Sorenson Manufacturing was incorporated on January 3, 20x1. The corporation's financial statements for its first year's operations were not examined by a PA. You have been engaged to audit the financial statements for the year ended December 31, 20x2, and your examination is substantially completed. A partial trial balance ofthe company's accounts is given below: EXHIBIT EP 14-6 Sorenson Manufacturing Corporation Partial Trial Balance at December 31, 20x2 TRIAL BALANCE DEBIT CREDIT Cash $11,000 Accounts receivable 42,500 Allowance for doubtful accounts $500 Inventories 38,500 Machinery 75,000 Equipment 29,000 Accumulated amortization 10,000 Patents 85,000 Leasehold improvements 26,000 Prepaid expenses 10,500 Goodwill 24,000 The following information relates to accounts that may yet require adjustment: 1. Patents for Sorenson's manufacturing process were purchased January 2, 20x2, at a cost of $68,000. An additional $17,000 was spent in December 20x2 to improve machinery covered by the patents and charged to the patents account The patents had a remaining legal term of 17 years. 2. The balance in the goodwill account includes $24,000 paid December 30, 2OX1, for an advertising program estimated to increase Sorenson's sales over a period of four years following the disbursement. 3. The leasehold improvement account includes (1) the $15,000 cost of improvements, with a total estimated useful life of12 years, which Sorenson, as tenant, made to leased premises in January 20x1; (2) movable assembly line equipment costing $8,500, which was installed in the leased premises in December 20x2; and (3) real estate taxes of $2,500 paid by Sorenson, which, under the terms ofthe lease, should have been paid by the landlord. Sorenson paid its rent in full during 20x2. A 10-year non-renewable lease was signed January 3, 20x1, for the leased building that Sorenson used in manufacturing operations. No amortization ofthe leasehold improvements has been recorded Required: Prepare adjusting entries as necessary. (If no entry is required for a transaction/event, select "Nojournal entry required" in the first account field.) View transaction list Record the transfer cost of improving machinery to the fixed asset account. Record the straight-line amortization of patents for the yeah Record to correct the accounting error of last year of improperly capitalizing an expense item. Record the equipment in the proper account and to record a receivabie for the real estate taxes. Record the current amortization of leasehold improvements on a straight-line, 10-year basis and correct the error of failure in previous year to record amortization. No adjustment to depreciation of Note : . = journal entry has been entered Record the current amortization of leasehold improvements on a straight-line, 10-year basis and correct the error of failure in previous year to record amortization. No adjustment to depreciation of equipment since it was acquired in December. Journal entry worksheet