ristar Production Company began operations on September 1, 2021. Listed below are a number of transactions that occurred during its first four months of operations. On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $220,000 in cash for the property. According to appraisals, the land had a fair value of $151,200 and the building had a fair value of $88,800. On September 1, Tristar signed a $52,000 noninterest-bearing note to purchase equipment. The $52,000 payment is due on September 1, 2022. Assume that 10% is a reasonable interest rate. On September 15, a truck was donated to the corporation. Similar trucks were selling for $3,700. On September 18, the company paid its lawyer $3,500 for organizing the corporation. On October 10, Tristar purchased maintenance equipment for cash. The purchase price was $27,000 and $1,100 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 $6,700 normal cash price. The supplier agreed to accept 200 shares of the company's no-par 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 $32,000. It paid $3,500 down and signed a 12% note with both principal and interest due in one year. Twelve percent is an appropriate rate of interest for this note. Required: Prepare journal entries to record each of the above transactions.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Tristar Production Company began operations on September 1, 2021. Listed below are a number of transactions that occurred during its first four months of operations.

On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $220,000 in cash for the property. According to appraisals, the land had a fair value of $151,200 and the building had a fair value of $88,800.
On September 1, Tristar signed a $52,000 noninterest-bearing note to purchase equipment. The $52,000 payment is due on September 1, 2022. Assume that 10% is a reasonable interest rate.
On September 15, a truck was donated to the corporation. Similar trucks were selling for $3,700.
On September 18, the company paid its lawyer $3,500 for organizing the corporation.
On October 10, Tristar purchased maintenance equipment for cash. The purchase price was $27,000 and $1,100 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 $6,700 normal cash price. The supplier agreed to accept 200 shares of the company's no-par 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 $32,000. It paid $3,500 down and signed a 12% note with both principal and interest due in one year. Twelve percent is an appropriate rate of interest for this note.

Required:

Prepare journal entries to record each of the above transactions.

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