**Software Development Costs****Instructions**Closer & Co. incurred and paid the following costs for internal-use software:- $12,000 in the preliminary stage of development- $17,000 in external direct material and service costs used in developing the internal-use software- $23,000 in payroll costs for employees working on the project- $3,500 in interest costs while developing the software**Required:**Prepare Closer's initial journal entry(s) to record its internal-use software.---This exercise provides an opportunity to apply accounting principles related to software development costs. It involves tallying and categorizing various expenses incurred during the development phase. The requirement prompts the preparation of journal entries, helping learners understand financial documentation and accounting for intangibles. **Chart of Accounts: Closer & Co. General Ledger****Assets:**- 111 Cash- 121 Accounts Receivable- 141 Inventory- 152 Prepaid Insurance- 176 Software Development Costs- 181 Equipment- 189 Accumulated Depreciation**Liabilities:**- 211 Accounts Payable- 231 Salaries Payable- 250 Unearned Revenue- 261 Income Taxes Payable**Equity:**- 311 Common Stock- 331 Retained Earnings**Revenue:**- 411 Sales Revenue**Expenses:**- 500 Cost of Goods Sold- 511 Insurance Expense- 512 Utilities Expense- 521 Salaries Expense- 527 Software Development Expense- 532 Bad Debt Expense- 540 Interest Expense- 541 Depreciation Expense- 559 Miscellaneous Expenses- 910 Income Tax ExpenseThis chart of accounts provides a structured framework for organizing financial transactions within Closer & Co. It categorizes various accounts under Assets, Liabilities, Equity, Revenue, and Expenses, aiding in precise financial tracking and reporting. Each account is assigned a unique number to simplify reference and data management.

Journal entry is a process of recording business transactions in the books of accounts for the first time. Journal entry become a base for further accounting process such as preparations of ledgers accounts, Trial balance, Financials statements, etc. Recording of Journal entry is the first step of the accounting cycle.

Business

Accounting

Closer & Co. incurred and paid the following costs for internal-use software: • $12,000 in the preliminary stage of development • $17,000 in external direct material and service costs used in developing the internal-use software • $23,000 in payroll costs for employees working on the project • $3,500 in interest costs while developing the software Required: Prepare Closer's initial journal entry(s) to record its internal-use software.

Closer & Co. incurred and paid the following costs for internal-use software: • $12,000 in the preliminary stage of development • $17,000 in external direct material and service costs used in developing the internal-use software • $23,000 in payroll costs for employees working on the project • $3,500 in interest costs while developing the software Required: Prepare Closer's initial journal entry(s) to record its internal-use software.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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