Question

On June 1, 2018, Sheffield spent $10,440 to successfully prosecute a patent infringement suit. As a result, the estimate of useful life was extended to 12 years from June 1, 2018. Prepare all journal entries required in 2018 and 2019. (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 O for the amounts.) Date Account Titles and Explanation Debit Credit 2018 (To record patents) 2018 (To record amortization expense) 2019 e Textbook and Media List of Accounts In 2020, Sheffield determined that a competitor's product would make the New Age Piano obsolete and the patent worthless by December 31, 2021. Prepare all journal entries required in 2020 and 2021. (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 for the amounts.) Account Titles and Explanation Debit Credit

Answer 1

a) Date Account Titles and explanations 2016 Research and development expense Cash (To record research and development expenses) Debit Credit $165,600 $165,600 $41.040 2016 Patents Cash (To record legal expenses) $41.040 $1,026 2016 Patents amortization expense [(S41,040 / 10 years) * 3/12] Patents (To record amortization expense) $1.026 $4.104 2017 Patents amortization expense (S41,040 / 10 years) Patents (To record amortization expense) $4.104 b) $10,440 2018 Patents Cash (To record Patents) $10.440 $3.880 2018 Patents amortization expense Patents (To record amortization expense) $3,880 Workings: Patents amortization expense in 2018: Patents cost (balance) in 2017 = $41,040 - ($1,026 + $4,104) = $35,910 Patent amortization in 2018 = ($4,104 * 5/12) + (($35,910 - $1,710)/12 * 7/12] + [($10.440/12) * 7/12] = $1,710+ $1,662.50 + $507.50 = $3.880 $3,720 2019 Patents amortization expense Patents (To record amortization expense) $3.720 Workings: Patent amortization in 2019 = ($34,200 + $10,440) / 12 = $3.720 $19.375 2020 Patents amortization expense Patents (To record amortization expense) $19,375 Workings: Patents cost (balance) in 2019: = ($41,040 + $10.440) - ($1,026 + $4,104 + $3.880 + $3.720) = $38.750 Patent amortization in 2020 = $38,750/2 = $19.375