Question

Foremost Company owns a royalty interest in an oil well. The contract stipulates that Fore-most will receive royalty payments semiannually on January 31 and July 31. The January 31 payment will be for 30% of the oil sold to jobbers between the previous June 1 and November 30, and the July 31 payment will be for oil sold between the previous December 1 and May 31. Royalty receipts for 2014 amounted to $150,000 and $240,000 on January 31 and July 31, respectively. On December 31, 2013, accrued royalty revenue receivable amounted to $40,000. Production reports show the following oil sales:
June 1, 2013–November 30, 2013........ $500,000
December 1, 2013–May 31, 2014 ....... 800,000
June 1, 2014–November 30, 2014 ....... 600,000
December 1, 2014–December 31, 2014 .... 100,000

Required:
What amount should Foremost report as royalty revenue for 2014?



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  • CreatedSeptember 10, 2014
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