Regina Company produces computer software that Bit Comp, Inc., sells. Regina receives a royalty of 15 percent of sales. Bit Comp pays royalties to Regina Company semiannually—on May 1 for sales made in July through December of the previous year and on November 1 for sales made in January through June of the current year. Royalty expense for Bit Comp and royalty income for Regina Company in the amount of $12,000 were accrued on December 31, 2010. Cash in the amounts of $12,000 and $20,000 was paid and received on May 1 and November 1, 2011, respectively. Software sales during the July to December 2011 period totaled $430,000.

1. Calculate the amount of royalty expense for Bit Comp and royalty income for Regina during 2011.

2. Record the adjusting entry that each company made on December 31, 2011.