Music Company's only asset as of January 1, 2014, was a copyright. During 2014, only the following three
transactions occurred:
Royalties earned from copyright use, $510,000 in cash Cash paid for advertising and salaries, $62,500 Amortization, $50,000
Required
1. What amount of income will Music report in 2014?
2. What is the amount of cash on hand at December 31, 2014?
3. Explain how the cash balance increased from zero at the beginning of the year to its year-end balance. Why does the increase in cash not equal the income?

Question

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The Answer of Music Company's only asset as of January 1, 2014, was a copyright. During 2014, only the following three
transactions occurred:
Royalties earned from copyright use, $510,000 in cash Cash paid for advertising and salaries, $62,500 Amortization, $50,000
Required
1. What amount of income will Music report in 2014?
2. What is the amount of cash on hand at December 31, 2014?
3. Explain how the cash balance increased from zero at the beginning of the year to its year-end balance. Why does the increase in cash not equal the income?

Music Company's Only Asset as of January 1, 2014, Was