Cooke Company acquires patent rights from other enterprises and pays advance royalties in some cases, and in others, royalties are paid within ninety days after year-end. The following data are included in Cooke’s December 31 balance sheets:
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|
2005 |
2006 |
|
|
Prepaid royalties |
$55,000 |
$45,000 |
|
Royalties payable |
80,000 |
75,000 |
During 2006 Cooke remitted royalties of $300,000. In its income statement for the year ended December 31, 2006, Cooke should report royalty expense of
- $295,000
- $305,000
- $310,000
- $330,000