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Accounting for Organization Costs Perry Inc. was organized during 2019 and started operations on January 1,...

Accounting for Organization Costs

Perry Inc. was organized during 2019 and started operations on January 1, 2020. Cash expenditures during 2019 were the following.

Professional fees (attorney fees) for articles of incorporation $100,000
Professional fees (accounting fees) to research tax status of organization 75,000
Meetings and promotional activities incidental to organization 75,000
Filing and related fees 25,000
Purchase of office equipment 250,000

Required

Prepare a 2019 summary journal entry to record the cash expenditures related to the startup of the new company.

Account Name Dr. Cr.
AnswerCashNote ReceivableDiscount on Note ReceivableEquipmentAccumulated DepreciationFranchiseGoodwillPatentSoftware Intangible AssetTrademarkNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of Par—Common StockSales RevenueAmortization ExpenseLegal ExpenseOrganization ExpenseResearch and Development ExpenseSoftware Amortization ExpenseSoftware Development ExpenseGain on saleImpairment LossN/A Answer Answer
AnswerCashNote ReceivableDiscount on Note ReceivableEquipmentAccumulated DepreciationFranchiseGoodwillPatentSoftware Intangible AssetTrademarkNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of Par—Common StockSales RevenueAmortization ExpenseLegal ExpenseOrganization ExpenseResearch and Development ExpenseSoftware Amortization ExpenseSoftware Development ExpenseGain on saleImpairment LossN/A Answer Answer
AnswerCashNote ReceivableDiscount on Note ReceivableEquipmentAccumulated DepreciationFranchiseGoodwillPatentSoftware Intangible AssetTrademarkNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of Par—Common StockSales RevenueAmortization ExpenseLegal ExpenseOrganization ExpenseResearch and Development ExpenseSoftware Amortization ExpenseSoftware Development ExpenseGain on saleImpairment LossN/A Answer Answer

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Expert Solution

Account Name Dr. Cr.
Organization Expense 275000 0
Equipment 250000 0
      Cash 0 525000
Workings:
Professional fees (attorney fees) for articles of incorporation 100000
Professional fees (accounting fees) to research tax status of organization 75000
Meetings and promotional activities incidental to organization 75000
Filing and related fees 25000
Organization Expense 275000

ekkarill92 answered 4 years ago
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