- 8 -
during the subsequent year. Therefore, for financial statement
purposes, each year’s royalty expense reflected a reduction for
royalties attributable to the estimated subsequent year’s returns.
According to Random House’s books, the beginning and end of
year balances of the reserve for returns for the audit years were
as follows:
1989 1990
Balance in reserve for returns $63,652,154 $93,923,107
beginning of year
Balance in reserve for returns 93,923,107 96,957,702
end of year
Net increase to reserve 30,270,953 3,034,595
for returns
According to Random House’s books, the beginning and end of
year balances of the royalty reserve for the audit years were as
follows:
1989 1990
Balance in royalty reserve $7,327,000 $9,230,000
beginning of year
Balance in royalty reserve 9,230,000 10,278,077
end of year
Net increase to royalty reserve 1,903,000 1,048,077
For tax purposes, Random House reversed those financial
statement reserve adjustments. Accordingly, to arrive at net
sales for income tax purposes, Random House increased financial
statement net sales by $30,270,953 for 1989 and $3,034,595 for
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011