chap4soln[1]

chap4soln[1] - EXERCISE 4-1(18–20 minutes Computation of...

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Unformatted text preview: 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 additional paid-in capital 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) Maria Conchita Alonzo Corp. Income Statement For the Year Ended December 31, 2007 Sales Revenue Sales........................................................................................................... $1,380,000 Less: Sales returns and allowances.................................................... $150,000 Sales discounts............................................................................. 45,000 195,000 Net sales revenue .................................................................................... 1,185,000 Cost of goods sold................................................................................... 621,000 Gross profit on sales..................................................................................... 564,000 Operating Expenses Selling expenses............................................................................... 194,000 Admin. and general expenses....................................................... 97,000 291,000 Income from operations.............................................................................. 273,000 Other Revenues and Gains Interest revenue ........................................................................................ 86,000 359,000 Other Expenses and Losses Interest expense........................................................................................ 60,000 Income before tax and extraordinary item ................................................... 299,000 Income tax ($299,000 X .34)..................................................................... 101,660 Income before extraordinary item .................................................................. 197,340 Extraordinary item—loss from earthquake damage....................................... 150,000 Less: Applicable tax reduction ($150,000 X .34)...................................... 51,000 99,000 Net income............................................................................................................. $ 98,340 Per share of common stock: Income before extraordinary item ($197,340 ÷ 100,000)............................................................................... $1.97* Extraordinary item (net of tax) ............................................................. (.99 ) Net income ($98,340 ÷ 100,000)............................................................... $ .98 EXERCISE 4-7 (15–20 minutes)...
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chap4soln[1] - EXERCISE 4-1(18–20 minutes Computation of...

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