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Unformatted text preview: Review, PassMaster Questions Lecture: Regulation 3 Following is Ral Corp.'s condensed income statement, before federal income tax, for the year ended December 31, 1993: Sales Cost of sales Gross profit Operating expenses Operating income Other income (loss): Interest Dividends Net long-term capital loss Income before federal income tax $1,000,000 (700,000) 300,000 (220,000) 80,000 $5,200 19,200 (6,400) Additional information: Interest arose from the following sources: U.S. Treasury notes Municipal bonds Total interest 18,000 98,000 $ 3,000 2,200 5,200 Dividends arose from the following sources: Taxable domestic corporation Clove Corp. Ramo Corp. Sol Corp. (stock sold 1/10/94) Real Estate Investment Trust Mutual Fund Corp. (capital gains dividends only) Money Market Fund (invests only in interest-paying securities) Total dividends Date stock acquired 7-1-87 9-1-89 12-1-93 6-1-92 % owned by Ral 30.0 10.0 5.0 1.0 $ 7,000 6,000 1,000 2,700 4-1-91 0.1 400 3-1-90 0.1 2,100 $ 19,200 Operating expenses include the following:...
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