Detailed Answer
(d) The agreement states that Super is to receive royalties
of 20% of revenues associated with the comic strip. Since
Fantasy’s year 3 revenues from the strip were $1,500,000, Super’s
royalty revenue is $300,000 ($1,500,000 × 20%). The other
information in the problem about the receivable and cash payments
is not needed to compute revenues. Super’s year 3 summary
entries would be
Cash 200,000
Royalties rec. 75,000
Royalty revenue 125,000 ($200,000 – $75,000)
Royalties rec. 175,000
Royalty revenue 175,000 ($300,000 – $125,000)