Mark-Wall Corp.'s trademark was licensed to Rodgers Inc. for royalties of 12% of sales of the trademarked items. Royalties are payable semi-annually on March 15 for sales in July through December of the previous year, and on September 15 for sales in January through June of the same year. Mark-Wall received the following royalties from Rodgers: $\begin{array}{ccc}
& \underline{\text { March 15 }} & \underline{\text { September 15 }} \
\text { During 2019 } & \$ 5,000 & \$ 9,000 \
\text { During 2020 } & 8,000 & 6,000
\end{array}$ Rodgers estimates that sales of the trademarked items would total $ 67,000 for July through December 2020. On their statement of comprehensive income for calendar 2020, Mark-Wall's royalty revenue should be

Question

Mark-Wall Corp.'s trademark was licensed to Rodgers Inc. for royalties of 12% of sales of the trademarked items. Royalties are payable semi-annually on March 15 for sales in July through December of the previous year, and on September 15 for sales in January through June of the same year. Mark-Wall received the following royalties from Rodgers: $\begin{array}{ccc} 
& \underline{\text { March 15 }} & \underline{\text { September 15 }} \
\text { During 2019 } & \$ 5,000 & \$ 9,000 \
\text { During 2020 } & 8,000 & 6,000
\end{array}$ Rodgers estimates that sales of the trademarked items would total $ 67,000 for July through December 2020. On their statement of comprehensive income for calendar 2020, Mark-Wall's royalty revenue should be

Quizplus · Accepted Answer

To compute the royalty revenue for the calendar year 2020, we need to find out the sales of the trademarked items for July through December 2019, for which royalties were payable on March 15, 2020.

Let X be the sales of trademarked items for July through December 2019.

Then, X * 12% = Royalties payable on March 15, 2020 = $5,000.

Solving for X, we get X = $41,667.

Similarly, the sales of the trademarked items for January through June 2020, for which royalties were payable on September 15, 2020, were:

Y * 12% = Royalties payable on September 15, 2020 = $6,000.

Solving for Y, we get Y = $50,000.

Therefore, the total sales of the trademarked items for the year 2020 was:

X + Y = $41,667 + $50,000 = $91,667.

Thus, the royalties payable on March 15, 2021, for sales of July through December 2020, is:

$67,000 * 12% = $8,040.

Hence, total royalty revenue for the calendar year 2020 is:

$5,000 + $8,000 + $8,040 + $6,000 = $27,040.

The correct answer is C) $14,040.

Mark-Wall Corp Rodgers Estimates That Sales of the Trademarked Items Would Total