Miller Corporation issued 6000 shares of its $5 par value common stock in payment for attorney services billed at $54,000. Miller Corporation's stock has been actively trading at $9 per share. The journal entry for this transaction would include a credit to:

Question

Kaley Lester

Business

23 January, 19:24

Miller Corporation issued 6000 shares of its $5 par value common stock in payment for attorney services billed at $54,000. Miller Corporation's stock has been actively trading at $9 per share. The journal entry for this transaction would include a credit to:

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Landen Farmer · Answer 1

Answer:Share premium account of $24,000

The provider of attorney services of $30,000

Explanation:

On provision of services, the Attorney services expenses account is debited with $54,000 and the attorney services provider account credited with $54,000

Furthermore a share account is opened for the provider and credited with $30,000, the share premium is credited $24,000 and a debit transfer is made to his liability account initially credited.

The $24,000 credit to share premium represents the difference between the nominal value of the share of $5 and the market value of $9 multiply by the 30,000 shares he was paid with.

Also a memorandum will be issued to state that 6000 share has been transferred from Miller to the attorney services provider and the shares will be delited from his name and entered in the name of the services provider because the credit of shares to his account does not represents new shares issued but it's the transfer of Miller's shares to him.