On January 1, 2018, Weaver Corporation purchased a patent for $237,000

On January 1, 2018, Weaver Corporation purchased a patent for $237,000. The remaining legal life is 20 years, but the company estimates the patent will be useful for only six more years. In January 2020, the company incurred legal fees of $57,000 in successfully defending a patent infringement suit. The successful defense did not change the company’s estimate of useful life. Weaver Corporation’s year-end is December 31.

Required:

1. Record the purchase in 2018; amortization in 2018; amortization in 2019; legal fees in 2020; and amortization in 2020.

2. What is the balance in the Patent account at the end of 2020?


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On March 1, Terrell & Associates provides legal services to Whole Grain Bakery regarding some recent food poisoning complaints

On March 1, Terrell & Associates provides legal services to Whole Grain Bakery regarding some recent food poisoning complaints. Legal services total $11,000. In payment for the services, Whole Grain Bakery signs a 9% note requiring the payment of the face amount and interest to Terrell & Associates on September 1.

Required:

For Whole Grain Bakery, record the issuance of the note payable on March 1 and the cash payment on September 1.

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Halle’s Berry Farm establishes a $200 petty cash fund on September 4 to pay for minor cash

Halle’s Berry Farm establishes a $200 petty cash fund on September 4 to pay for minor cash expenditures. The fund is replenished at the end of each month. At the end of September, the fund contains $30 in cash. The company has also issued a credit card and authorized its office manager to make purchases. Expenditures for the month include the following items:

  Office party decorations (petty cash)    $  170 

  Lawn maintenance (credit card)              420 

  Postage (credit card)    575 

  Fuel for deliveries (credit card)                285 

Required:

Record the establishment of the petty cash fund on September 4, all expenditures made during the month, and the replenishment of the petty cash fund on September 30. The credit card balance is not yet paid.

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