Sony Inc. was organized in 2019. Its accounting records include only one account for all intangible assets. The following is a summary of the debit entries that have been recorded and posted during 2019 and 2020:

Intangible Assets

July 1,2019 8-year franchise; expires June 30, 2027 P126,000

October 1,2019 Advance payment on leasehold (tem of lease is 2 years) 84,000

December 31,2019 Net loss for 2019 including incorporation fee, P3,000, and related legal fees of organizing, P15,000 (all fees incurred in 2019) 48,000

January 2,2020 Acquired patent (10-year life) 222,000

March 1,2020 Cost of developing a secret formula 225,000

April 1,2020 Goodwill purchased 835,200

July 1,2020 Legal fee for successful defense of patent purchased above 37,950

October 1,2020 Research and development costs 480,000

Required: Based on the result of your audit, determine the following: (Ignore Income Tax Implications)

1. Amount of prepaid rent at December 31,2020

A. 73,500

B. 31,500

C. 84,000

D. 63,000

2. Adjusting entries on December 31,2020 should include a net debit to retained earnings account of

A. 89,275

B. 42,000

C. 60,375

D. 66,375

3. As a result of the adjustments at December 31,2020, the total charges against Sony's 2020 Income should be

A. 840,900

B. 822,900

C. 597,900

D. 841,275