In exchange for $1,500 legal services to help set up the new company,Hickory Grove Corporation issued 100 shares of $10 par value stock to its attorney.The entry to record the issuance of the stock would include a:

Question

Quizplus · Accepted Answer

The issuance of the stock involves both the par value and the excess of par value. The company issued 100 shares of $10 par value stock, which means the total par value of the stock issued is $1,000 (100 shares x $10 par value). However, the company received $1,500 for the legal services, which is $500 more than the par value. Therefore, the entry to record the issuance of the stock includes a credit to Common Stock for $1,000 (the par value of the shares) and a credit to Paid-in Capital in Excess of Par Value-Common for $500 (the amount over the par value). Hence, the correct answer is D.

In Exchange for $1,500 Legal Services to Help Set Up