Alex Kerr has been running Kerr Consulting as a

proprietorship #8293
Alex Kerr has been running Kerr Consulting as a proprietorship but is planning to expand
operations in the near future. In Chapter 12 , Alex had considered taking on a partner, but
decided not to form a partnership after all. To raise cash for future expansion, he has now
decided to incorporate and create Kerr Consulting Corporation. He has gone through all the
legal steps to incorporate his business; as of February 1, 2014, Kerr Consulting Corporation is
authorized to issue an unlimited number of common shares and 50,000 $2.00 preferred
shares.The Kerr Consulting January 31, 2014, balance sheet appears below. All amounts in the
accounting records reflect current market value.Kerr
ConsultingAssetsCash..................................................................$32,350Accounts receivable.....
...............................................4,900Inventory...............................................................2,713Suppli
es...................................................................100Prepaid rent........................................................
....2,000Equipment..............................................................2,000Accumulated amortization-equip
ment..............................(66)Furniture................................................................6,000Accumulated
amortization-furniture..............................(200)Total
assets..........................................................$49,797Liabilities and EquityAccounts
payable...................................................$10,700Salary
payable.........................................................1,400Unearned service
revenue............................................1,333Alex Kerr,
capital....................................................36,364Total liabilities and
capital........................................$49,797Required1. Create the journal entry to record the
incorporation of the business on February 1, 2014. To do this, you need to record each asset
and liability account at its current market value. For equipment and furniture, this would be the
net book value of each-there would not be any accumulated amortization accounts at the
beginning of the new corporation's life. The Alex Kerr, Capital balance would become the value
of the 20,000 common shares Alex issues to himself.2. To raise $50,000 in additional cash, Kerr
Consulting Corporation issued 1,000 of the preferred shares for $50.00 per share on February
1, 2014. Journalize this transaction. 3. Kerr Consulting Corporation incurred $1,500 in legal fees
and incorporation fees to organize the corporation under the Canada Business Corporations Act
in Ontario. Prepare the journal entry for these organization costs.View Solution:
Alex Kerr has been running Kerr Consulting as a proprietorship

ANSWER
http://paperinstant.com/downloads/alex-kerr-has-been-running-kerr-consulting-as-a-
proprietorship/

1/1
Powered by TCPDF (www.tcpdf.org)