contestada

Brick Oven Corporation made the following expenditures during the first month of operations:

Attorneys' fees to organize the corporation $8,000
Purchase of a patent 30,000
Legal and other fees for transfer of the patent 2,000
Advertising 70,000
Total $110,000

Required:
Record the $110,000 in cash expenditures.

Respuesta :

tanseershar

Answer:

The answer is given below;

Explanation:

Patent ($30,000+$2,000)               Dr.$32,000

Advertising Expense                       Dr.$70,000

Legal Fees Expense                        Dr.$8,000  

Cash                                                  Cr.$110,000  

Please note that purchase cost of patent and legal fees paid for the transfer of patent are capital expenditures, therefore they are capitalized.

Where as the advertising and attorney's fee are revenue expenditures.            

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