Treasure Land Corporation incurred the following costs in 2012. Cost of laborato

Question

Treasure Land Corporation incurred the following costs in 2012.

Cost of laboratory research aimed at discovery of new knowledge   $100,900

Cost of testing in search for product alternatives   121,400

Cost of engineering activity required to advance the design of a product to the manufacturing stage   209,500

Total: $431,800

Prepare the necessary 2012 journal entry or entries for Treasure Land. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Explanation / Answer

Solution:

Cost of Discovery of new knowledge is a research expense. And product design is a development cost.

Therefore, the journal entry should be -

Research and development Expense          $ 431,800

Cash                          $ 431,800

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