Exercise 12-5

As the recently appointed auditor for Marigold Corporation, you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2017, are prepared. The controller for Marigold Corporation mentions that only one account is kept for intangible assets. The account is shown below.

Intangible Assets

Debit

Credit

Balance

Jan. 4

Research and development costs

937,000

937,000

Jan. 5

Legal costs to obtain patent

73,680

1,010,680

Jan. 31

Payment of 7 months rent on property

leased by Bryan

88,900

1,099,580

Feb. 11

Premium on common stock

237,000

862,580

March 31

Unamortized bond discount on bonds

due March 31, 2037

100,800

963,380

April 30

Promotional expenses related to

start-up of business

214,100

1,177,480

June 30

Operating losses for first 6 months

256,000

1,433,480

Prepare the entries necessary to correct this account. Assume that the patent has a useful life of 10 years. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)