Exercise 12-5

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

Intangible Assets Prepare the entries necessary to correct this account. Assume that the patent has a useful life of 10 years
				Debit		Credit		Balance
Jan. 4		Research and development costs		941,000				941,000
Jan. 5		Legal costs to obtain patent		74,640				1,015,640
Jan. 31		Payment of 7 months rent on property
		leased by Bryan		91,700				1,107,340
Feb. 11		Premium on common stock				241,000		866,340
March 31		Unamortized bond discount on bonds
		due March 31, 2037		110,400				976,740
April 30		Promotional expenses related to
		start-up of business		215,500				1,192,240
June 30		Operating losses for first 6 months		256,500				1,448,740