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: Rodgers estimates that sales of the trademarked items would total $67,000 for July through December 2018.On their statement of comprehensive income for calendar 2018, 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:  Rodgers estimates that sales of the trademarked items would total $67,000 for July through December 2018.On their statement of comprehensive income for calendar 2018, Mark-Wall's royalty revenue should be

Quizplus · Accepted Answer

To calculate royalties for July through December 2018, we use the formula:
Royalties = Sales x Royalty Rate
Royalties = $67,000 x 12% = $8,040

Since royalties are payable semi-annually, Mark-Wall will receive half of this amount, or $4,020, on March 15, 2019, and the other half on September 15, 2019.

On the statement of comprehensive income for calendar 2018, Mark-Wall should recognize the total royalty revenue earned in 2018, which is the sum of the two semi-annual payments:
$4,020 + $4,020 = $8,040

Therefore, the correct answer is C ($14,040).