Question

Consider each of the transactions below. All of the expenditures were made in cash. 1. The Edison Company spent $15,000 during the year for experimental purposes in connection with the development of a new product. 2. in April, the Marshall Company lost a patent infringement suit and paid the plaintiff 59.000. 3. In March, the Cleanway Laundromat bought equipment Cleanway paid $9.000 down and signed a noninterest-bearing note requiring the payment of $19,500 in nine months. The cash price for this equipment was $26,000. 4. On June 1, the Jamsen Corporation installed a sprinkler system throughout the building at a cost of $31,000. 5. The Mayer Company, plaintiff, paid $15,000 in legal fees in November, in connection with a successful infringement suit on its patent 6. The Johnson Company traded its old equipment for new equipment. The new equipment has a fair value of $10.900. The old equipment had an original cost of $8.900 and a book value of $3,900 at the time of the trade. Johnson also paid cash of $8,600 as part of the trade. The exchange has commercial substance. Required: Prepare journal entries to record each of the above transactions

Answer 1

Research and Development expense to cash $15,000 $ 18000 2. Legal feel expense & 9000 44000 Cash 26000 Equipment Discount on note payable 2500 Cash $ 9000 Note payable $19500 -Sprinkler system 4. - Building Cash 31,000 31,000 so 15000 patent Cash 150 - 10,900 6o machine Loss on trade in 1600 Accumulated depreciation 500 machine - old Cash. (8900 – 3900) 8900 8600