chapter 4 homework.docx - EXERCISE 4-1 Computation of net income Change in assets \$204,000 Increase(a Change in liabilities 31,000 Increase(b Change in

# chapter 4 homework.docx - EXERCISE 4-1 Computation of net...

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EXERCISE 4-1 Computation of net income Change in assets .......................................................................................... \$204,000 Increase (a) Change in liabilities ...................................................................................... 31,000 Increase (b) Change in stockholders’ equity .................................................................... \$173,000 Increase (a) \$79,000 + \$45,000 + \$127,000 – \$47,000 (b) \$ 82,000 – \$51,000 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 4-3 (a) Total net revenue: Sales revenue ..................................................................................... \$390,000 Less: Sales discounts ......................................................................... \$ 7,800 Sales returns and allowances .................................................. 12,400 20,200 Net sales ............................................................................................. 369,800 Dividend revenue ............................................................................... 71,000 Rent revenue ...................................................................................... 6,500 Total net revenue .................................................................... \$447,300 (b) Net income: Total net revenue (from a) .................................................................. \$447,300 Expenses:
Cost of goods sold ......................................................................... 184,400 Selling expenses ............................................................................ 99,400 Administrative expenses ............................................................... 82,500 Interest expense ........................................................................... 12,700 Total expenses ......................................................................... 379,000 Income before income tax .................................................................. 68,300 Income tax .......................................................................................... 31,000 Net income ................................................................................... \$ 37,300 (c) Dividends declared: Ending retained earnings ................................................................... \$125,000 Beginning retained earnings ............................................................... 114,400 Net increase .................................................................................................... 10,600 Less: Net income (attributed to controlling shareholders) .............................. 20,300* Dividends declared .......................................................................................... \$ 9,700 \$37,300-\$17,000 (d)

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