Debit Credit Cash Accounts receivable Allowance for doubtful accounts $ 61,000 92,500 500 38,500 75,000 29,000 Inventories Machinery Equipment Accumulated depreciation Patent Leasehold improvements Prepaid expenses Organization costs Goodwill 10,000 85,000 26,000 10,500 29,000 24,000 50,000 49,000 Licensing Agreement No. 1 Licensing Agreement No. 2 Accounts payable Unearned revenue Common stock 147,500 12,500 300,000 27,000 Retained earnings, January 1, 2019 Sales 768,500 Cost of goods sold Selling and general expenses Interest expense Total 4ర6,000 173,000 3,500 $1,239,000 $1,239,000 The following information relates to accounts that may vet require adjustment:

Lee Manufacturing Corporation was incorporated on January 3, 2018.
The corporation's financial statements for its first year's operations were
not examined by a CPA. You have been engaged to examine the financial
statements for the year ended December 31, 2019, and your examination
is substantially completed. Lee's trial balance at December 31, 2019,
appears as follows:

The following information relates to accounts that may vet require
adjustment:
1. Patents for Lee's manufacturing process were acquired January
2, 2019, at a cost of $68,000. An additional $17,000 was spent in
December 2019 to improve machinery covered by the patents and
charged to the Patent account. Depreciation on fixed assets has
been properly recorded for 2019 in accordance with Lee's practice
which provides a full year's depreciation for property on hand June
30 and no depreciation otherwise. Lee uses the straight-line
method fix all depreciation and amortization and amortizes its
patents over their legal life.

2. On January 3. 2018, Lee purchased licensing Agreement No. 1,
which was believed to have an indefinite useful life. The balance in
the licensing Agreement No. 1 account includes its purchase price
of $48,000 and costs of $2,000 related to the acquisition. On January
1, 2019, Lee purchased licensing Agreement No. 2, which has a life
expectancy of 10 years. The balance in the Licensing Agreement
No. 2 account includes its $48,000 purchase price and $2,000 in
acquisition costs, but it has been reduced by a credit of $1,000 for
the advance collection of 2020 revenue from the agreement. In late
December 2018, an explosion caused a permanent 60% reduction
in the expected revenue-producing value of licensing Agreement
No. 1, and in January 2020 a flood caused additional damage that
rendered the agreement worthless,

3. The balance in the Goodwill account includes (a) $8,000 paid
December 30, 2018, for newspaper advertising for the next 4 years
following the payment, and (b) legal costs of $16,000 incurred for
Lee's incorporation on January 3, 2018.
4. The Leasehold Improvements account includes (a) the $15,000
cost of improvements with a total estimated useful life of 12 years,
which Lee, as tenant, made to leased premises in January 2018; (b)
movable assembly line equipment costing $8,500 that was installed
in the leased premises in December 2019; and (c) real estate taxes
of $2,500 paid by Lee in 2019, which under the terms of the lease
should have been paid by the land-lord. Lee paid its rent in full
during 2019. A 10-year nonrenewable lease was signed January 3,
2018, fix the leased building that Lee used in manufacturing
operations.  5. The balance in the Organization Costs account includes costs
incurred during the organizational period.
Required:
Prepare a worksheet (spreadsheet) to adjust accounts that require
adjustment and prepare financial statements. Formal adjusting journal
entries and financial statements are not required. No intangible assets
are impaired at the end of 2019. Ignore income taxes.