Question 1: Hootie and the Blow Fish, Inc., organized in 2002, has the following transactions related to intangible assets.
1/2102 Purchased patent (7-year life) $490,000
4/1/02 Goodwill purchased (indefinite life) 360,000
7/1/02 10-year franchise; expiration date 7/1/2012 420,000
9/1/02 Research and development costs 185.000
Instructions:
Prepare the necessary entries to record these intangibles. All costs incurred were for cash. Make the entries as of December 31, 2002, recording any necessary amortization and reflecting all balances accurately as of that date.
Question 2: Melanie Griffith Company closes its books monthly. On September 30. selected ledger account balances are:
Notes Receivable $28,000
Interest Receivable $ 216
Notes Receivable include the following.
|
Date
|
Maker
|
Face
|
Tenn
|
Interest
|
|
Aug. 16
|
Foran Inc.
|
$ 8,000
|
60 days
|
12%
|
|
Aug. 25
|
Drexler Co.
|
8,000
|
60 days
|
12%
|
|
Sept. 30
|
Sego Corp.
|
12,000
|
6 months
|
9%
|
Interest is computed using a 360-day year. During October, the following transactions were completed.
Oct. 7 Made sales of $6,900 on Melanie Griffith credit cards.
12 Made sales of $750 on MasterCard credit cards. The credit card service charge is 4%.
15 Added $485 to Melanie Griffith customer balance for finance charges on unpaid balances.
15 Received payment in full from Foran Inc. on the amount due.
24 Received notice that Drexler note has been dishonored. (Assume that Drexler is expected to pay in the future.)
Instructions:
(a) Journalize the October transactions and the October 31 adjusting entry for accrued interest receivable.
(b) Enter the balances at October 1 in the receivable accounts. Post the entries to all of the receivable accounts.
(c) Show the balance sheet presentation of the receivable accounts at October 31.