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    Accounting for Organization Costs

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    Fontenot Corporation was organized in 2009 and began operations at the beginning of 2010. The company is involved in interior design consulting services. The following costs were incurred
    prior to the start of operations.

    Attorney's fees in connection with organization of the company $17,000
    Purchase of drafting and design equipment 10,000
    Costs of meetings of incorporators to discuss organizational activities 7,000
    State filing fees to incorporate 1,000


    a. Compute the total amount of organization costs incurred by Fontenot.

    b. Prepare the journal entry to record organization costs for 2010.

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    Solution Summary

    The solution explains the calculation for organization costs and the related journal entry.