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    Homework 3 - Solution

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    cphycherry
    Hawk Sporting Goods Company reported $188,000 in net revenues and $21,200 in net income for the year ended March 31, 20X8. Total equity increased from $34,000 to $55,200 with the addition of net income, less $1,200 in dividends paid. As of March 31, 20X8, Hawk Sporting Goods Company had total assets of $110,000 including $1,700 in cash and $37,800 in accounts receivable. Total liabilities were $56,000 and total shareholders' equity was $54,000.

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    Homework 3 - Solution

    Uploaded by

    cphycherry
    20 views5 pages
    Hawk Sporting Goods Company reported $188,000 in net revenues and $21,200 in net income for the year ended March 31, 20X8. Total equity increased from $34,000 to $55,200 with the addition of net income, less $1,200 in dividends paid. As of March 31, 20X8, Hawk Sporting Goods Company had total assets of $110,000 including $1,700 in cash and $37,800 in accounts receivable. Total liabilities were $56,000 and total shareholders' equity was $54,000.

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    Homework 3_Solution

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    Hawk Sporting Goods Company reported $188,000 in net revenues and $21,200 in net income for the year ended March 31, 20X8. Total equity increased from $34,000 to $55,200 with the addition of net income, less $1,200 in dividends paid. As of March 31, 20X8, Hawk Sporting Goods Company had total assets of $110,000 including $1,700 in cash and $37,800 in accounts receivable. Total liabilities were $56,000 and total shareholders' equity was $54,000.

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    20 views5 pages

    Homework 3 - Solution

    Uploaded by

    cphycherry
    Hawk Sporting Goods Company reported $188,000 in net revenues and $21,200 in net income for the year ended March 31, 20X8. Total equity increased from $34,000 to $55,200 with the addition of net income, less $1,200 in dividends paid. As of March 31, 20X8, Hawk Sporting Goods Company had total assets of $110,000 including $1,700 in cash and $37,800 in accounts receivable. Total liabilities were $56,000 and total shareholders' equity was $54,000.

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    of 5

    (15-30 min.

    ) S 3-15

    Hawk Sporting Goods Company


    Income Statement
    Year Ended March 31, 20X8
    Thousand
    s
    Net $188,000
    revenues…………………………….
    Cost of goods (142,500)
    sold…………………….
    All other (24,300)
    expenses……………………..
    Net $ 21,200
    income………………………………

    Hawk Sporting Goods Company


    Statement of Changes in Equity
    Year Ended March 31, 20X8
    Thousan
    ds
    Total equity, March 31, $ 34,000
    20X7….............
    Add: Net 21,200
    income……………………….
    $55,200
    Less: (1,200)
    Dividends…………………………
    Total equity, March 31, 20X8. $54,000
    …………..
    (continued) S 3-15

    Hawk Sporting Goods Company


    Balance Sheet
    March 31, 20X8
    Thousands
    ASSETS
    Current:
    $ 1,700
    Cash………………………………………
    Accounts 37,800
    receivable…………………..
    25,000
    Inventories………………………………
    Other current 6,400
    assets…………………..
    Total current 70,900
    assets………………..

    Property and equipment, net…………


    7,500
    Other assets………………………………. 31,600
    Total $110,000
    assets…………………………………...

    LIABILITIES
    Current $48,000
    liabilities………………………….
    Long-term liabilities…………………… 8,000
    Total 56,000
    liabilities………………………………..
    SHAREHOLDERS’ EQUITY
    Share capital……………………………… 30,000
    Retained earnings……………………….. 24,000
    Total shareholders’ equity…………. 54,000
    ….......
    Total liabilities and shareholders’ $110,000
    equity..
    (5-10 min.) E 3-31B

    a. Cash Basis b. Accrual


    Basis

    Revenues……………… €650,000 €690,000


    …
    Expenses……………… 440,000 500,000
    …
    Net €210,000 € 190,000
    income………………

    The accrual basis measures net income better


    because its information on revenues and expenses is
    more complete than the information provided by the
    cash basis. The accrual basis also clearly states
    what the business is expecting in terms of its
    knowable future economic benefits and economic
    obligations.

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