chapter 2 - E2.2 Applying Accounting Relations Balance...

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E2.2. Applying Accounting Relations: Balance Sheet, Income Statement and Equity Statement a. Liabilities = Assets – Shareholder’s equity = $400 - $250 = $150 million b. Net Income = Revenues – Expenses $30 = ? - $175 ? = $205 million c. Ending equity = Beginning equity + Comprehensive Income – Net Payout $250 = $230 + ? - $12 ? = $32 million As net income (in the income statement) is $30 million, $2 million was reported as “other comprehensive income” in the equity statement. d. Net payout = Dividends + Share repurchases – Share issues As there were no share issues or repurchases, dividend = $12. E2.8. Using Accounting Relations to Check Errors Ending shareholders’ equity can be derived in two ways: 1. Shareholders’ equity = assets – liabilities 2. Shareholders’ equity = Beginning equity + comprehensive income – net dividends So, if the two calculations do not agree, there is an error somewhere. First make the calculations for comprehensive income and net dividends:
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This homework help was uploaded on 02/24/2008 for the course MBA 860 taught by Professor Zayaty during the Spring '08 term at University of Findlay.

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chapter 2 - E2.2 Applying Accounting Relations Balance...

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