As the recently appointed auditor for Pina Corporation, you have been asked to e

Question

As the recently appointed auditor for Pina Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2017, are prepared. The controller for Pina Corporation mentions that only one account is kept for intangible assets. The account is shown below.

Intangible Assets

Debit

Credit

Balance

Prepare the entries necessary to correct this account. Assume that the patent has a useful life of 10 years. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

(To correct the account)

(To record amortiztion expense)

Intangible Assets

Debit

Credit

Balance

Jan. 4 Research and development costs 941,000 941,000 Jan. 5 Legal costs to obtain patent 74,640 1,015,640 Jan. 31 Payment of 7 months’ rent on property    leased by Bryan 91,700 1,107,340 Feb. 11 Premium on common stock 241,000 866,340 March 31 Unamortized bond discount on bonds    due March 31, 2037 110,400 976,740 April 30 Promotional expenses related to    start-up of business 215,500 1,192,240 June 30 Operating losses for first 6 months 256,500 1,448,740

Explanation / Answer

1. Rent expense debit and Credit Intangible assets 91700

2. Intangible Assets debit and Credit Premium on common stock 241000

3. Unammotised bond discounts debit and Credit Intangible assets 110400

4. Promotional expense debit and Credit Intangible assets 215500

5. Operating loss debit and credit intangible assets 256500

6. No entry required for research and development and patent cost line items in the question.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.