Lane Company acquires copyrights from authors, paying advance royalties in some cases, and in others paying royalties within 30 days of year-end. Lane reported royalty expense of 375,000 for the year ended December 31, year 3. The following data are included in Lane's December 31 balance sheets :

Year 2

Prepaid Royalties: $60,000

Royalties Payable: $75,000

Year 3

Prepaid Royalties: $50,000

Royalties Payable: $90,000