Chapter 10 Pre-Builit Problems Help Sa Its first four months of operations. (EV
ID: 2541258 • Letter: C
Question
Chapter 10 Pre-Builit Problems Help Sa Its first four months of operations. (EV of $1. PV of $1. FVA of $1, PYA of $1, EVAD of $1 and PVAD of $) (Use appropriate factor(s) from the tables provided.) 10 1. On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $210,000 in 2. On September 1, Tristar signed a $51,000 noninterest- aisals, the land had a fair value of $142,600 and the building had a fair value of $87,400. bearing note to purchase equipment. The $51,000 payment is due on September 1, 2019, Assume that 9% is a reasonable interest rate. 4. On Se 5. On October 10, Tristar eBock 3. On September 15, a truck was donat ed to the corporation, Similar trucks were selling for $3,600. r $3,000 for organizing the corporation. mber 18, the company paid i its lawye purchased maintenance equipment for cash. The purchase price was $26,000 and $1,050 in freight charges r acquired various items of office equipment. The company was short of cash and could not pay the $6,600o st of $31,000. It paid $3,000 down and signed a 11% note with both Print also were paid. normal cash price. The supplier agreed to accept 200 shares of the compa equipment. The fair value of the stock is not readily determinable. ny's nopar common stock in exchange for the 7. On December 10, the company acquired a tract of land at a co principal and interest due in one year. Eleven percent is an appropriate rate of interest for this note. Required journal entries to record each of the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round final answers to the nearest whole dollars.) Journal entry worksheet K Prev 11 of 14 Next>Explanation / Answer
Sr. No
Date
Ledgers
Dr/Cr
Amount
1
01-Sep-18
Land
Dr
1,30,200
Building
Dr
79,800
Cash/Bank
Cr
-2,10,000
Being land and building purchase recorded. Amount allocation to land and building based on relative fair values of these assets
2
01-Sep-18
Bank
Dr
46,789
Non Interest bearing note
Cr
-46,789
Being non interest bearing note payable in 1 year recorded at fair value, i.e. 51,000 discounted at 9% for one year (51000/1.09)
3
15-Sep-18
Donations
Dr
3,600
Trucks
Cr
-3,600
(Question is not clear on book value of truck, therefore, entire fair value is credited to the trucks account. Ideally, net book value of truck will be recorded in truck account, with difference being recorded to the profit and loss account, as gain/loss on disposal of truck, in this case, not through sale, but donation)
4
18-Sep-18
Legal expenses
Dr
3,000
Cash/Bank
Cr
-3,000
(Being legal expenses paid for organising the corporation)
5
10-Oct-18
Inventory (maintenance equipment)
Dr
27,050
Cash/Bank
Cr
-27,050
Purchase of maintenance equipment recorded as inventory including freight charges incurred. Amount paid in cash
6
02-Dec-18
Office equipment
Dr
6,600
Equity
Cr
-6,600
Office equipment purchased against equity recorded in books at fair value of ofice equipment as value of shares not readily determinable. Equity component to be split into shares and premium dpeending on face value of shares which is not mentioned in the question
7
10-Dec-18
Land
Dr
28,225
Cash
Cr
-3,000
Note payable
Cr
-25,225
Being land purchase recorded. Notes recorded at fair value (28000/1.11), based on which, the fair value of land is derived
Sr. No
Date
Ledgers
Dr/Cr
Amount
1
01-Sep-18
Land
Dr
1,30,200
Building
Dr
79,800
Cash/Bank
Cr
-2,10,000
Being land and building purchase recorded. Amount allocation to land and building based on relative fair values of these assets
2
01-Sep-18
Bank
Dr
46,789
Non Interest bearing note
Cr
-46,789
Being non interest bearing note payable in 1 year recorded at fair value, i.e. 51,000 discounted at 9% for one year (51000/1.09)
3
15-Sep-18
Donations
Dr
3,600
Trucks
Cr
-3,600
(Question is not clear on book value of truck, therefore, entire fair value is credited to the trucks account. Ideally, net book value of truck will be recorded in truck account, with difference being recorded to the profit and loss account, as gain/loss on disposal of truck, in this case, not through sale, but donation)
4
18-Sep-18
Legal expenses
Dr
3,000
Cash/Bank
Cr
-3,000
(Being legal expenses paid for organising the corporation)
5
10-Oct-18
Inventory (maintenance equipment)
Dr
27,050
Cash/Bank
Cr
-27,050
Purchase of maintenance equipment recorded as inventory including freight charges incurred. Amount paid in cash
6
02-Dec-18
Office equipment
Dr
6,600
Equity
Cr
-6,600
Office equipment purchased against equity recorded in books at fair value of ofice equipment as value of shares not readily determinable. Equity component to be split into shares and premium dpeending on face value of shares which is not mentioned in the question
7
10-Dec-18
Land
Dr
28,225
Cash
Cr
-3,000
Note payable
Cr
-25,225
Being land purchase recorded. Notes recorded at fair value (28000/1.11), based on which, the fair value of land is derived
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