Question

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. (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.)

1. On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $150,000 in cash for the property. According to appraisals, the land had a fair value of $108,800 and the building had a fair value of $61,200.
2. On September 1, Tristar signed a $45,000 noninterest-bearing note to purchase equipment. The $45,000 payment is due on September 1, 2022. Assume that 9% is a reasonable interest rate.
3. On September 15, a truck was donated to the corporation. Similar trucks were selling for $3,000.
4. On September 18, the company paid its lawyer $5,500 for organizing the corporation.
5. On October 10, Tristar purchased maintenance equipment for cash. The purchase price was $20,000 and $750 in freight charges also were paid.
6. On December 2, Tristar acquired various items of office equipment. The company was short of cash and could not pay the $6,000 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.
7. On December 10, the company acquired a tract of land at a cost of $25,000. It paid $4,500 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.)

Answer 1

Answer
Date	Particulars	Debit	Credit
01-09-2021	Land	$       96,000
	Building	$       54,000
	Cash		$       1,50,000
	( Acquired land and building )

Working Note	Fair Value	% of Total fair value	Initial Valuation
Land	108800	64%	96000
Building	61200	36%	54000
	170000	100%	150000

01-09-2021	Equipment(PV of 9%)	$       41,284
	Discount on Note Payable@9%	$         3,716
	Note Payable		$           45,000
	(To record equipment purchase)
15-09-2021	Truck	$         3,000
	Revenue -Donation of assets		$             3,000
	( truck donated )
18-09-2021	Oraganisation cost exp a/c	$         5,500
	Cash		$             5,500
	( Legal exp paid )
10-10-2021	Machinery a/c	$       20,750
	Cash		$           20,750
	( Machinery Purchases )
02-12-2021	Office Equipment A/c	$         6,000
	Common Stock		$             6,000
	( Office Equipment purchaes against common stock )
10-12-2021	Land	$       25,000
	Cash		$             4,500
	Note Payable		$           20,500
	( Tract on land Acquired )
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