Question

Brick Oven Corporation made the following expenditures during the first month of operations: Attorneys' fees to organize the corporation $ 9,000 Purchase of a patent 40,000 Legal and other fees for transfer of the patent 2,500 Advertising 80,000 Total $ 131,500 Required: Record the $131,500 in cash expenditures. (

Answer 1

Answer:

The answer is given below;

Explanation:

Legal Expenses  Dr.$9,000

Patent (40,000+2,500) Dr.$42,500

Advertising Expense    Dr.$80,000        

Cash                             Cr.$131,500  

Please note that legal and other fees for transfer of patent is capitalized in patent cost.

The compound entry is made to simplify the T-Account of cash as the second impact of every debit entry is cash.