Simon Company issued 2,000 ordinary shares with a $5 par value in payment of its attorney's bill of $40,000. The bill was for services performed in helping the company incorporate. Simon should record this transaction by debiting

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When a company issues shares in payment of services, the amount to be recorded is equal to the fair value of the shares issued. In this case, the fair value of the shares is $40,000 ($5 par value x 2,000 shares), so the transaction should be recorded by debiting Organization Expense for $40,000. Legal Expense is not the proper account to use in this case, as the services were performed in helping the company incorporate, rather than providing legal services.

Simon Company Issued 2,000 Ordinary Shares with a $5 Par