Mattson Company Receives Royalties on a Patent It Developed Several

question 66

Essay

Mattson Company receives royalties on a patent it developed several years ago. Royalties are 5% of net sales, receivable 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, 2012, and Mattson accrued royalty revenue of $60,000 on December 31, 2012, as follows: Mattson received royalties of $65,000 on March 31, 2013, and $80,000 on September 30, 2013. The patent user indicated to Mattson that sales subject to royalties for the second half of 2013 should be $800,000.
Required:
(1.) Prepare any journal entries Mattson should record during 2013 related to the royalty revenue.
(2.) What changes should be made to retained earnings relative to these royalties?

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Definitions:

Realities

The state of things as they actually exist, as opposed to an idealistic or notional idea of them.

Marital Burnout

The gradual deterioration of love and ultimate loss of an emotional attachment between partners.

Slowly

At a leisurely or reduced pace, allowing for careful progression or appreciation.

Quietly

In a manner that makes little or no noise; silently or softly.