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Consider each of the transactions below. All of the expenditures were made in cash. 1. The Edison Company spent $12,000 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 $7,500 in legal fees to the plaintiff. 3. In March, the Cleanway Laundromat bought equipment. Cleanway paid $6,000 down and signed a noninterest-bearing note requiring the $19.000 $32.000

Consider each of the transactions below. All of the expenditures were made in cash. 1. The Edison Company spent $12,000 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 $7,500 in legal fees to the plaintiff. 3. In March, the Cleanway Laundromat bought equipment. Cleanway paid $6,000 down and signed a noninterest-bearing note requiring the $19.000 $32.000

FINANCIAL ACCOUNTING
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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Prepare the necessary journal entry to clear the intangible asset account and to set up accounts for separate intangible assets, other types of assets, and expenses indicated by the transactions. P 10-5 Acquisition costs; journal entries LO10-1, LO10-3, LO10-6, LO10-8 Consider each of the transactions below. All of the expenditures were made in cash. 1. The Edison Company spent $12,000 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 $7,500 in legal fees to the plaintiff. 3. In March, the Cleanway Laundromat bought equipment. Cleanway paid $6,000 down and signed a noninterest-bearing note requiring the payment of $18,000 in nine months. The cash price for this equipment was $23,000. 4. On June 1, the Jamsen Corporation installed a sprinkler system throughout the building at a cost of $28,000. 5. The Mayer Company, plaintiff, paid $12,000 in legal fees in November, in connection with a successful infringement suit on its patent. 6. The Johnson Company traded its old equipment for new equipment. The new equipment has a fair value of $10,000. The old equipment had an original cost of $7,400 and a book value of $3,000 at the time of the trade. Johnson also paid cash of $8,000 as part of the trade. The exchange has commercial substance. Required: Prepare journal entries to record each of the above transactions.
Transcribed Image Text:Prepare the necessary journal entry to clear the intangible asset account and to set up accounts for separate intangible assets, other types of assets, and expenses indicated by the transactions. P 10-5 Acquisition costs; journal entries LO10-1, LO10-3, LO10-6, LO10-8 Consider each of the transactions below. All of the expenditures were made in cash. 1. The Edison Company spent $12,000 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 $7,500 in legal fees to the plaintiff. 3. In March, the Cleanway Laundromat bought equipment. Cleanway paid $6,000 down and signed a noninterest-bearing note requiring the payment of $18,000 in nine months. The cash price for this equipment was $23,000. 4. On June 1, the Jamsen Corporation installed a sprinkler system throughout the building at a cost of $28,000. 5. The Mayer Company, plaintiff, paid $12,000 in legal fees in November, in connection with a successful infringement suit on its patent. 6. The Johnson Company traded its old equipment for new equipment. The new equipment has a fair value of $10,000. The old equipment had an original cost of $7,400 and a book value of $3,000 at the time of the trade. Johnson also paid cash of $8,000 as part of the trade. The exchange has commercial substance. Required: Prepare journal entries to record each of the above transactions.
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