Gansac Publishing Company signed a contract with an author to publish her book. The signing took place on January 1, 2016, and a payment of $20,000 was made to obtain a copyright. Gansac expects to sell 200,000 books evenly between 2016 and 2020 at a price of $10 per book.

Required:

1.	Prepare journal entries to record the events related to the copyright and sales of the book during 2016 and 2017, assuming that sales were as projected.
2.	Next Level How would your answer change if Gansac expected sales of the book to be 120,000 copies in 2016, 70,000 copies in 2017, and 10,000 copies over the remainder of the copyrights useful life?

Chart Of Accounts

CHART OF ACCOUNTS

Gansac Publishing Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation
195	Copyright

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
533	Amortization Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

General Journal

Prepare journal entries to record the events related to the copyright and sales of the book during 2016 and 2017, assuming that sales were as projected. Additional Instructions

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10

Next Level

How would your answer change if Gansac expected sales of the book to be 120,000 copies in 2016, 70,000 copies in 2017, and 10,000 copies over the remainder of the copyrights useful life?

Gansac would use an activity method of amortization and record of amortization in 2016 and of amortization in 2017.