Cost of Patents The Davis Research Company engaged in the following six transactions during 2007:
|
1 |
Purchased a patent for $35,000. Legal costs of $5,000 were also incurred. |
|
2 |
Costs of improving patent: |
|
Engineering costs |
$20,000 |
|
Assembling and testing prototypes |
10,000 |
|
Other R&D costs |
25,000 |
|
3 |
Sold a prototype machine for $7,000. The research and development were performed in previous years. |
|
4 |
Licensed a manufacturing process to another company and received $80,000 as an advance payment. |
|
5 |
Successfully defended a patent infringement suit at a cost of $12,000. |
|
6 |
Earned $5,000 of the advance payment on the licensed manufacturing process in Item 4. |
Required
Prepare journal entries to record the preceding transactions.