A is corrent. Since the $200,000 cash receipts is not separated into earned and unearned revenue, set up T-accounts for royalties receivable and unearned royalties.
By analyzing the T-accounts, the $195,000 debit to royalties receivable represents revenue earned. In addition, the $20,000 decrease in unearned royalties represents year 2 royalty revenue. Therefore, Decker should report $215,000 ($195,000 + $20,000) of earned royalty revenue.
B is incorrect. Since the $200,000 cash receipts is not separated into earned and unearned revenue, set up T-accounts for royalties receivable and unearned royalties.
By analyzing the T-accounts, the $195,000 debit to royalties receivable represents revenue earned. In addition, the $20,000 decrease in unearned royalties represents year 2 royalty revenue. Therefore, Decker should report $215,000 ($195,000 + $20,000) of earned royalty revenue.
B is incorrect. Since the $200,000 cash receipts is not separated into earned and unearned revenue, set up T-accounts for royalties receivable and unearned royalties.
By analyzing the T-accounts, the $195,000 debit to royalties receivable represents revenue earned. In addition, the $20,000 decrease in unearned royalties represents year 2 royalty revenue. Therefore, Decker should report $215,000 ($195,000 + $20,000) of earned royalty revenue.
D is incorrect. Since the $200,000 cash receipts is not separated into earned and unearned revenue, set up T-accounts for royalties receivable and unearned royalties.
By analyzing the T-accounts, the $195,000 debit to royalties receivable represents revenue earned. In addition, the $20,000 decrease in unearned royalties represents year 2 royalty revenue. Therefore, Decker should report $215,000 ($195,000 + $20,000) of earned royalty revenue.
