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S. Lawyer performed legal services for E. Corp. Due to a cash shortage, an agreement was reached whereby E. Corp. would pay S. Lawyer a legal fee of approximately $15,000 by issuing 8,000 shares of its common stock (par $1). The stock trades on a daily basis and the market price of the stock on the day the debt was settled is $1.80 per share. Given this information, the best journal entry for E. Corp. to record for this transaction is

Respuesta :

Answer: C.Legal Expense 14,400 Common Stock 8,000 Paid-in Capital in Excess of Par - Common 6,400

Explanation:

With the information given in the question, the journal entry for E. Corp. to record for this transaction will go thus:

Debit Legal expense $14400

Credit Common stock $8000

Credit Paid-in Capital in Excess of Par - Common $6400

Note that Paid-in Capital in Excess of Par - Common was calculated as:

= 8000(1.80 - 1.00)

= 6400

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