A corporation was organized in January year 1 with authorized
capital of $10 par value common stock. On February 1,
year 1, shares were issued at par for cash. On March 1, year 1, the
corporation’s attorney accepted 5,000 shares of the common
stock in settlement for legal services with a fair value of $60,000.
Additional paid-in capital would increase on

February 1, year 1
March 1, year 1

(d) On February 1, year 1, when shares were issued at
par for cash, the following journal entry would have been made:
Cash (cash received)
Common stock (par)
On March 1, year 1, however, the issuance of 5,000 shares in
settlement for legal services rendered would have been recorded
as follows:
Legal fees 60,000
Common stock ($10 × 5,000 shares) 50,000
Addl. paid-in capital 10,000
Stock issued for services (i.e., in a nonmonetary transaction)
should be recorded at the fair market value of those services (in
this case $60,000).