Answer:
1. Dr Research and development expenses $25,000
Cr Cash $25,000
2. Dr Legal fees expenses $8,500
Cr Cash $8,500
3. Dr Equipment $38,000
Dr Discount on Note Payable $5,599
Cr Cash $19,000
Cr Note Payable $24,500
4. Dr Building - sprinkler system $41,000
Cr Cash $41,000
5. Dr Patent $25,000
Cr Cash $25,000
6. Dr Equipment new $13,900
Dr Accumulated Depreciation - equipment $7,000
Dr Loss on trade in $3,600
Cr Cash $10,600
Cr Equipment - old $13,900
Explanation:
Preparation of the journal entries
1. Dr Research and development expenses $25,000
Cr Cash $25,000
2. Dr Legal fees expenses $8,500
Cr Cash $8,500
3. Dr Equipment $38,000
Dr Discount on Note Payable $5,599
($38,000-$19,000-$24,500)
Cr Cash $19,000
Cr Note Payable $24,500
4. Dr Building - sprinkler system $41,000
Cr Cash $41,000
5. Dr Patent $25,000
Cr Cash $25,000
6. Dr Equipment new $13,900
Dr Accumulated Depreciation - equipment ($13,900 - $6,900) $7,000
Dr Loss on trade in $3,600
($10,600+$13,900-$13,900-$7,000)
Cr Cash $10,600
Cr Equipment - old $13,900
