The Horstmeyer Corporation commenced operations early in 2021. A number of expenditures were made during 2021 that were debited to one account called intangible asset. A recap of the $144,000 balance in this account at the end of 2021 is as follows:

Required:Prepare the necessary journal entry to clear the intangible asset account and to set up accounts for separate intangible assets, other types of assets, and expenses indicated by the transactions.

Transcribed Image Text:

Amount Date Transaction State incorporation fees and legal costs related to organizing the corporation February 3 $ 7,000 Fire insurance premium for three-year period March 6,000 March 15 Purchased a copyright Research and development costs Legal fees for filing a patent on a new product resulting from an R&D project Legal fee for successful defense of patent developed above Entered into a 10-year franchise agreement with franchisor Advertising costs Total 20,000 April 30 40,000 June 15 3,000 September 3O October Various 12,000 13 40,000 16,000 $144,000