-E18-21 (Determine Proper Income Reporting) Presented below are three independent situations that you are to solve: 1. Lauren Bacall Inc. received dividends from its common stock investments during the year ended December 31, 1999, as follows: Chapter 18 Investments (a) A cash dividend of $12,000 is received from Big Sleep Corporation. (Bacall owns a 2% interest in Big Sleep.) (b) A cash dividend of $60,000 is received from Key Largo Corporation. (Bacall owns a 30% interest in Key Largo.) A majority of Bacall's directors are also directors of Key Largo Corporation. (c) A stock dividend of 300 shares from Orient Express Inc. was received on December 10, 1999, on which date the quoted market value of Orient's shares was $10 per share. Bacall owns less than 1% of Orient's common stock. Determine how much dividend income Bacall should report in its 1999 income statement. 2. On January 3, 1999, Barbara Bach Co. purchased as a long-term investment 5,000 shares of Ringo Starr Co. common stock for $79 per share, which represents a 2% interest. On December 31, 1999, the market price of the stock was $83 per share. On March 3, 2000, it sold all 5,000 shares of Starr stock for $102 per share. The company regularly sells securities of this type. The income tax rate is 35%. Determine the amount of gain or loss on disposal that should be reported on the income statement in 2000 3. Nastassia Kinski Co. owns a 5% interest in Magdalene Corporation, which declared a cash dividend of $620,000 on November 27, 1999, to shareholders of record on December 16, 1999, payable on January 6, 2000. In addition, on October 15, 1999, Kinski received a liquidating dividend of $10,200 from Terminal Velocity Company. Kinski owns 6% of Terminal Velocity Co. Determine the amount of dividend income Kinski should report in its financial statements for 1999