Question

During 2016, Sarasota Corporation spent $164,160 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2016, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $36,720 related to the patent were incurred as of October 1, 2016.

(a)

Prepare all journal entries required in 2016 and 2017 as a result of the transactions above.

Answer 1

	Journal entries
DATE	ACCOUNT TITLES AND EXPLANATIONS	DEBIT ($)	CREDIT ($)
2016	Research and development expense	164,160.00
	Cash		164,160.00
	(To Record Research and development expense)
	Patents	36,720.00
	Cash		36,720.00
	(To record patent)
	Patent amortization expense [(36,720/10)*3/12]	918.00
	Patents		918.00
	(To record amortization of patent)
2017	Patent amortization expense	3,672.00
	Patents		3,672.00
	(To Record Patent Amortization)