Three programmers at Feenix Computer Storage, Inc., write an operating systems c

Question

Three programmers at Feenix Computer Storage, Inc., write an operating systems control manual for Hill-McGraw Publishing, Inc., for which Feenix receives royalties equal to 12% of net sales. Royalties are payable annually on February 1 for sales the previous year. The editor indicated to Feenix on December 31, 2016, that book sales subject to royalties for the year just ended are expected to be $380,000. Accordingly, Feenix accrued royalty revenue of $45,600 at December 31 and received royalties of $46,180 on February 1, 2017. What adjustments, if any, should be made to retained earnings or to the 2016 financial statements? (If no entry is required for a particular event, select "No journal entry required" in the first account field.)

Explanation / Answer

Royalties 12% of sales sales as on12/31/2016 $380,000.00 Royalties expenses $45,600.00 Royalties received $46,180.00 journal entry -Feenix Computer Storage books No ajdustment required for the retained earnings date Accounts Debit Credit 31/12/16 Royalties receivable       45,600.00 royalty income    45,600.00 2/1/2017 Cash       46,180.00 Royalties receivable    45,600.00 royalty income          580.00

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