Question

Chandler & Co. provided 450 hours of its time to Joey Corporation and received 1,000 shares of Joey's $5 par common stock in exchange for services rendered. Chandler's usual billing rate is $650 per hour, and Joey's stock has a book value of $330 per share. By what amount will Joey's paid-in capital—excess of par increase for this transaction?

a 226,500

b 292,500

c 287,500

d 290,500

Answer 1

Debit Service Rendered(450*$650)        $292500

          Credit   Common Stock (1000* $5)             $5000

          Credit   Paid in capital excess of par          $287500

                     ($292500-$5000)

SO THE ANSWER WOULD BE (c) $287,500