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 $120,000 in cash for the property. According to appraisals, the land had a fair value of $85,400 and the building had a fair value of $54,600. On September 1, Tristar signed a $42,000 noninterest-bearing note to purchase equipment. The $42,000 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 $2,700. On September 18, the company paid its lawyer $4,000 for organizing the corporation. On October 10, Tristar purchased maintenance equipment for cash. The purchase price was $17,000 and $600 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 $5,700 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 $22,000. It paid $3,000 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.)

Answer 1

Solution: Following is the required journal entries:

Date	Particulars	Debit($)	Credit($)
Sept 1	Land[(85400*120000)/(85400+54600)]	73,200
	Building[(54600*120000)/(85400+54600)]	46,800
	Cash		120,000
Sept 1	Equipment[PV(FV=42,000, PMT=0, n=1, i=9%)]	38,532
	Discount on Note payable	3,468
	Note Payable		42,000
Sept 15	Truck	2,700
	Revenue-Donation of asset		2,700
Sept 18	Organisation cost Expense	4,000
	Cash		4,000
Oct 10	Equipment(17000+600)	17,600
	Cash		17,600
Dec 2	Office Equipment	5,700
	Common stock		5,700
Dec 10	Land	22,000
	Cash		3,000
	Note payable(22000-3000)		19,000