Chapter 1, Problem 1.62AP

LO 3, 4

(Learning Objectives 3, 4: Apply the accounting equation; evaluate business operations) Compute the missing amount (?) for each company. (Amounts are in millions.)

	Kennedy Corp.	Caring Co.	Childress, Inc.
Beginning
Assets.................................	$76	$ 30	$ ?
Liabilities...........................	51	21	1
Common stock...................	7	7	6
Retained earnings...............	?	2	10
Ending
Assets.................................	$ ?	$ 48	$20
Liabilities...........................	53	32	?
Common stock...................	7	?	8
Retained earnings...............	26	?	?
Income statement
Revenues............................	$227	?	$22
Expenses............................	218	157	?
Net income.........................	?	?	?
Statement of retained earnings
Beginning RE.....................	$ 18	$ 2	$10
+ Net income.........................	?	8	4
− Dividends declared.............	(1)	(6)	(2)
= Ending RE..........................	$ 26	$ 4	$12

At the end of the year, which company had the

• highest net income?
• highest percent of net income to revenues?