Tolan Corp.'s trademark was licensed to Eddy Co.for royalties of 15% of sales of the trademarked items.Royalties are payable semiannually on March 15 for sales in July through December of the prior year, and on September 15 for sales in January through June of the same year.Tolan received the following royalties from Eddy: $$\begin{array} { c c c }
& \text { March } 15 & \text { September } 15 \
2006 & \$ 5,000 & \$ 7,500 \
2007 & 6,000 & 8,500
\end{array}$$ Eddy estimated that sales of the trademarked items would total $40,000 for July through December 2007.In Tolan's 2007 income statement, the royalty revenue should be

Question

Tolan Corp.'s trademark was licensed to Eddy Co.for royalties of 15% of sales of the trademarked items.Royalties are payable semiannually on March 15 for sales in July through December of the prior year, and on September 15 for sales in January through June of the same year.Tolan received the following royalties from Eddy: $$\begin{array} { c c c } 
& \text { March } 15 & \text { September } 15 \
2006 & \$ 5,000 & \$ 7,500 \
2007 & 6,000 & 8,500
\end{array}$$ Eddy estimated that sales of the trademarked items would total $40,000 for July through December 2007.In Tolan's 2007 income statement, the royalty revenue should be

Quizplus · Accepted Answer

Royalties for the six months ended December 31, 2007, are 15% of $40,000, or $6,000. Adding this to the $8,500 received on September 15, 2007, gives total royalty revenue of $14,500.

Tolan Corp March 15 September 152006$5,000$7,50020076,0008,500\begin{array} { c c c } & \text { March } 15 & \text { September } 15 \\2006 & \$ 5,000 & \$ 7,500 \\2007 & 6,000 & 8,500\end{array}20062007​ March 15$5,0006,000​ September 15$7,5008,500​

Tolan Corp $\begin{array} { c c c } & \text { March } 15 & \text { September } 15 \\2006 & \$ 5,000 & \$ 7,500 \\2007 & 6,000 & 8,500\end{array}$