Question

Percy Corporation was formed on January 1. The corporate charter authorized 100,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 230 shares to its attorneys in payment of a $4,300 charge for drawing up the articles of incorporation. The entry to record this transaction would include:

Answer 1

The journal entry for the transaction as mentioned above will include a debit in the organizational expenses for $4,300.

What are the golden rules of a journal entry?

As per the golden rules of a journal entry, all the expenses of an organization, whether direct or indirect are debited. Thus, in the above case, the organization expenses will be debited.

Hence, the significance of a journal entry is aforementioned.

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