Dispensers of California Journal Entries

Journal entries:

1. In return for signing his patent over to the new company, which was to be called Dispensers of the California, Inc., Hynes would receive 60 percent of the company's capital stock. For their part, the investors would contribute $80,000 cash for a 40 percent interest in the company.

Dr: Cash 80,000.00

Dr: Patent 120,000.00

Cr: Capital Stock 200,000.00

2. Incorporation costs, $2,500.

Dr: Incorporation Cost 2,500.00

Cr: Cash 2,500.00

3. Equipment to be used in assembling the paint spray dispensers, $85,000.

Dr: Equipment 85,000.00

Cr: Cash 85,000.00

4. Out-of-Pocket labor and development costs to redesign the paint spray disperser to facilitate more efficient assembling, $25,000.

Dr: Out of pocket cost 25,000.00

Cr: Cash 25,000.00

5. Component part purchases, $212,100.

Dr: Component parts inventory (Raw Materials) 212,100.00

Cr: Cash 212,100.00

6. Short-term loan from local bank, $30,000. (Loan to be repaid before the end of the year with $500 interest.)

Dr: Cash 30,000.00

Cr: Bank loans 30,000.00

Loans will be repaid at the end of the year:

Dr: Bank loans 30,000.00

Dr: Interest Expense 500.00

Cr: Cash 30,500.00

7. Manufacturing payroll, $145,000.

Dr: Manufacturing Payroll (Direct Labor) 145,000.00

Cr: Cash 145,000.00

8. Other manufacturing costs (excluding component part costs), $62,000.

Dr: Factory Overhead 62,000.00

Cr: Cash 62,000.00

9. Selling, general, and administration costs, $63,000.

Dr: Selling, general, & administrative cost 63,000.00

Cr: Cash 63,000.00

10. Ending component parts inventory cost, $15,100.

Dr: Work in process inventory - Direct Mat'ls