Ch04HWsolutionsPlus - CHAPTER 4 Income Statement and Related Information EXERCISE 4-1 Computation of net income Change in assets $69,000 $45,000

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CHAPTER 4 Income Statement and Related Information EXERCISE 4-1 Computation of net income Change in assets: $69,000 + $45,000 + $127,000 – $47,000 = $194,000 Increase Change in liabilities: $ 82,000 – $51,000 = 31,000 Increase Change in stockholders’ equity: $163,000 Increase Change in stockholders’ equity accounted for as follows: Net increase. .......................................................... $163,000 Increase in common stock. ......................... $125,000 Increase in additional paid-in capital. ........ 13,000 Decrease in retained earnings due to dividend declaration. ............................... (24,000 ) Net increase accounted for. ................................. 114,000 Increase in retained earnings due to net income. ............................................................... $ 49,000
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EXERCISE 4-2 (a) Total net revenue: Sales. ............................................ $400,000 Less: Sales discounts. ............... $ 7,800 Sales returns. ................... 12,400 20,200 Net sales. ...................................... 379,800 Dividend revenue. ........................ 71,000 Rental revenue. ............................ 6,500 Total net revenue. ............... $457,300 (b) Net income: Total net revenue (from a). ......... $457,300 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. ......... 78,300 Income tax. ................................... 26,600 Net income. ............................ $ 51,700 (c) Dividends declared: Ending retained earnings. .......... $134,000 Beginning retained earnings. ..... 114,400 Net increase. .......................................... 19,600 Less: Net income (from (b)). ............... 51,700 Dividends declared. .............................. $ 32,100
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ALTERNATE SOLUTION (for (c)) Beginning retained earnings. ............................. $114,400 Add: Net income. ................................................ 51,700 166,100 Less: Dividends declared. .................................. ? Ending retained earnings. ................................... $134,000 Dividends declared must be $32,100 ($166,100 – $134,000) EXERCISE 4-3 (20–25 minutes) DUNBAR INC. Income Statement For Year Ended December 31, 2010 Revenues Net sales ($1,125,000 (b) – $17,000). .................. $1,108,000 Expenses Cost of goods sold. .......................................... $500,000 Selling expenses. .............................................. 360,000 (c) Administrative expenses. ................................ 90,000 (a) Interest expense. .............................................. 20,000 Total expenses. ........................................ 970,000 Income before income tax. ......................................... 138,000 Income tax. ........................................................ 41,400 Net income
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This note was uploaded on 06/28/2011 for the course ACCOUNTING 515 taught by Professor Jim during the Spring '11 term at CUNY Queens.

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Ch04HWsolutionsPlus - CHAPTER 4 Income Statement and Related Information EXERCISE 4-1 Computation of net income Change in assets $69,000 $45,000

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