During 2022 Hernandez Company Incurred $1900000 of Research and Development

question 137

Multiple Choice

During 2022 Hernandez Company incurred $1900000 of research and development costs in its laboratory to develop a new product and $220000 in legal fees to patent the product.Use the following tabular analysis to record these costs assuming that the payments were made in cash

• A)Increase Patents $220000 increase Expenses $1900000 decrease Cash $2120000.
• B)Increase Patents and decrease Cash $2120000.
• C)Decrease Cash and increase Expenses $2120000.
• D)Increase Revenues and Cash $2120000.

---

Definitions:

Interest-bearing Note

A debt instrument in which the borrower agrees to pay back the principal sum along with interest on a specified date.

Total Payment

The sum amount paid over the lifetime of an agreement, including principal, interest, and any applicable fees.

Interest Expense

A cost incurred by an entity for borrowed funds, often reflected in the income statement as a non-operating expense.

Journal Entry

A record in accounting that notes the details of a financial transaction and its effect on accounts in a double-entry bookkeeping system.