The terms of the contract therefore are that Jean would pay and Molly would deliver. Jean then calls Molly and says that they will be unable to pay which means that they are not going to be able to hold up their responsibilities in the contract.

Molly has the right to then cancel the contract because the other party will not be able to perform their obligations and face no repercussion for it.

6 0

3 years ago

The following transactions involving intangible assets of Minton Corporation occurred on or near December 31, 2017. 1. Minton pa

kvv77 [185]

Answer and Explanation:

As per the data given in the question,

The journal entries are shown below:

A. On the date of transaction

1. Franchise A/c Dr. $400,000

To Cash Cr. $400,000

(Being cash paid is recorded)

2. Research and development expense A/c Dr. $600,000

To Cash Cr. $600,000

(Being cash paid is recorded)

3. Patents A/c Dr. $180,000

To Cash Cr. $180,000

(Being cash paid is recorded)

4. Patents A/c Dr. $140,000

To Cash Cr. $140,000

(Being cash paid is recorded)

5. Legal fees expense A/c Dr. $480,000

To Cash Cr. $480,000

(Being cash paid is recorded)

6. Patents expense A/c Dr. $252,000

To Patents Cr. $252,000

(Being patent expense is recorded)

7. Research and development expense $104,000

To Cash Cr. $104,000

(Being cash paid is recorded)

B. Journal entries on Dec-31, 2018

1. No journal entry is needed

2. No journal entry is needed

3. Amortization expense A/c Dr. $18,000

To Patents Cr. $18,000

(Being the amortization expense is recorded)

4. Amortization expense $35,000 ($140,000 ÷ 4 years)

To Patents Cr. $35,000

(Being the amortization expense is recorded)

5. No journal entry is needed

6. No journal entry is needed

6 0

2 years ago

Electrodo Co. purchased land for $55,000 with $20,000 paid in cash and $35,000 in notes payable. What effect does this transacti

Archy [21]

Answer:

(c). Net increase in assets of $35,000 and a net increase in liabilities of $35,000

Explanation:

Accrual basis of accounting attempts to record transactions as and when they arise and not on the basis of when money is actually received or paid. Once a liability is certain, such a liability is provided for immediately.

The journal entry for purchase of Land partly by cash and partly for issuing a notes payable would be:

Land Dr. $55,000

To Cash $20,000

To Notes Payable $35,000

(Being land purchased by payment of $20,000 in cash and a note being issued against the balance amount)

Land and cash are assets whereas Notes Payable is a liability.

So, the effect of the above transaction would be:

Net increase of $35,000 ( $ 55,000 - $ 20,000) as debit in fixed assets account increases their balance whereas cash being a real account, the rule being debit what comes in, credit what goes out. So credit in cash account would reduce the cash balance by $ 20,000.

Notes Payable account which is to be paid in future is a liability which shall increase the liabilities by $ 35,000.

So, the correct answer is (c), Net increase in assets of $35,000 and a net increase in liabilities of $35,000.

5 0

3 years ago