7. Intangible Assets and Other Issues (8 points) Helman Ltd. has just hired you
ID: 2329351 • Letter: 7
Question
7. Intangible Assets and Other Issues (8 points) Helman Ltd. has just hired you into their accounting department. The person you replaced Tweedle Dee) was transferred out after it was discovered that he had no idea what he was doing. During the year, if Tweedle Dee was not too sure of the proper accounting for a transaction, he simply put it in his "fix later" account (he calls the account Fix-Later). Make the proper journal entries to correct the company's financial records (as well as the proper fiscal year-end adjusting entries) for the fiscal year end 12/31/2005 Fix-Later Account Date 5/31/2005 The company purchases a trademark-it is 600,000 Description supposed to be part of a new product line that Cash account effect was appropriately DR CR ors |the company expects will last 8 years. The recorded at purchase. 7/31/2005 Recorded the cash outlay for wages for the 1,500,000 entire company, 35% of the wages are for engineers working on projects, 25% is for administrative staff, and 40% is for the executives. 8/31/2005 Due to rising market value, the company 7,500,000 recognizes a large increase in their retained earnings account. 7 9/30/2005 The company purchases a new laser for use in 450,000 ife their current research projects. The laser will 5us be used exclusively on this project for one year but will be used to engrave nameplates for 4 more years thereafter. The Cash account effect was appropriately recorded at purchase. 450 11/30/2000 The company's attorney gave notice that they 85,000 will likely win their lawsuit against their main competitor. The range of the gain recognized from the lawsuit is between $15,000 $85,000 irdles .njsurExplanation / Answer
5/31/2005 - Purchase of Trade Mark should be debited to asset account. Hence the correcting entry should be made as follows:
Trade Mark - Debit $600,000
Fix-Later Account – Credit $600,000
7/31/2005 - Payment of wages should be debited to respective expense account. Hence the correcting entry should be made as follows:
Project Salary expense- Debit $525,000
Administrative Salary expense – Debit $375,000
General Office Salary expense – Debit $600,000
Fix-Later Account – Credit $1,500,000
8/31/2005 Increase in retained earnings are recorded by debit to Income Statement. Hence the entry made to debit Fix-Later account should be reversed.
9/30/2005 - Purchase of Laser should be debited to asset account. Hence the correcting entry should be made as follows:
Laser - Debit $450,000
Fix-Later Account – Credit $450,000
11/30/2005 Winning of law suit will be recorded, when the judgement is passed and the gain is received. Hence the entry made to debit Fix-Later account should be reversed.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.