On February 3, 2014, Abacus Software Group purchased the patent for new software for cash of $220,800.

Question:

On February 3, 2014, Abacus Software Group purchased the patent for new software for cash of $220,800. The company expects the software to be sold over the next five years and uses the straight-line method to amortize intangibles.

Required
1. Prepare entries to record the:
a. Purchase of the software patent, and
b. Straight-line amortization for the year ended December 31, 2014, calculated to the nearest whole month. Round to the nearest dollar.
2. On December 31, 2014, the company’s adjusted trial balance showed the additional asset accounts shown below. Prepare the asset section of the at December 31, 2014, including the patent purchased on February 3, 2014.
Accounts receivable .............................................................................................. $285,600
Accumulated depreciation, equipment .................................................................. 259,200
Accumulated depreciation, building ...................................................................... 189,000
Allowance for doubtful accounts .............................................................................. 8,400
Cash ........................................................................................................................ 103,200
Equipment ............................................................................................................... 477,600
Building ................................................................................................................... 595,200
Land ........................................................................................................................ 110,400
Merchandise inventory .................................................................................... 135,600
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...