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Kleen Company acquired patent rights on January 10 of Year 1 for $857,700. The patent has a useful life equal to its legal life of

Kleen Company acquired patent rights on January 10 of Year 1 for $857,700. The patent has a useful life equal to its legal life of 8 years. On January 7 of Year 4, Kleen successfully defended the patent in a lawsuit at a cost of $36,000.

Required:
a. Determine the patent amortization expense for Year 4 ended December 31.
b. Journalize the adjusting entry on December 31 of Year 4 to recognize the amortization.
CHART OF ACCOUNTS
Kleen Company
General Ledger
ASSETS
110 Cash
111 Petty Cash
112 Accounts Receivable
114 Interest Receivable
115 Notes Receivable
116 Merchandise Inventory
117 Supplies
119 Prepaid Insurance
120 Land
123 Delivery Truck
124 Accumulated Depreciation-Delivery Truck
125 Equipment
126 Accumulated Depreciation-Equipment
130 Mineral Rights
131 Accumulated Depletion
132 Goodwill
133 Patents
LIABILITIES
210 Accounts Payable
211 Salaries Payable
213 Sales Tax Payable
214 Interest Payable
215 Notes Payable
EQUITY
310 Common Stock
311 Retained Earnings
312 Dividends
REVENUE
410 Sales
610 Interest Revenue
620 Gain on Sale of Delivery Truck
621 Gain on Sale of Equipment
622 Gain on Sale of Patents
EXPENSES
510 Cost of Merchandise Sold
520 Salaries Expense
521 Advertising Expense
522 Depreciation Expense-Delivery Truck
523 Delivery Expense
524 Repairs and Maintenance Expense
529 Selling Expenses
531 Rent Expense
532 Depreciation Expense-Equipment
533 Depletion Expense
534 Amortization Expense-Patents
535 Insurance Expense
536 Supplies Expense
539 Miscellaneous Expense
710 Interest Expense
720 Loss on Sale of Delivery Truck
721 Loss on Sale of Equipment
722 Loss on Sale of Patents

a. Determine the patent amortization expense for Year 4 ended December 31.

b. Journalize the adjusting entry on December 31 of Year 4 to recognize the amortization.

General Journal Instructions

PAGE 1

JOURNAL

ACCOUNTING EQUATION

DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY
1 Adjusting Entries
2
3

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