During the current year, Cartwright Corporation\'s accountant recorded numerous

Question

During the current year, Cartwright Corporation's accountant recorded numerous transactions in an account ntitled Intangible Assets, as follows 2 Paid incorporation fees $17,500 11 Paid legal fees for the organization of the company 7,500 25 Paid for large-scale advertising campaign for the year 15,000 1 Acquired land for $15,000 and a building for $20,000 to house the R&D; activities. The building has a 20-year life. 35,000 Purchased materials exclusively for use in R&D; activities of these materials, 20% are left at the end of the year ay 15 15,000 and will be used in the same project next year. (They have no alternative use) June 30 Paid expenses related to obtaining a patent 10,000 Purchased an experimental machine from an inventor. The machine is expected to be used for a particular - 12,000 activity for 2 years, after which it will have no residual value 31 Paid salaries of employees involved in R&D; 30,000 Required: re adjusting journal entries to eliminate the Intangible Assets account and correctly record all the items, amortization adjustments. Cartwright amortizes patents over 10

Explanation / Answer

Date Account Title Debit Credit 2-Jan-17 (535) Startup Cost                 17,500 (111) Cash                 17,500 Date Account Title Debit Credit 11-Jan-17 (535) Startup Cost                   7,500 (111) Cash                   7,500 Date Account Title Debit Credit 25-Jan-17 (536) Advertising Exp                 15,000 (111) Cash                 15,000 Date Account Title Debit Credit 1-Apr-17 (161) Land                 15,000 (171) Building                 20,000 (111) Cash                 35,000 Date Account Title Debit Credit 15-May-17 (141) Inventory                 15,000 (111) Cash                 15,000 Date Account Title Debit Credit 30-Jun-17 (181) Patent                 10,000 (111) Cash                 10,000 Date Account Title Debit Credit 11-Dec-17 (180) Intengible asset                 12,000 (111) Cash                 12,000 Date Account Title Debit Credit 31-Dec-17 (526) R&D Expenditure                 30,000 (111) Cash                 30,000 Adjusting Entries Depn on building Date Account Title Debit Credit 31-Dec-17 (526) R&D Expenditure                   1,000 (190) Accumulated Depreciation                   1,000 Write off 100% intangible Assets Date Account Title Debit Credit 31-Dec-17 (526) R&D Expenditure                 12,000 (180) Intengible asset                 12,000 Date Account Title Debit Credit 31-Dec-17 (526) R&D Expenditure                 12,000 (141) Inventory                 12,000 Amortise 10% patent Date Account Title Debit Credit 31-Dec-17 (533) Amortisation                   1,000 (195) Accumulated Amortisation                   1,000

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