Question 8

Sunland Co., organized in 2024, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2025 and 2026.

Intangible Assets
7/1/25		8-year franchise; expiration date 6/30/33		$72,000
10/1/25		Advance payment on laboratory space (2-year lease)		30,000
12/31/25		Net loss for 2025 including state incorporation fee, $1,000,
		and related legal fees of organizing, $5,000 (all fees incurred in 2025)		14,200
1/2/26		Patent purchased (10-year life)		85,600
3/1/26		Cost of developing a secret formula (indefinite life)		88,000
4/1/26		Goodwill purchased (indefinite life)		278,600
6/1/26		Legal fee for successful defense of patent purchased above		12,190
9/1/26		Research and development costs		140,000

Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2026, recording any necessary amortization. (Ignore income tax effects.) (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. List all debit entries before credit entries.)

Account Titles and Explanation	Debit	Credit
enter an account title to clear the intangible assets	enter a debit amount	enter a credit amount
enter an account title to clear the intangible assets	enter a debit amount	enter a credit amount
enter an account title to clear the intangible assets	enter a debit amount	enter a credit amount
enter an account title to clear the intangible assets	enter a debit amount	enter a credit amount
enter an account title to clear the intangible assets	enter a debit amount	enter a credit amount
enter an account title to clear the intangible assets	enter a debit amount	enter a credit amount
enter an account title to clear the intangible assets	enter a debit amount	enter a credit amount
(To clear the Intangible Assets)
enter an account title to record current amount for franchises	enter a debit amount	enter a credit amount
enter an account title to record current amount for franchises	enter a debit amount	enter a credit amount
enter an account title to record current amount for franchises	enter a debit amount	enter a credit amount
(To record current amount for Franchises)
enter an account title to record current amount for rents	enter a debit amount	enter a credit amount
enter an account title to record current amount for rents	enter a debit amount	enter a credit amount
enter an account title to record current amount for rents	enter a debit amount	enter a credit amount
(To record current amount for Rents)
enter an account title to record current amount for patents	enter a debit amount	enter a credit amount
enter an account title to record current amount for patents	enter a debit amount	enter a credit amount
(To record current amount for Patents)

Calculate all balances accurately as of December 31, 2026. (Ignore income tax effects.)

select an item FranchisesGoodwillPatentsPrepaid Rent		$enter a dollar amount
select an item FranchisesGoodwillPatentsPrepaid Rent		$enter a dollar amount
select an item FranchisesGoodwillPatentsPrepaid Rent		$enter a dollar amount
select an item FranchisesGoodwillPatentsPrepaid Rent		$enter a dollar amount