Tristar Production Company began operations on September 1, 2024. Listed below are a number of transactions that occurred during its first four months of operations. 1. On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $130,000 in cash for the property. According to appraisals, the land had a fair value of $93,000 and the building had a fair value of $57,000. 2. On September 1, Tristar signed a $43,000 noninterest-bearing note to purchase equipment. The $43,000 payment is due on September 1, 2025. Assume that 10% is a reasonable interest rate. 3. On September 15, a truck was donated to the corporation. Similar trucks were selling for $2,800. 4. On September 18, the company paid its lawyer $4,500 for organizing the corporation. 5. On October 10, Tristar purchased equipment for cash. The purchase price was $18,000 and $650 in freight charges also were paid. 6. On December 2, Tristar acquired equipment. The company was short of cash and could not pay the $5,800 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 $23,000. 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. Note: Use tables, Excel, or a financial calculator. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar. (FV of $1. PV of $1. FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1)
Tristar Production Company began operations on September 1, 2024. Listed below are a number of transactions that occurred during its first four months of operations. 1. On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $130,000 in cash for the property. According to appraisals, the land had a fair value of $93,000 and the building had a fair value of $57,000. 2. On September 1, Tristar signed a $43,000 noninterest-bearing note to purchase equipment. The $43,000 payment is due on September 1, 2025. Assume that 10% is a reasonable interest rate. 3. On September 15, a truck was donated to the corporation. Similar trucks were selling for $2,800. 4. On September 18, the company paid its lawyer $4,500 for organizing the corporation. 5. On October 10, Tristar purchased equipment for cash. The purchase price was $18,000 and $650 in freight charges also were paid. 6. On December 2, Tristar acquired equipment. The company was short of cash and could not pay the $5,800 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 $23,000. 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. Note: Use tables, Excel, or a financial calculator. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar. (FV of $1. PV of $1. FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1)
Chapter12: Nonrecognition Transactions
Section: Chapter Questions
Problem 57CP
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Transcribed Image Text:Tristar Production Company began operations on September 1, 2024. Listed below are a number of transactions that occurred during
its first four months of operations.
1. On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $130,000 in
cash for the property. According to appraisals, the land had a fair value of $93,000 and the building had a fair value of $57,000.
2. On September 1, Tristar signed a $43,000 noninterest-bearing note to purchase equipment. The $43,000 payment is due on
September 1, 2025. Assume that 10% is a reasonable interest rate.
3. On September 15, a truck was donated to the corporation. Similar trucks were selling for $2,800.
4. On September 18, the company paid its lawyer $4,500 for organizing the corporation.
5. On October 10, Tristar purchased equipment for cash. The purchase price was $18,000 and $650 in freight charges also were paid.
6. On December 2, Tristar acquired equipment. The company was short of cash and could not pay the $5,800 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 $23,000. 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.
Note: Use tables, Excel, or a financial calculator. If no entry is required for a transaction/event, select "No journal entry required" in
the first account field. Round your answers to the nearest whole dollar. (FV of $1, PV of $1. FVA of $1, PVA of $1, FVAD of $1 and
PVAD of $1)
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