Chapter 4: 3E (page 182)

Presented below are certain account balances of Paczki Products Co.
Rent revenue $6,500 Sales discounts $7,800
Interest expense $12,700 Selling expenses $99,400
Beginning retained earnings $114,400 Sales revenue $390,000
Ending retained earnings $125,000Income tax expense $31,000
Dividend revenue $71,000Cost of goods sold $184,000
Sales returns and allowances $12,400Administrative expenses $82,500
Allocation to non controlling interest $17,000
Instructions
From the foregoing, compute the following: (a) total net revenue, (b) net income, (c) dividends declared, and (d) income attributable to controlling stockholders.

Short Answer

Expert verified

The income attributable to controlling shareholders is $20,300.

Step by step solution

Meaning of Dividends

Dividend refers to the amount paid to common shareholders from the profits of a company's earnings. After earning a profit, it is in the hands of the management to either pay dividends or reinvests in the business.

Calculation of total net revenue

Computation of Total Net Revenue
Sales Revenue		$390,000
Less: Sales discounts	$7,800
Sales returns and Allowances	$12,400	($20,200)
Net Sales Revenue			$369,800
Dividend Revenue			$71,000
Rent Revenue			$6,500
Total net revenue			$447,300

Calculation of Net Income

Calculation of Net Income
Total net revenue (A)		$447,300
Less: Total Operating expenses
Cost of Goods Sold	$184,400
Selling Expenses	$99,400
Administrative Expenses	$82,500
Interest Expenses	$12,700
Total Operating expenses (B)		($379,000)
Income before income tax expense (A-B)		$68,300
Income Tax Expense		($31,000)
Net Income		$37,300

Computation of Dividends Declared

Computation of Dividends Declared
Particulars	Amount ($)
Beginning Retained Earnings Balance	$114,400
Add: Net Income	$37,300
	$151,700
Less: Ending Retained Earnings Balance	$134,000
Dividends Declared	$17,700

Computation of Income attributable to controlling shareholders

$\begin{array}{rcl} Income attributable to controlling shareholders & = & Net income - Allocation to non - controlling interest \\ = & $ 37, 300 - $ 17, 000 \\ = & $ 20, 300 \end{array}$

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Short Answer

Step by step solution

Meaning of Dividends

Calculation of total net revenue

Calculation of Net Income

Computation of Dividends Declared

Computation of Income attributable to controlling shareholders

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