Question

On January 5, Barnaby, Inc., purchased a patent costing $100,000 with a useful life of 20 years. The company records its adjusting entries at the end of each year on December 31.

Complete the necessary adjusting entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answer 1

Answer and Explanation:

The adjusting entries are shown below

On Jan 1

Patent Dr $100,000

To Cash $100,000

(Being patent purchased on cash is recorded)

Here patent is debited as it increased the assets and credited the cash as it decreased the assets

On Dec 31

Amortization expense - Patent ($100,000 ÷ 20 years) $5,000

To Accumulated amortization - Patent $5,000

(being amortization expense is recorded)

Here amortization expense is debited as it increased the expense and credited the accumulated depreciation as it decreased the assets