Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Entro Co. sold equipment to Pan Co. for $80,000. The equipment had a net book amount of $50,000. The collections were $30,000 in the first
| Entro Co. sold equipment to Pan Co. for $80,000. The equipment had a net book amount of $50,000. The collections were $30,000 in the first year, $32,000 in the next year, and $18,000 in the last year. What is the amount of gross profit for the third year if Entro used the installment-sales accounting method for the transaction? | |
| A. | $11,250 |
| B. | $6,750 |
| C. | $12,000 |
| D. | $30,000 |
| During Year 1, Fan Co.'s trademark was licensed to Ham Corp. for royalties of 15% of net sales of the trademarked items. Returns were estimated to be 2% of gross sales. On signing the licensing agreement, Ham paid Fan $ 90,000 as an advance against future royalty earnings. Gross sales of the trademarked items during the year were $750,000. What amount should Fan report as royalty income for Year 1? | |
| A. | $110,250 |
| B. | $112,500 |
| C. | $111,375 |
| D. | $73,500 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started