Jack Deal created Deal’s Cleaning Service Corporation and hired a lawyer to perf

Question

Jack Deal created Deal’s Cleaning Service Corporation and hired a lawyer to perform the incorporation for a fee of $500. The par value of the common stock will be $1 per share and 50,000 shares are authorized in the charter of incorporation. Jack purchased 20,000 shares of the corporation’s common stock for $20,000 using his personal funds. The corporation will operate an office cleaning service business in Pike Road, Alabama. The business will prepare financial statements on a monthly basis and calculate depreciation/amortization at June 30 and December 31, respectively, using the straight-line method. Any fixed assets purchased during the month are treated as if purchased at beginning of month. Interest is accrued at year-end and when paid. Jack paid the lawyer the incorporation fee. what is the jounral entry of this transation?

Explanation / Answer

Journal entry

Date

Explanation

debit

credit

1-

incorporation expenses-lawyer fee

500

cash

500

Journal entry

Date

Explanation

debit

credit

1-

incorporation expenses-lawyer fee

500

cash

500

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