Instructions General Journal Byrd Corporation engaged in the following transactions at the beginning of 2019: 1a. Prepare journal entries to record the 2019 transactions for the franchise. Assume the purchase was made on January 1, 2019. a. Purchased a Hogburger franchise for a 5-year, $60,000, 10% interest-bearing note. The franchise has an indefinite life providing the terms of the franchise are not violated. General Journal Instructions b. Sold a trade name for $50,000. The trade name had a carrying value of $5,000. c. Paid an advertising agency $60,000 for advertisements to promote a new trade name. The advertisements will begin in 2020. PAGE 1 d. Incurred legal fees of $5,000 to register a new trade name. e. Purchased the copyright to a new movie for $500,000. The movie is made during 2019 at a cost of $15 million. It will begin showing in 2020 and GENERAL JOURNAL is expected to gross $10 million during 2020, $20 million during 2021, and $10 million during 2022. POST. REF. DATE ACCOUNT TITLE DEBIT CREDIT Franchise 60,000.00 Required: 2 Notes Payable 60,000.00 1. Prepare journal entries to record the preceding transactions, including any appropriate adjusting entries for 2019. Adjusting Entries 2. Next Level With regard to the copyright in Transaction e, what factors should Byrd consider in selecting an amortization method? 4 Chart of Accounts 16. Prepare journal entries to record the 2019 transactions related to the trade name. CHART OF ACCOUNTS General Journal Instructions Byrd Corporation General Ledger DAGE 1 ASSETS REVENUE GENERAL JOURNAL 111 Cash 411 Sales Revenue DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 121 Accounts Receivable 881 Gain on Sale of Trade Name 125 Notes Receivable 2 141 Inventory EXPENSES 152 Prepaid Insurance 500 Cost of Goods Sold 153 Prepaid Advertising 511 Insurance Expense 171 Equipment 512 Utilities Expense 179 Accumulated Depreciation 521 Salaries Expense 6 183 Franchise 532 Bad Debt Expense 185 Copyright 540 Interest Expense 187 Trade Name 541 Depreciation Expense 559 Miscellaneous Expenses 1c. Prepare journal entries to record the 2019 transactions for the copyright, Assume the purchase was made on JJanuary 1, 2019. LIABILITIES 910 Income Tax Expense 211 Accounts Payable General Journal Instructions 221 Notes Payable 224 Interest Payable PAGE 1 231 Salaries Payable GENERAL JOURNAL EQUITY DATE ACCOUNT TITLE DEBIT POST. REF. CREDIT 311 Common Stock 331 Retained Earnings 2

Instructions General Journal Byrd Corporation engaged in the following transactions at the beginning of 2019: 1a. Prepare journal entries to record the 2019 transactions for the franchise. Assume the purchase was made on January 1, 2019. a. Purchased a Hogburger franchise for a 5-year, $60,000, 10% interest-bearing note. The franchise has an indefinite life providing the terms of the franchise are not violated. General Journal Instructions b. Sold a trade name for $50,000. The trade name had a carrying value of $5,000. c. Paid an advertising agency $60,000 for advertisements to promote a new trade name. The advertisements will begin in 2020. PAGE 1 d. Incurred legal fees of $5,000 to register a new trade name. e. Purchased the copyright to a new movie for $500,000. The movie is made during 2019 at a cost of $15 million. It will begin showing in 2020 and GENERAL JOURNAL is expected to gross $10 million during 2020, $20 million during 2021, and $10 million during 2022. POST. REF. DATE ACCOUNT TITLE DEBIT CREDIT Franchise 60,000.00 Required: 2 Notes Payable 60,000.00 1. Prepare journal entries to record the preceding transactions, including any appropriate adjusting entries for 2019. Adjusting Entries 2. Next Level With regard to the copyright in Transaction e, what factors should Byrd consider in selecting an amortization method? 4 Chart of Accounts 16. Prepare journal entries to record the 2019 transactions related to the trade name. CHART OF ACCOUNTS General Journal Instructions Byrd Corporation General Ledger DAGE 1 ASSETS REVENUE GENERAL JOURNAL 111 Cash 411 Sales Revenue DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 121 Accounts Receivable 881 Gain on Sale of Trade Name 125 Notes Receivable 2 141 Inventory EXPENSES 152 Prepaid Insurance 500 Cost of Goods Sold 153 Prepaid Advertising 511 Insurance Expense 171 Equipment 512 Utilities Expense 179 Accumulated Depreciation 521 Salaries Expense 6 183 Franchise 532 Bad Debt Expense 185 Copyright 540 Interest Expense 187 Trade Name 541 Depreciation Expense 559 Miscellaneous Expenses 1c. Prepare journal entries to record the 2019 transactions for the copyright, Assume the purchase was made on JJanuary 1, 2019. LIABILITIES 910 Income Tax Expense 211 Accounts Payable General Journal Instructions 221 Notes Payable 224 Interest Payable PAGE 1 231 Salaries Payable GENERAL JOURNAL EQUITY DATE ACCOUNT TITLE DEBIT POST. REF. CREDIT 311 Common Stock 331 Retained Earnings 2

Instructions General Journal Byrd Corporation engaged in the following transactions at the beginning of 2019: 1a. Prepare journal entries to record the 2019 transactions for the franchise. Assume the purchase was made on January 1, 2019. a. Purchased a Hogburger franchise for a 5-year, $60,000, 10% interest-bearing note. The franchise has an indefinite life providing the terms of the franchise are not violated. General Journal Instructions b. Sold a trade name for $50,000. The trade name had a carrying value of $5,000. c. Paid an advertising agency $60,000 for advertisements to promote a new trade name. The advertisements will begin in 2020. PAGE 1 d. Incurred legal fees of $5,000 to register a new trade name. e. Purchased the copyright to a new movie for $500,000. The movie is made during 2019 at a cost of $15 million. It will begin showing in 2020 and GENERAL JOURNAL is expected to gross $10 million during 2020, $20 million during 2021, and $10 million during 2022. POST. REF. DATE ACCOUNT TITLE DEBIT CREDIT Franchise 60,000.00 Required: 2 Notes Payable 60,000.00 1. Prepare journal entries to record the preceding transactions, including any appropriate adjusting entries for 2019. Adjusting Entries 2. Next Level With regard to the copyright in Transaction e, what factors should Byrd consider in selecting an amortization method? 4 Chart of Accounts 16. Prepare journal entries to record the 2019 transactions related to the trade name. CHART OF ACCOUNTS General Journal Instructions Byrd Corporation General Ledger DAGE 1 ASSETS REVENUE GENERAL JOURNAL 111 Cash 411 Sales Revenue DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 121 Accounts Receivable 881 Gain on Sale of Trade Name 125 Notes Receivable 2 141 Inventory EXPENSES 152 Prepaid Insurance 500 Cost of Goods Sold 153 Prepaid Advertising 511 Insurance Expense 171 Equipment 512 Utilities Expense 179 Accumulated Depreciation 521 Salaries Expense 6 183 Franchise 532 Bad Debt Expense 185 Copyright 540 Interest Expense 187 Trade Name 541 Depreciation Expense 559 Miscellaneous Expenses 1c. Prepare journal entries to record the 2019 transactions for the copyright, Assume the purchase was made on JJanuary 1, 2019. LIABILITIES 910 Income Tax Expense 211 Accounts Payable General Journal Instructions 221 Notes Payable 224 Interest Payable PAGE 1 231 Salaries Payable GENERAL JOURNAL EQUITY DATE ACCOUNT TITLE DEBIT POST. REF. CREDIT 311 Common Stock 331 Retained Earnings 2

Intermediate Accounting: Reporting And Analysis

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 8P

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Question

Instructions
General Journal
Byrd Corporation engaged in the following transactions at the beginning of 2019:
1a. Prepare journal entries to record the 2019 transactions for the franchise. Assume the purchase was made on January 1, 2019.
a. Purchased a Hogburger franchise for a 5-year, $60,000, 10% interest-bearing note. The franchise has an indefinite life providing the terms of
the franchise are not violated.
General Journal Instructions
b. Sold a trade name for $50,000. The trade name had a carrying value of $5,000.
c. Paid an advertising agency $60,000 for advertisements to promote a new trade name. The advertisements will begin in 2020.
PAGE 1
d. Incurred legal fees of $5,000 to register a new trade name.
GENERAL JOURNAL
e. Purchased the copyright to a new movie for $500,000. The movie is made during 2019 at a cost of $15 million. It will begin showing in 2020 and
is expected to gross $10 million during 2020, $20 million during 2021, and $10 million during 2022.
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
1
Franchise
60,000.00
Required:
Notes Payable
60,000.00
2
1. Prepare journal entries to record the preceding transactions, including any appropriate adjusting entries for 2019.
Adjusting Entries
3
2. Next Level With regard to the copyright in Transaction e, what factors should Byrd consider in selecting an amortization method?
4
Chart
Accounts
(X
16. Prepare journal entries to record the 2019 transactions related to the trade name.
CHART OF ACCOUNTS
General Journal Instructions
Byrd Corporation
General Ledger
PAGE 1
ASSETS
REVENUE
GENERAL JOURNAL
111 Cash
411 Sales Revenue
DATE
ACCOUNT TITLE
POST, REF.
DEBIT
CREDIT
121 Accounts Receivable
881 Gain on Sale of Trade Name
1
125 Notes Receivable
2
141 Inventory
EXPENSES
3
152 Prepaid Insurance
500 Cost of Goods Sold
4
153 Prepaid Advertising
511 Insurance Expense
5
171 Equipment
512 Utilities Expense
179 Accumulated Depreciation
521 Salaries Expense
6
183 Franchise
532 Bad Debt Expense
7
185 Copyright
540 Interest Expense
187 Trade Name
541 Depreciation Expense
559 Miscellaneous Expenses
1c. Prepare journal entries to record the 2019 transactions for the copyright. Assume the purchase was made on January 1, 2019.
LIABILITIES
910 Income Tax Expense
211 Accounts Payable
General Journal Instructions
221 Notes Payable
224 Interest Payable
PAGE 1
231 Salaries Payable
GENERAL JOURNAL
EQUITY
DATE
ACCOUNT TITLE
POST. REF.
DEBIT
CREDIT
311 Common Stock
1
331 Retained Earnings
2

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Lee Manufacturing Corporation was incorporated on January 3, 2018. The corporations financial statements for its first years 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. Lees trial balance at December 31, 2019, appears as follows: The following information relates to accounts that may vet require adjustment: 1. Patents for Lees 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 Lees practice which provides a full years 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 Lees 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.
Mystic Pizza Company purchases a franchise from NY Pizzeria Inc. for 96,000 on June 1, 2019. The franchise will last 8 years. Record Mystic Pizzas purchase of the franchise on June 1 and adjusting entry at the end of 2019.
Notes Receivable On January 1, 2019, Lisa Company sold machinery with a book value of 118,000 to Mark Company. Mark signed a 180,000 non-interest-bearing note, payable in three 60,000 annual installments on December 31, 2019, 2020, and 2021. The fair value of the machinery was 149,211.12 on the date of sale. The machinery had been purchased by Lisa at a cost of 160,000. Required: 1. Prepare all the journal entries on Lisas books for January 1, 2019, through December 31, 2021. 2. Prepare the notes receivable portion of Lisas balance sheet on December 31, 2019 and 2020.

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