Homework 4.docx - Homework Chapter 4 EXERCISE 4-1(1820 minutes Computation of net income Change in assets Change in liabilities Change in stockholders

# Homework 4.docx - Homework Chapter 4 EXERCISE 4-1(1820...

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Homework Chapter 4 EXERCISE 4-1 (18–20 minutes) 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 (25–35 minutes) (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 EXERCISE 4-3 (Continued) ALTERNATE SOLUTION Beginning retained earnings ......................................... \$114,400 Add: Net income ............................................................. 20,300* 134,700

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