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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 |
Solutions
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 |
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