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Skysong, Inc., spent $50,400 in attorney fees while developing the trade name of its new product, the Mean Bean Machine. Prepare the journal entries to record the $50,400 expenditure and the first year’s amortization, using an 8-year life. Use the account title "Trade Names". (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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Answer and Explanation:

The Journal entry is shown below:-

Trade Names Dr, $50,400  

         To Cash $50,400

(Being trade names is recorded)

Here we debited trade names as it increasing the assets and we credited the cash as decreasing the assets.

Amortization Expense Dr, $6,300

($50,400 ÷ 8)

          To Trade Names $6,300

(Being amortization expenses is recorded)

Here, we debited the amortization expenses are increased the expenses and we credited the trade names as decrease the assets.

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