Chapter 10, Problem 8PSA

Due to rapid employee turnover in the accounting department, the following transactions involving intangible assets were improperly recorded by Monty Corporation. 1.   Monty developed a new manufacturing process, incurring research and development costs of $188,000. The company also purchased a patent for $43,000. In early January, Monty capitalized $231,000 as the cost of the patents. Patent amortization expense of $11,550 was recorded based on a 20-year useful life. 2.   On July 1, 2022, Monty purchased a small company and as a result, recorded goodwill of $80,000. Monty recorded a half-year’s amortization in 2022, based on a 20-year life ($2,000 amortization). The goodwill has an indefinite life. Prepare all journal entries necessary to correct any errors made during 2022. Assume the books have not yet been closed for 2022.

Conrad Playground Supply underwent a restructuring in 2021. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2021 before any adjusting entries or closing entries are prepared. a. Additional computers were acquired at the beginning of 2019 and added to the company's office network. The $45,000 cost of the computers was inadvertently recorded as maintenance expense. Computers have five-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method. b. Two weeks prior to the audit, the company paid $17,000 for assembly tools and recorded the expenditure as office supplies. The error was discovered a week later. c. On December 31, 2020, merchandise inventory was understated by $78,000 due to a mistake in the physical inventory count. The company uses the periodic inventory system. d. Two years earlier, the company recorded a 4% stock dividend (2,000 common…

Conrad Playground Supply underwent a restructuring in 2021. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2021 before any adjusting entries or closing entries are prepared. Additional computers were acquired at the beginning of 2019 and added to the company’s office network. The $42,000 cost of the computers was inadvertently recorded as maintenance expense. Computers have five-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method. Two weeks prior to the audit, the company paid $14,000 for assembly tools and recorded the expenditure as office supplies. The error was discovered a week later. On December 31, 2020, merchandise inventory was understated by $72,000 due to a mistake in the physical inventory count. The company uses the periodic inventory system. Two years earlier, the company recorded a 3% stock dividend (1,400 common shares, $1 par)…