Question

n 2021, Starsearch Corporation began work on three research and development projects. One of the projects was completed and commercial production of the developed product began in December. The company's fiscal year-end is December 31. All of the following 2021 expenditures were included in the R&D expense account:

Salaries and wages for:
Lab research	$	320,000
Design and construction of preproduction prototype		180,000
Quality control during commercial production		22,000
Materials and supplies consumed for:
Lab research		62,000
Construction of preproduction prototype		32,000
Purchase of equipment		620,000
Patent filing and legal fees for completed project		42,000
Payments to others for research		130,000
Total	$	1,408,000

$210,000 of equipment was purchased solely for use in one of the projects. After the project is completed, the equipment will be abandoned. The remaining $410,000 in equipment will be used on future R&D projects. The useful life of equipment is five years. Assume that all of the equipment was acquired at the beginning of the year.

Required:
Prepare journal entries, reclassifying amounts in R&D expense, to reflect the appropriate treatment of the expenditures. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer
General Journal	Debit	Credit
Equipment	$           410,000
R&D Expenses		$     410,000
R&D Expenses	$             82,000		410000/5
Acc Dep - Equipment		$       82,000
Patent	$             42,000
R&D Expenses		$       42,000
Inventory	$             22,000
R&D Expenses		$       22,000
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