Tristar Production Company began operations on September 1, 2018. Listed below a
ID: 2593505 • Letter: T
Question
Tristar Production Company began operations on September 1, 2018. Listed below are a number of transactions that occurred during its first four months of operations. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $300,000 in cash for the property. According to appraisals, the land had a fair value of $195,200 and the building had a fair value of $124,800.
On September 1, Tristar signed a $60,000 noninterest-bearing note to purchase equipment. The $60,000 payment is due on September 1, 2019. Assume that 9% is a reasonable interest rate.
On September 15, a truck was donated to the corporation. Similar trucks were selling for $4,500.
On September 18, the company paid its lawyer $7,500 for organizing the corporation.
On October 10, Tristar purchased maintenance equipment for cash. The purchase price was $35,000 and $1,500 in freight charges also were paid.
On December 2, Tristar acquired various items of office equipment. The company was short of cash and could not pay the $7,500 normal cash price. The supplier agreed to accept 200 shares of the company's nopar common stock in exchange for the equipment. The fair value of the stock is not readily determinable.
On December 10, the company acquired a tract of land at a cost of $40,000. It paid $7,500 down and signed a 11% note with both principal and interest due in one year. Eleven percent is an appropriate rate of interest for this note.
Required:
Prepare 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.)
Explanation / Answer
answer
journal entries in the book of Tristar Production company
date
particular
L.F.
Dr. amount
Cr. amount
1 sept 2018
Land
Building
to Cash
(Being land and building purchase on cash)
18300
11700
300000
1 sept 2018
equipment
discount on note payable
to note payable
(Being equipment purchase on credit)
55020
4980
60000
15 sept 2018
Truck
To revenue- donation of asset
(Being truck received as nodation)
4500
4500
18 sept 2018
organization cost (expense)
to cash
(Being legal expense paid )
7500
7500
10 oct 2018
equipment
to cash
(Being maintinence equipment purchase )
36500
36500
2 dec 2018
office equipment
to common stock
(Being office equipment purchased)
7500
7500
10 dec 2018
land
to cash
to note payable
(Being land purchase)
40000
7500
32500
Note-1 value of land and building
fair value(total)
% of fair value
initial value(%*300000)
land =195200
building =124800
total =320000
0.61
0.39
0.61*300000=18300
0.39*300000=117000
Note-2 present value of equipment
PV= 60000*0.917=55020
pv of $1 in one year=0.917
date
particular
L.F.
Dr. amount
Cr. amount
1 sept 2018
Land
Building
to Cash
(Being land and building purchase on cash)
18300
11700
300000
1 sept 2018
equipment
discount on note payable
to note payable
(Being equipment purchase on credit)
55020
4980
60000
15 sept 2018
Truck
To revenue- donation of asset
(Being truck received as nodation)
4500
4500
18 sept 2018
organization cost (expense)
to cash
(Being legal expense paid )
7500
7500
10 oct 2018
equipment
to cash
(Being maintinence equipment purchase )
36500
36500
2 dec 2018
office equipment
to common stock
(Being office equipment purchased)
7500
7500
10 dec 2018
land
to cash
to note payable
(Being land purchase)
40000
7500
32500
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.