Question

Flint Corporation commenced operations in early 2020. The corporation incurred $58,500 of costs such as fees to underwriters, legal fees, state fees, and promotional expenditures during its formation.

Required:
Prepare journal entries to record the $58,500 expenditure and 2020 amortization, if any.

Answer 1

Answer and Explanation:

The journal entry is shown below:

1. Organization expense Dr $58,500

To cash $58,500

(Being organization expense is recorded)

Here organization expense is debited as it increased the expenses and credited the cash as it decreased the assets. Also the assets and expenses contains normal debit balance

2. No entry is required as the amortization is recorded for only intangible assets