What ferol company royalty expense is

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Ferol Company acquired rights to a patent from Rachal Company requiring an advance royalty payment when agreement was signed. Ferol Company remits royalties earned and due under the agreement on October 31 each year. Additionally, on the same date, Ferol Company pays in advance estimated royalties for the next year. Ferol Company adjusts prepaid royalties at year-end.

Information for the year ended December 31, 2021 is as follows:

01/01/2021      Prepaid royalties                                                  75,000
10/31/2021      Royalty payment (charged to royalty expense)      1,350,000
12/31/2021      Year-end credit adjustment to royalty expense        165,000

Problem 1: Under the cash basis of accounting, Ferol Company's royalty expense for 2021 is

Reference no: EM132994545

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