Farouk Inc. issues 10 preferred shares in exchange for consulting services valued at $3500. Farouk Inc. does not have shares that are trading on the stock market, and has never issued shares (the shares are all owned by the initial shareholders). In the journal entry to record issuing the shares, Farouk Inc. should 1. More information is required to answer this question 2. Debit Consulting Expense $3500 and Credit Contributed Capital $3500 3. Debit Consulting Expense $3500 and Credit Preferred Shares $3500 4. None of the answers are correct
Farouk Inc. issues 10 preferred shares in exchange for consulting services valued at $3500. Farouk Inc. does not have shares that are trading on the stock market, and has never issued shares (the shares are all owned by the initial shareholders). In the journal entry to record issuing the shares, Farouk Inc. should 1. More information is required to answer this question 2. Debit Consulting Expense $3500 and Credit Contributed Capital $3500 3. Debit Consulting Expense $3500 and Credit Preferred Shares $3500 4. None of the answers are correct
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
(Multiple Choice)
Farouk Inc. issues 10 preferred shares in exchange for consulting services valued at $3500. Farouk Inc. does not have shares that are trading on the stock market, and has never issued shares (the shares are all owned by the initial shareholders). In the journal entry to record issuing the shares, Farouk Inc. should
1. More information is required to answer this question
2. Debit Consulting Expense $3500 and Credit Contributed Capital $3500
3. Debit Consulting Expense $3500 and Credit Preferred Shares $3500
4. None of the answers are correct
5. Debit Preferred Shares $3500 and Credit Consulting Expense $3500
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