FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Berdahl Company owns several retail outlets. During the year, it expanded operations and entered into the following transactions:
| Jan. 2 | Signed an eight-year lease for additional retail space for an annual rent of $25,400. Paid the first year's rent on this date. (Hint: Debit the first year's rent to Prepaid Rent.) |
| Jan. 3 | Paid $24,800 to a contractor for installation of a new oak floor in the leased facility. The oak floor's life is an estimated 50 years with no salvage value. |
| Mar. 1 | Paid $55,000 to obtain an exclusive area franchise for five years to distribute a new line of gourmet chocolates. |
| June 1 | Paid $45,000 to LogoLab, Inc., for designing a trademark for a new line of gourmet chocolates that Berdahl will distribute nationally. Berdahl will use the trademark for as long as the firm remains in business. Berdahl expects to be in business for at least another 50 years. |
| June 1 | Paid $27,000 for advertisement in a national magazine (June issue) introducing the new line of gourmet chocolates at the trademark. |
Required
a. Prepare
b. Prepare the necessary
Round all answers to the nearest dollar.
- Transactions
- Depreciation & Amortization
| General Journal | |||
|---|---|---|---|
| Date | Description | Debit | Credit |
| Jan. 2 | Answer | Answer | Answer |
| Answer | Answer | Answer | |
| To record payment of first year's rent on 8- year lease. | |||
| Jan. 3 | Answer | Answer | Answer |
| Answer | Answer | Answer | |
| To record payment for oak floor installation in leased facility | |||
| Mar. 1 | Answer | Answer | Answer |
| Answer | Answer | Answer | |
| To record acquisition of 5- year franchise. | |||
| July 1 | Answer | Answer | Answer |
| Answer | Answer | Answer | |
| To record payment for design of trademark. | |||
| July 1 | Answer | Answer | Answer |
| Answer | Answer | Answer | |
| To record payment for advertising. |
Please answer all parts of the question.
Expert Solution
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Step 1
a. Journal entries:
| Date | Particulars | Debit | Credit |
| Jan 2 | Prepaid rent | $25,400 | |
| Cash | $25,400 | ||
| (To record payment of first year's rent on 8- year lease) | |||
| Jan 3 | Leasehold Improvements | $24,800 | |
| Cash | $24,800 | ||
| (On capitalization of installation charges) | |||
| Mar 1 | Franchise a/c | $55,000 | |
| Cash | $55,000 | ||
| (On obtaining franchise) | |||
| June 1 | Trademarks a/c | $45,000 | |
| Cash | $45,000 | ||
| (On obtaining trademark) | |||
| June 1 | Advertisement expenses | $27,000 | |
| Cash | $27,000 | ||
| (To record advertisement expenses) |
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