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Concept explainers
Book royalties
• LO20–4
Dreighton Engineering Group receives royalties on a technical manual written by two of its engineers and sold to William B. Irving Publishing, Inc. Royalties are 10% of net sales, receivable on October 1 for sales in January through June and on April 1 for sales in July through December of the prior year. Sales of the manual began in July 2017, and Dreighton accrued royalty revenue of $31,000 at December 31, 2017, as follows:
Receivable—royalty revenue | 31,000 | |
Royalty revenue | 31,000 |
Dreighton received royalties of $36,000 on April 1, 2018, and $40,000 on October 1, 2018. Irving indicated to Dreighton on December 31 that book sales subject to royalties for the second half of 2018 are expected to be $500,000.
Required:
- 1. Prepare any
journal entries Dreighton should record during 2018 related to the royalty revenue. - 2. What adjustments, if any, should be made to
retained earnings or to the 2017 financial statements? Explain.
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Chapter 20 Solutions
GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
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- Corporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
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