Make adjusting journal entries to eliminate the intangible

Reference no: EM13391044

Correct Classi?cation of Intangibles During the current year, Cartwright Corporation's accountant recorded numerous transactions in an account entitled Intangible Assets, as follows:

Jan. 2 Paid incorporation fees. $17,500

11 Paid legal fees for the organization of the company. 7,500

25 Paid for large-scale advertising campaign for the year. 15,000

Apr. 1 Acquired land for $15,000 and a building for $20,000 to house the R&D activities. The building has a 20-year life. 35,000

May 15 Purchased materials exclusively for use in R&D activities. Of these materials, 20% are left at the end of the year and will be used in the same project next year. (They have no alternative use.) 15,000

June 30 Paid expenses related to obtaining a patent. 10,000

Dec. 11 Purchased an experimental machine from an inventor. The machine is expected to be used for a particular R&D activity for 2 years, after which it will have no residual value. 12,000

31 Paid salaries of employees involved in R&D. 30,000

Required:

Prepare adjusting journal entries to eliminate the Intangible Assets account and correctly record all the items. Cart-wright amortizes patents over 10 years.

Reference no: EM13391044

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