Asked by Aliyah Grant on Jun 05, 2024
Verified
Bodkin Beverage Company is authorized to issue 20000 shares of 8% $100 par value preferred stock and 500000 shares of no-par common stock with a stated value of $1 per share. If Bodkin issues 12000 shares of common stock to pay its recent attorney's bill of $50000 for legal services on a land access dispute which of the following would be the journal entry for Bodkin to record? a.
Legal Expense 12,000 Common Stock12,000\begin{array}{llr} \text {Legal Expense } &12,000\\ \text { Common Stock} &&12,000\\\end{array}Legal Expense Common Stock12,00012,000
b.
Legal Expense 50,000 Common Stock 50,000 \begin{array}{llr} \text {Legal Expense } &50,000\\ \text { Common Stock } &&50,000\\ \text { } &\end{array}Legal Expense Common Stock 50,00050,000
c.
Legal Expense 50,000 Common Stock12,000 Paid-in Capital in Excess of Stated Value -Common 38,000\begin{array}{llr} \text { Legal Expense } &50,000\\ \text { Common Stock} &&12,000\\ \text { Paid-in Capital in Excess of Stated Value -Common } &&38,000\end{array} Legal Expense Common Stock Paid-in Capital in Excess of Stated Value -Common 50,00012,00038,000
d.
Legal Expense 50,000 Common Stock 12,000 Paid-in Capital in Excess of Par - Preferred 38,000\begin{array}{llr} \text { Legal Expense } &50,000\\ \text { Common Stock } &&12,000\\ \text { Paid-in Capital in Excess of Par - Preferred } &&38,000\end{array} Legal Expense Common Stock Paid-in Capital in Excess of Par - Preferred 50,00012,00038,000
Par Value
A nominal value assigned to share of stock in the charter of a corporation, unrelated to market value.
Legal Expense
Costs incurred in the process of legal advice, litigation, or other legal services.
Paid-In Capital
Funds raised by a company through the sale of its shares to investors, over and above the par value of these shares.
- Execute the computation and recording of transactions pertinent to the release of stock in return for cash, tangible assets (other than cash), and services.
- Understand the treatment and recording of stock issued in exchange for assets and services.
Verified Answer
ZK
Learning Objectives
- Execute the computation and recording of transactions pertinent to the release of stock in return for cash, tangible assets (other than cash), and services.
- Understand the treatment and recording of stock issued in exchange for assets and services.