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:

ScreenTip

A small, descriptive text box that appears when a user hovers the cursor over an icon, button, or any other graphical user interface element.

Character Style

A set of formatting attributes, such as font size and color, that can be applied to text characters in a document.

Bookmark

A tool used in web browsers and documents to mark a specific location or page for quick access in the future.

ScreenTip

A small, contextual tooltip that appears when a user hovers over an element in a graphical user interface, providing information about that element.