Sandhill Company, organized in 2016, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2017.1/2/17 Purchased patent (7-year life) $306,6004/1/17 Purchase goodwill (indefinite life) 379,3007/1/17 Purchased franchise with 10-year life; expiration date 7/1/27 468,0008/1/17 Payment of copyright (5-year life) 144,0009/1/17 Research and development costs 222,000    $1,519,900     Prepare the necessary entry to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)Account Titles and ExplanationDebitCredit                    SHOW LIST OF ACCOUNTSLINK TO TEXTLINK TO TEXT   Make the entry as of December 31, 2017, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)Account Titles and ExplanationDebitCredit              SHOW LIST OF ACCOUNTSLINK TO TEXTLINK TO TEXT   Reflect all balances accurately as of December 31, 2017.Use straight-line amortization PatentsGoodwillResearch and development costsFranchisesCopyrights $  PatentsResearch and development costsCopyrightsGoodwillFranchises $  FranchisesResearch and development costsCopyrightsPatentsGoodwill $  Research and development costsPatentsCopyrightsGoodwillFranchises $   Click if you would like to Show Work for this question:Open Show Workplease answer all parts of the question

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Asked Nov 26, 2019
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Sandhill Company, organized in 2016, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2017.

1/2/17   Purchased patent (7-year life)  
$306,600
4/1/17   Purchase goodwill (indefinite life)  
379,300
7/1/17   Purchased franchise with 10-year life; expiration date 7/1/27  
468,000
8/1/17   Payment of copyright (5-year life)  
144,000
9/1/17   Research and development costs  
222,000
       
$1,519,900
 
 
 
 
 
Prepare the necessary entry to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation
Debit
Credit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

SHOW LIST OF ACCOUNTS
LINK TO TEXT
LINK TO TEXT
 
 
 
Make the entry as of December 31, 2017, recording any necessary amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation
Debit
Credit
 
 
 
 
 
 
 
 
 
 
 
 
 
 

SHOW LIST OF ACCOUNTS
LINK TO TEXT
LINK TO TEXT
 
 
 
Reflect all balances accurately as of December 31, 2017.

Use straight-line amortization
 PatentsGoodwillResearch and development costsFranchisesCopyrights
 
$
 
 PatentsResearch and development costsCopyrightsGoodwillFranchises
 
$
 
 FranchisesResearch and development costsCopyrightsPatentsGoodwill
 
$
 
 Research and development costsPatentsCopyrightsGoodwillFranchises
 
$
 
 

 

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Expert Answer

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Step 1

The journal entries are referred to the recording of business transactions on daily basis in the books of accounts. Each transaction involves two account. One is debited and other is credited in making journal entries.

Step 2

The journal entry to record the set-up of intangible assets is as follows:

Account title & explanation
Debit (S)
Credit (S)
Date
31 December
Patents
306,600
2017
Goodwill
Franchise
379,300
468,000
144,000
222,000
Сорyright
Research & development cost
....Intangible assets
(to record the set up of separate
account for intangible assets)
1,519,900
help_outline

Image Transcriptionclose

Account title & explanation Debit (S) Credit (S) Date 31 December Patents 306,600 2017 Goodwill Franchise 379,300 468,000 144,000 222,000 Сорyright Research & development cost ....Intangible assets (to record the set up of separate account for intangible assets) 1,519,900

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Step 3

The entry to record the amortization on 31 ...

Account title &explanation
Amortization expense
Credit (S)
Debit (S)
Date
31 December
79,200
2017
Patent ($306,600/7)
Franchise ($468,000/10 x 6/12)
Copyrights ($144,000/5 x 5/12)
(to record the amortization expense for
intangible assets)
43,800
23,400
12,000
help_outline

Image Transcriptionclose

Account title &explanation Amortization expense Credit (S) Debit (S) Date 31 December 79,200 2017 Patent ($306,600/7) Franchise ($468,000/10 x 6/12) Copyrights ($144,000/5 x 5/12) (to record the amortization expense for intangible assets) 43,800 23,400 12,000

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Journal and Ledger Balance

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