Montgomery & Co., a well-established law firm, provided 500 hours of its time to Fink Corporation in exchange for 1,000 shares of Fink's $5 par common stock. Montgomery's usual billing rate is $700 per hour, and Fink's stock has a book value of $250 per share. By what amount will Fink's paid-in capital-excess of par increase for this transaction?

Question

Quizplus · Accepted Answer

$\begin{array}{|l|r|r|}
\hline \text { Legal expense }(500 \times \$ 700) & 350,000 & \
\hline \text { Common stock }(1,000 \times \$ 5) & & 5,000 \
\hline \text { Paid-in capital\_excess of par } & & 345,000 \
\hline
\end{array}$