Question

During 2016, Concord Corporation spent $168,480 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 $41,040 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). Journal entries recorded in 2016 & 2017

Date	Account title and explanation	Debit($)	Credit($)
2016	Research and development expense	168,480
	Cash		168,480
	( to record research and development costs)
	Patents	41,040
	Cash		41,040
	( to record the patent)
	Patents amortization expense	1,026
	Patents(41,040/10*3/12)		1,026
	(to record amortization)
2017	Patent amortization expense	4,104
	Patents (41,040/10)		4,104
B).
2018	Patents	9,000
	Cash		9,000
	( to record patents)
	Patent amortization expense	3,810
	Patents**		3,810
	( to record amortization)
2019	Patent amortization expense	3,600
	Patents(43,200/12)		3,600

Working note:

Patents=(Jan1 - June1)= $41,040*5/12/10

= $ 1,710

June1-Dec31: (41,040-1,026-4,104--1,710+9,000)

: 43,200/12*7*12= $ 2,100

Patent amortization= $1,710+2,100

=$3,810

C).

Date	Account title and explanation	Debit($)	Credit($)
2020&2021	Patent Amortization expense	$18,750
	Patent( $37,500/2)		18,750
	(43,200-2,100-3,600)= $ 37,500

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