Ch. 20 Homework Que 10.00 points Three programmers at Feenix Computer Storage, I
ID: 2527906 • Letter: C
Question
Ch. 20 Homework Que 10.00 points Three programmers at Feenix Computer Storage, Inc., write an operating systems control manual for Hill- McGraw Publishing, Inc., for which Feenx receives royalties equal to 12% of net sales Royalties are payable annually on February 1 for sales the previous year The editor indicated to Feenix on December 31, 2016, that book sales subject to royalties for the year just ended are expected to be $280,000 Accordingly. Feenix accrued royalty revenue of $33,600 at December 31 and received royalties of $34,080 on February 1, 2017 What adjustments, if any, should be made to retained earnings or to the 2016 financial statements? (If no entry is required for a particular event, select "No journal entry required" in the first account field.) Wew transaction list Journal entry worksheet Record adjustments to be made to retained earnings for 2016 financial Note: Enter debits before credits Event Debit Credit Record entry Clear entry View general journalExplanation / Answer
As per ASC 250 and IAS 8, Any change in accouting estimate should have a prospective effect only and prior period should not be adjusted.
The differential royalty Income of $480 should be reported in 2017 and prior period ie 2016 should not be altered