ment CALCULATOR FULL SCREEN PRINTER VERSION 4 BACK NEXT Pro

ment CALCULATOR FULL SCREEN PRINTER VERSION 4 BACK ! NEXT Problem 12-1 Wildhorse Co., organized in 2016, has set up a single account for all intangible assets. The following summary disdoses the debit entries that have been recorded during 2017 and 2018. Intangible Assets 7/1/178-year franchise; expiration date 6/30/2:5 10/1/17 Advance payment on laboratory space (2-year lease) 12/31/17 Net loss for 2017 including state incorporation fee, $1,500, $52,800 24,000 12,400 83,800 88,000 274,600 13,685 173,000 and related legal fees of organizing, $5,500 (all fees incurred in 2017) 1/2/18 Patent purchased (10-year life) 3/1/18Cost of developing a secret formula (indefinite life) 4/1/18 Goodwill purchased (indefinite life) 6/1/18 Legal fee for successful defense of patent purchased above 9/1/18Research and development costs December 31, 2018, Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of recording any necessary amortiza ation. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round all answers to o decíimal places, e.g. 8,564. If no entry is required, select \"No Entry\" for the account titles and enter o for the an Account Titles and Explanation Debit Credit Ins, All Rights Reserved. A Division of John Wiley & Sons lloc OM acy Polic 8 Jshn Wiley&Sons;

Solution

ANS

JOURNAL ENTRIES DEBIT($) CREDIT($)

FRANCHISES A/C DR 52800

PREPAID RENT A/C DR 24000

PATENTS A/C (83800+13685) DR 97485

GOODWILL A/C DR 274600

RESEARCH AND DEVELOPMENT COSTS A/C DR 261000

(173000+88000)

RETAINED EARNINGS (NET LOSS) A/C DR 12400

TO INTANGIBLE ASSETS A/C 722285

(TO CLEAR THE INTANGIBLE ASSET)

AMORTIZATION EXPENSE A/C ($52800/8) DR 6600

RETAINED EARNINGS A/C (6600/2) DR 3300

TO FRANCHISES A/C 9900

(TO RECORD CURRENT ACCOUNT FOR FRANCHISES)

RENT EXPENSE A/C ($24000/2) DR 12000

RETAINED EARNINGS A/C ($12000/4) DR 3000

TO PREPAID RENT A/C 15000

(TO RECORD CURRENT AMOUNT FOR RENTS)

AMORTIZATION EXPENSE A/C ($83800/10 + 13685*7/115) DR 9213

TO PATENTS A/C 9213

(TO RECORD CURRENT AMOUNT FOR PATENTS)

FRANCHISES $42900

PATENTS $88272

GOODWILL(NO AMMORTIZATION)$274600

PREPAID RENT $9000