Mattson Company Receives Royalties on a Patent It Developed Several

question 5

Essay

Mattson 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 1,2015,and Mattson accrued royalty revenue of $60,000 on December 31,2015,as follows:

Mattson received royalties of $65,000 on March 31,2016,and $80,000 on September 30,2016.In December,2016,the patent user indicated to Mattson that sales subject to royalties for the second half of 2016 should be $800,000.
Required:
(1. )Prepare any journal entries Mattson should record during 2016 related to the royalty revenue.
(2. )What changes should be made to retained earnings relative to these royalties?

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Definitions:

Bulimia Nervosa

An eating disorder characterized by binge eating followed by purging to prevent weight gain.

Remorse

A deep regret or guilt for a wrong committed, often associated with a desire to make amends.

Gain Weight

The increase in body mass, typically as a result of excess calorie intake beyond the body's energy needs.

Anorexia Nervosa

An eating disorder characterized by an obsessive desire to lose weight by refusing to eat and extreme weight loss.