Johnson Company receives royalties on a patent it developed several years ago. Royalties are 5% of net sales, to received on September 30 for sales from January through June and receivable on March 31 for sales from July through December. The patent rights were distributed on July 1, 2020, and Johnson accrued royalty revenue of $50,000 on December 31, 2020, as follows: Receivable-royalty revenue Royalty revenue 50,000 50,000 Johnson received royalties of $65,000 on March 31, 2021, and $90,000 on September 30, 2021. In December, 2021, the patent user indicated to Johnson that sales subject to royalties for the second half of 2021 should be $600,000.
Johnson Company receives royalties on a patent it developed several years ago. Royalties are 5% of net sales, to received on September 30 for sales from January through June and receivable on March 31 for sales from July through December. The patent rights were distributed on July 1, 2020, and Johnson accrued royalty revenue of $50,000 on December 31, 2020, as follows: Receivable-royalty revenue Royalty revenue 50,000 50,000 Johnson received royalties of $65,000 on March 31, 2021, and $90,000 on September 30, 2021. In December, 2021, the patent user indicated to Johnson that sales subject to royalties for the second half of 2021 should be $600,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Johnson Company receives royalties on a patent it developed several years ago. Royalties are 5% of net sales, to be
received on September 30 for sales from January through June and receivable on March 31 for sales from July
through December. The patent rights were distributed on July 1, 2020, and Johnson accrued royalty revenue of
$50,000 on December 31, 2020, as follows:
Receivable-royalty revenue
Royalty revenue
50,000
Required:
50,000
Johnson received royalties of $65,000 on March 31, 2021, and $90,000 on September 30, 2021. December,
2021, the patent user indicated to Johnson that sales subject to royalties for the second half of 2021 should be
$600,000.
Prepare any journal entries Johnson should record during 2021 related to the royalty revenue.
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