Question

7) Mary issues common stock in exchange for legal services received. The common stock has a fair value of $3,000 and a par value of $500. What is the journal entry required to record this transaction?

8) By what amount did this transaction affect Mary’s total shareholder equity? (ignore taxes) show calculation

9) By what amount did this transaction affect Mary’s net income for the year? (ignore taxes) show calculation

10) Delta repurchased (reacquired) 100 shares of its common stock for $15 per share. Will this transaction increase or decrease Shareholder Equity, and by what amount?

Answer 1

7
	General Journal	Debit	Credit
	Legal Fees Expense	$3,000
	Common Stock		$500
	Additional Paid-in-Capital in Excess of Par - Common		$2,500
8	$3,000
9	-$3,000
10	Decrease Shareholder Equity	$1,500