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 $35,000 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 LevelHow would your answer change if Gansac expected sales of the book to be 110,000 copies in 2016, 70,000 copies in 2017, and 20,000 copies over the remainder of the copyright's 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

For grading purposes, use December 31, 2016 and December 31, 2017 to record summary transactions for sales entries that would have been made during the year.

Refer to the Chart of Accounts provided for the exact wording of the answer choices for text entries.

Assume sales were for cash rather than on account.

PAGE 1

GENERAL JOURNAL

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

9

10

Solution

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

9

10

Points:

Feedback

Check My Work Explanation

Next Level

How would your answer change if Gansac expected sales of the book to be 110,000 copies in 2016, 70,000 copies in 2017, and 20,000 copies over the remainder of the copyright's useful life?

Gansac would use an activity method of amortization and record

of amortization in 2016 and

of amortization in 2017.

Points:

Feedback

Check My Work Explanation