In 2018, Bratten Fitness Company made the following cash purchases: The exclusiv
ID: 2562800 • Letter: I
Question
In 2018, Bratten Fitness Company made the following cash purchases:
The exclusive right to manufacture and sell the X-Core workout machine from Symmetry Corporation for $209,000. Symmetry created the unique design for the machine. Bratten also paid an additional $14,500 in legal and filing fees to attorneys to complete the transaction.
An initial fee of $290,000 for a three-year agreement with Silver’s Gym to use its name for a new facility in the local area. Silver’s Gym has locations throughout the country. Bratten is required to pay an additional fee of $5,900 for each month it operates under the Silver’s Gym name, with payments beginning in March 2018. Bratten also purchased $409,000 of exercise equipment to be placed in the new facility.
The exclusive right to sell Healthy Choice, a book authored by Kent Patterson, for $28,000. The book includes healthy recipes, recommendations for dietary supplements, and natural remedies. Bratten plans to display the book at the check-in counter at its new facility, as well as make it available online.
Required:
Prepare a summary journal entry to record expenditures related to initial acquisitions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Explanation / Answer
Date Particulars Debit Credit Working January, 2018 Intangible Asset 2,23,500.00 209000+14500 Cash 2,23,500.00 (To record the payments for intangible asset) January, 2018 Prepaid expense 2,90,000.00 Cash 2,90,000.00 (To record the payment of initial fees) December, 2018 Additional fees 70,800.00 Cash 70,800.00 (To record the payment of additional fees) December, 2018 Equipment 4,09,000.00 Cash 4,09,000.00 (To record the purchase of new equipment) December, 2018 Intangible Asset 28,000.00 Cash 28,000.00 (To record the payments for intangible asset)