Accounting for Intangible Assets and Leasehold Improvements Jeffrey Company owns several retail outlets. During the year, it expanded operations and entered into the following transactions: Jan. 2 Signed an eight-year lease for additional retail space for an annual rent of $32,000. Paid the first year's rent on this date. (Hint: Debit the first year's rent to Prepaid Rent.) Jan. 3 Paid $23,600 to a contractor for installation of a new oak floor in the leased facility. The oak floor's life is an estimated 50 years with no salvage value. Mar. 1 Paid $60,000 to obtain an exclusive area franchise for five years to distribute a new line of gourmet chocolates. July 1 Paid $46,000 to LogoLab, Inc., for designing a trademark for a new line of gourmet chocolates that Jeffrey will distribute nationally. Jeffrey will use the trademark for as long as the firm remains in business. Jeffrey expects to be in business for at least another 50 years. July 1 Paid $40,000 for advertisement in a national magazine (June issue) introducing the new line of gourmet chocolates at the trademark. Required a. Prepare journal entries to record these transactions. b. Prepare the necessary adjusting entries on December 31 for these transactions. Jeffrey makes adjusting entries once a year. Jeffrey uses straight-line depreciation and amortization. Round all answers to the nearest dollar. Transactions Depreciation & Amortization General Journal Date Description Debit Credit Dec.31 Answer Rent Expense Answer 32,000 Answer 0 Answer Prepaid Rent Answer 0 Answer 32,000 To record rent expense. Dec.31 Answer Depreciation Expense - Leasehold Improvements Answer Answer 0 Answer Accumulated Depreciation - Leasehold Improvements Answer 0 Answer To record depreciation of leasehold improvements. Dec.31 Answer Amortization Expense - Franchise Answer 10,000 Answer 0 Answer Franchise Answer 0 Answer 10,000 To record amortization of franchise. Dec.31 Answer Amortization Expense - Trademark Answer 460 Answer 0 Answer Trademark Answer 0 Answer 460 To record amortization of trademark.
Accounting for Intangible Assets and Leasehold Improvements Jeffrey Company owns several retail outlets. During the year, it expanded operations and entered into the following transactions: Jan. 2 Signed an eight-year lease for additional retail space for an annual rent of $32,000. Paid the first year's rent on this date. (Hint: Debit the first year's rent to Prepaid Rent.) Jan. 3 Paid $23,600 to a contractor for installation of a new oak floor in the leased facility. The oak floor's life is an estimated 50 years with no salvage value. Mar. 1 Paid $60,000 to obtain an exclusive area franchise for five years to distribute a new line of gourmet chocolates. July 1 Paid $46,000 to LogoLab, Inc., for designing a trademark for a new line of gourmet chocolates that Jeffrey will distribute nationally. Jeffrey will use the trademark for as long as the firm remains in business. Jeffrey expects to be in business for at least another 50 years. July 1 Paid $40,000 for advertisement in a national magazine (June issue) introducing the new line of gourmet chocolates at the trademark. Required a. Prepare
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