Question

During 2016, Grouper Corporation spent $152,640 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2016, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $28,080 related to the patent were incurred as of October 1, 2016. Prepare all journal entries required in 2016 and 2017 as a result of the transactions above. (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.) Date Account Titles and Explanation Debit Credit 2016 (To record research and development expenses) 2016 (To record legal expenses) 2016 (To record amortization expense) 2017

Answer 1

Answer a Date Credit Debit $152,640 2016 Accounts Title and Explanation Research & Development Expense Cash (To record the R&D Expenses) $152,640 2016 $28,080 Patents Cash (To record the Legal Expense) $28,080 2016 $702 Amortization Expense - Patents Patents [($28,080 / 10 years) x 3/12] (To record the amortization expense) $702 2017 $2,808 Amortization Expense - Patents Patents ($28,080 / 10 years) (To record the amortization expense) $2,808

Credit Date 2018 Debit $11,160 Accounts Title and Explanation Patents Cash (To record the patents) $11,160 2018 $2,850 Amortization Expense - Patents Patents (To record the amortization expense) $2,850 2019 $2,880 Amortization Expense - Patents Patents ($34,560 / 12 years) (To record the amortization expense) $2,880

Credit Debit $15,000 Date Accounts Title and Explanation 2020 & 2021 Amortization Expense - Patents Patents [($34,560 - $1,680 - $2,880) / 2 years] (To record the amortization expense) $15,000 Explanations b Calculation of Amortization Expense Patents Amortization Expense - 2018 Jan 1 to June 1 = $28,080 / 10 years = $2,808 x 5/12 = $1,170 June 1 to Dec. 31 = ($28,080 - $702 - $2,808 - $1,170 + $11,160) / 12 x 7/12 = ($34,560 / 12) x 7/12 = $1,680 Total = $1,170 + $1,680 = $2,850