Connect .> C Secure ! https://newconnect.mheducation.com/flow/connect.html Ch. 2

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Connect .> C Secure ! https://newconnect.mheducation.com/flow/connect.html Ch. 20 - Brief Exercises (60 minutes) G Help Save & Exlt Submlt Saved 3 Check my work 5 Brief Exercise 20-6 Book royalties [LO20-4] 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, 2018, that book sales subject to royalties for the year just ended are expected to be $270,000. Accordingly, Feenix accrued royalty revenue of $32,400 at December 31 and received royalties of $32,870 on February 1, 2019. 10 points eBook References What adjustments, if any, should be made to retained earnings or to the 2018 financial statements? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Event General Journal Debit Credit Mc Graw Hill 846 PM 4/23/2018

Explanation / Answer

Answer:

Prevously we have recorded in the books the royalty revenue as accrued , now they are recieved to some extent. Now the adjustment to be made to the recieved extent by transferring to the retained earnings.The journal entry would be as follows:

Accrued royalty revenue a/c ..............................Dr $32400

To Retained Earnings a/c $32400   

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