Make adjusting and correcting journal entries on December

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Problem - Correcting Entries for Patents During the year-end audit of Cressman Corporation's financial statements for 2019, you discover the following items:

1. Cressman capitalized $57,000 to the Patent account at the beginning of 2018 for the cost of a patent. This amount included $50,000 of R&D costs. The patent was amortized over a 20-year life in 2018 and 2019.

2. At the beginning of 2018, Cressman paid its lawyers $8,000 to successfully defend a patent infringement suit regarding the patent in Item 1. Cressman debited this cost to Legal Fees Expense.

3. At the beginning of 2019, Cressman purchased a patent for $30,000 from Baylor Company to prevent potential competition. It recorded the cost in the Patent account and amortized this cost over the remaining legal life of the patent obtained in Item 1 (19 years). However, Cressman agreed to a suggestion by the auditors that the life of the original patent obtained in Item 1 was protected for only 7 more years as of the beginning of 2019.

Required - Make adjusting and correcting journal entries on December 31 for 2019.

Reference no: EM132887442

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