Exercise 9-9 a-b Date Account Titles and Explanation Debit Credit (To record pur

Question

Exercise 9-9 a-b

Date

Account Titles and Explanation

Debit

Credit

(To record purchase of trademark)

(To record costs incurred to defend trademark)

SHOW LIST OF ACCOUNTS

Date

Account Titles and Explanation

Debit

Credit

Dec. 31

(To record amortization expense on copyrights)

Dec. 31

(To record amortization expense on franchises)

Exercise 9-9 a-b

Cullumber Corporation has the following selected transactions during the year ended December 31, 2018:
Jan. 1 Purchased a copyright for $117,660 cash. The copyright has a useful life of six years and a remaining legal life of 30 years. Mar. 1 Acquired a franchise with a contract period of nine years for $501,660; the expiration date is March 1, 2027. Paid cash of $43,540 and borrowed the remainder from the bank. Sept. 1 Purchased a trademark for $71,780 cash. As the purchase was being finalized, spent $38,000 cash in legal fees to successfully defend the trademark in court.

Explanation / Answer

Journal entries on the date of acquisition:

Amortization entries:for copyrights and franchise agreement:

Date Account title and explanation Debit Credit Remarks 01-01-2018 Copyright a/c Dr 117660.00 To cash a/c Cr 117660.00 (Being copyright with life of 6 years purchased for cash) 01-03-2018 Franchise a/c Dr $5,01,660.00 To Cash a/c Cr $43,540.00 To Loan from bank a/c Cr $4,58,120.00 (Being franchise acquired) 01-Sep-18 Trade mark a/c Dr $71,780.00 To cash a/c Cr $71,780.00 (Being trade mark purchased) 01-Sep-18 Trademark a/c Dr $38,000.00 To cash a/c Cr $38,000.00 (Being legal fees capitalized)

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