These payments were debited to prepaid tax expense on

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Unformatted text preview: . (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: • Bonus of $5,000 paid to Ral's sales manager on January 31, 1994. This bonus was based on a percentage of Ral's 1993 sales and was computed on January 25, 1994, under a formula in effect in 1993. • Estimate of $10,000 for bad debts. Actual bad debts for the year amounted to $8,000. No pre-1989 bad debt reserve remained on Ral's books since January 1, 1989. • Keyman life insurance premiums of $4,000. Ral is the beneficiary of the policies. • State income taxes of $12,000. During 1993, Ral made estimated federal income tax payments of $35,000. These payments were debited to prepaid tax expense on Ral's books. Ral does not exercise significant influence over Clove and accordingly did not use the equity method of accounting for thi...
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