Simon Company issued 4,000 shares of its $5 par value common stock in payment of its attorney's bill of $35,000. The bill was for services performed in helping the company incorporate. Simon should record this transaction by debiting
A) Legal Expense for $20,000.
B) Legal Expense for $35,000.
C) Organization Expense for $20,000.
D) Organization Expense for $35,000.

Question

Quizplus · Accepted Answer

The issuance of stock to pay for legal fees incurred during incorporation is a transaction classified as an organization expense. Therefore, Simon should debit Organization Expense for $35,000.

Simon Company Issued 4,000 Shares of Its $5 Par Value