400 shares to its attorneys in payment of a $5,000 charge for drawing up the articles of incorporation. The entry to record this transaction would include: g

Answer 1

Answer= The entry to record this transaction would include:

A debit to Organization Expenses for $5,000.

A credit to common stock for $4,000 and Paid in capital in excess of par-Common Stock of $1,000

Explanation:

Common stock = 400 x $10= $4000

Accounts                             Debit                  Credit

Organisation expense      $5,000

Common stock                                              $4,000

Paid in capital in excess of par value

of common stock                                            $1,000

( $5000 - $4000)