Question

As the recently appointed auditor for Culver Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2020, are prepared. The controller for Culver Corporation mentions that only one account is kept for intangible assets. The account is shown below. Intangible Assets Debit Credit Balance Jan. 4 Research and development costs 948,000 948,000 Jan. 5 Legal costs to obtain patent 76,320 1,024,320 Jan. 31 Payment of 7 months’ rent on property leased by Culver 96,600 1,120,920 Feb. 11 Premium on common stock 248,000 872,920 March 31 Unamortized bond discount on bonds due March 31, 2040 127,200 1,000,120 April 30 Promotional expenses related to start-up of business 228,900 1,229,020 June 30 Operating losses for first 6 months 241,500 1,470,520

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.)

Answer 1

| Answer. Journal Entries! pate credit He dr $948.000 particulary IDebit Research and development expense Intangible Assets -patenty Ale dr $76,320 Rent expense 577) * 96600) Ale &r $69.000 Prepaid Rent 5217)x 96600] Ale'dr $27,600 Advertising expense Al dr $228,900 Income Summary Ale dr $241,500 Discount on note payable Ale dr|$125,610 Interest expense Ale dr $1590 To Common shares to tangible Assets $248,000 $1470,520 Working Medley : Discount on neoty payable Assuncing Straight line Amortization (127,200/29/y = 1590 5127,200-1590 = 125610 Amortization expense Ale dr $3816 To Accumulated Amortization patenty (C76320/10years)x1/2] $3816