The entry to record the issuance of 150 shares of $5 par common stock at par to an attorney in payment of legal fees for organizing the corporation includes a credit to
A) Organizational Expenses
B) Goodwill
C) Common Stock
D) Cash

Question

Quizplus · Accepted Answer

When a company issues stock as a form of payment, it credits the stock account (in this case, Common Stock) for the par value of the shares issued. Since the stock is issued at par, the Common Stock account is credited with the total par value of the shares issued. There is no cash involved, and the transaction does not directly affect Organizational Expenses or Goodwill accounts.

The Entry to Record the Issuance of 150 Shares of $5