Transcribed Image Text:The Horstmeyer Corporation commenced operations early in 2021. A number of
expenditures were made during 2021 that were debited to one account called intangible asset.
A recap of the $170,000 balance in this account at the end of 2021 is as follows:
Date
Transaction
Amount
State incorporation fees and legal costs related to organizing the
corporation
Fire insurance premium for three-year period
Purchased a copyright
Research and development costs
Legal fees for filing a patent on a new product resulting from an
R&D project
February 3
$ 9,000
March 1
8,000
24,000
44,000
March 15
April 30
June 15
5,000
September
Legal fee for successful defense of patent developed above
16,000
30
October 13 Entered into a 10-year franchise agreement with franchisor
44,000
Various
Advertising costs
20,000
Total
$170,000
Required:
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. (If no entry is required for a transaction/event, select "No journal entry
required" in the first account field.)
1. Record the journal entry to reclassify various expenditures incorrectly charged to the
intangible asset account.
Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
