Lucie Corporation was formed on January 1 of the current year. The corporate charter authorized the company to issue 100,000 common shares. During the first month ofoperation, the corporation issued 300 shares to its lawyer in payment of a $5,600 bill for preparing the articles of incorporation. The entry to record this transaction wouldinclude:
A) A credit to Common Shares for $3,300.
B) A debit to Organization Costs for $3,000.
C) A debit to Organization Costs for $5,600.
D) A credit to Organization Costs for $5,600.
E) A debit to Common Shares for $5,600.

Question

Quizplus · Accepted Answer

The correct entry would be to debit Organization Costs for $5,600 to record the expense incurred for legal services, and credit Common Shares for the same amount to reflect the issuance of shares as payment.

Lucie Corporation Was Formed on January 1 of the Current