Prepare any journal entries dreighton should record

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Question - Dreighton Engineering Group receives royalties on a technical manual written by two of its engineers and sold to William B. Irving Publishing, Inc. Royalties are 10% of net sales, receivable on October 1 for sales in January through June and on April 1 for sales in July through December of the prior year. Sales of the manual began in July 2010, and Dreighton accrued royalty revenue of $31,000 at December 31, 2010, as follows:

Receivable-royalty revenue

31,000


Royalty revenue


31,000

Dreighton received royalties of $36,000 on April 1, 2011, and $40,000 on October 1, 2011. Irving indicated to Dreighton on December 31 that book sales subject to royalties for the second half of 2011 are expected to be $500,000.

Required:

(1) Prepare any journal entries Dreighton should record during 2011 related to the royalty revenue.

(2) Should any adjustments be made to retained earnings or to the 2010 financial statements? Prepare any journal entries if required.

Reference no: EM131790424

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