5. Alkaleej Co., a well established law firm, provided 500 hours of its time to XYZ Corporation in
exchange for 1,000 shares of XYZ $5 par ordinary shares. Alakhaleej usual billing rate is $700 per
hour, and xyz shares have a book value of $250 per share. Which of the following is a correct to
record this transaction:
A. Legal expense (500 x $700)
350,000
Ordinary share capital (1,000 x $5)
5,000
Share premium
345,000
B. Legal expense (250,000*1000)
250,000
Ordinary share capital
250,000
C. Ordinary share capital (500 x $700)
350,000
350,000
Legal expense
D. Legal expense (1000 x $5)
5,000
5,000
Ordinary share capital (1,000 x $5)