In 2018, Bratten Fitness Company made the following cash purchases: 1. The exclu
ID: 2563203 • Letter: I
Question
In 2018, Bratten Fitness Company made the following cash purchases:
1. The exclusive right to manufacture and sell the X-Core workout machine from Symmetry Corporation for $210,000. Symmetry created the unique design for the machine. Bratten also paid an additional $15,000 in legal and filing fees to attorneys to complete the transaction.
2.An initial fee of $295,000 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 $6,000 for each month it operates under the Silver’s Gym name, with payments beginning in March 2018. Bratten also purchased $410,000 of exercise equipment to be placed in the new facility.
3.The exclusive right to sell Healthy Choice, a book authored by Kent Patterson, for $29,000. 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.)
Record the expenditures related to initial acquisitions.
Explanation / Answer
Journal entry to record payment in acquiring the assets :
Franchise: the ongoing expense each month of operating as a Franchise would be expensed as incurred.
Event General journal Debit Credit 1. Patent(210,000+15000) $225,000 Franchise $295,000 Equipment $410,000 Copyright $29,000 Cash $959,000