Asked by
Dasia Nasheed
on Oct 15, 2024
Verified
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:
A) A debit to Organization Expenses for $4,000.
B) A debit to Organization Expenses for $5,000.
C) A credit to Common Stock for $5,000.
D) A credit to Paid-in Capital in Excess of Par Value,Common Stock for $5,000.
E) A debit to Paid-in Capital in Excess of Par Value,Common Stock for $2,000.
Organization Expenses
Costs associated with the formation and setup of a company, including legal fees, incorporation fees, and promotional expenses.
Common Stock
A type of security that represents ownership in a corporation, with voting rights and the potential for dividends.
Articles of Incorporation
A document filed with a government body to legally document the creation of a corporation; synonymous with Corporate Charter but varies by jurisdiction.
- Master the operational and accounting aspects of issuing shares, together with the theories of par value, stated value, and paid-in capital excess.
Verified Answer
KR
Learning Objectives
- Master the operational and accounting aspects of issuing shares, together with the theories of par value, stated value, and paid-in capital excess.