Chapter 04 - Homework Solutions

Chapter 04 - Homework Solutions - CHAPTER 4 Income...

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4-1 CHAPTER 4 Income Statement and Related Information SOLUTIONS TO EXERCISES 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
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4-2 EXERCISE 4-3 (20–25 minutes) LeRoi Jones Inc. Income Statement For Year Ended December 31, 2007 Revenues Net sales ($1,250,000 (b) – $17,000) ....................... $1,233,000 Expenses Cost of goods sold ............................................... 500,000 Selling expenses ................................................... 400,000 (c) Administrative expenses ...................................... 100,000 (a) Interest expense .................................................... 20,000 Total expenses ............................................. 1,020,000 Income before income tax .............................................. 213,000 Income tax ............................................................. 63,900 Net income ...................................................................... $ 149,100 Earnings per share .......................................................... $ 7.46 * *Rounded
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