Question

Bird Corp.'s trademark was licensed to Brian Co. for royalties of 15% of the sales of the trademarked items. Royalties are payable semiannually on March 15 for sales in July through December of the prior year, and on September 15 for sales in January through June of the same year.Bird received the following royalties from Brian:________March 15 September 152004 $5,000 $7,5002005 6,000 8,500Brian estimated that the sales of the trademarked items would total $30,000 for July through December 2005.In Bird's 2005 Income Statement, the royalty revenue should be:A. $13,000B. $14,500C. $19,000D. $20,500

Answer 1

Answer:

A. $13,000

Explanation:

The computation of the royalty revenue is shown below:

= Estimated sales of the trademarked items × given percentage + September 2005 royalties received

= $30,000 ×15% + $8,500

= $4,500 + $8,500

= $13,000

For the first half, the royalty would be $8,500 and the second half it would depend on the estimated sales which we computed above