Question

Consider each of the transactions below. All of the expenditures were made in cash. 1. The Edison Company spent $24,000 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 $8,000. 3. In March, the Cleanway Laundromat bought equipment. Cleanway paid $18,000 down and signed a noninterest-bearing note requiring the payment of $24,000 in nine months. The cash price for this equipment was $37,000. 4. On June 1, the Jamsen Corporation installed a sprinkler system throughout the building at a cost of $40,000. 5. The Mayer Company, plaintiff, paid $24,000 in legal fees in November, in connection with a successful infringement suit on its patent. 6. The Johnson Company traded its old machine with an original cost of $13,400 and a book value of $6,600 plus cash of $10,400 for a new one that had a fair value of $13,600. The exchange has commercial substance. Required: Prepare journal entries to record each of the above transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

1	Research and development expense	24000
	Cash		24000
2.	Legal fees expense	8,000
	Cash		8,000
3.	equipment	37000
	Discount on notes payable	5,000
	Cash		18,000
	Notes payable		24,000
4.	Building - SPrinker system	40,000
	CAsh		40,000
5.	Patents	24,000
	Cash		24,000
6.	Machinery - New	13,600
	Loss on sale of machine old	3,400
	Accumulated depreciation - old	6,800
	Machinery - old		13,400
	Cash		10,400