Acc301 CH-4 HW Solution - EXERCISE41(1820minutes Changeinassets Changeinliabilities $79,000 $45,000 $127,000$47,000=$204,000Increase

Acc301 CH-4 HW Solution - EXERCISE41(1820minutes...

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EXERCISE 4-1 (18–20 minutes) Computation of net income Change in assets: $79,000 + $45,000 + $127,000 – $47,000 = $204,000 Increase Change in liabilities: $  82,000 – $51,000 =     31,000  Increase Change in stockholders’ equity: $173,000  Increase Change in stockholders’ equity accounted      for as follows: Net increase $ 173,000 Increase in common stock $125,000 Increase in paid-in capital in excess      of par 13,000 Decrease in retained earnings due to      dividend declaration    (19,000 ) Net increase accounted for   (119,000 ) Increase in retained earnings due to net      income $   54,000 EXERCISE 4-5 (30–35 minutes) (a) Multiple-Step Form P. BRIDE COMPANY Income Statement For the Year Ended December 31, 2014 (In thousands, except earnings per share) Sales revenue ...................................................... $96,500 Cost of goods sold .............................................   60,570 Gross profit ......................................................... 35,930
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Operating Expenses       Selling expenses             Sales commissions ................................. $7,980             Depr. of sales equipment ....................... 6,480             Delivery expense .....................................   2,690 $17,150       Administrative expenses             Officers’ salaries ..................................... 4,900             Depr. of office furn. and equip ...............   3,960     8,860   26,010                   Income from operations ................... 9,920 Other Revenues and Gains       Rent revenue .................................................   17,230 27,150 Other Expenses and Losses       Interest expense ............................................     1,860 Income before income tax .................................. 25,290       Income tax .....................................................     9,070 Net income ........................................................... $16,220 Earnings per share ($16,220  ÷  40,550) .............. $.40
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EXERCISE 4-5 (Continued) (b) Single-Step Form P. BRIDE COMPANY Income Statement For the Year Ended December 31, 2014 (In thousands, except earnings per share) Revenues       Net sales ............................................................................. $  96,500       Rental revenue ...................................................................     17,230             Total revenues ..............................................................   113,730 Expenses       Cost of goods sold ............................................................ 60,570       Selling expenses ................................................................ 17,150       Administrative expenses ................................................... 8,860       Interest expense .................................................................       1,860             Total expenses .............................................................     88,440 Income before income tax ....................................................... 25,290 Income tax ................................................................................       9,070       Net income ......................................................................... $  16,220 Earnings per share .................................................................. $.40 Note:  An alternative income statement format for the single-step form is to show income tax a part of expenses, and not as a separate item.
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