Relating net income to balance sheet changes. The comparative balance sheets for Target Corporation, a discount retailer, as of January 3 1 , Year 1 1 : January 3 1 . Year 12: and January 3 1 .

Year 13. appear below (amounts in millions):

TARGET CORPORATION Comparative Balance Sheet January 31, Year 11, Year 12, and Year 13 January 31 Year 11 Year 12 Year 13 Total Assets $19,490 Liabilities $12,971 Common Stock 977 Retained Earnings 5,542 Total Liabilities and Shareholders' Equity $19,490

$24,154

$16,294 1,173 6,687 $24,154

$28,603

$19,160 1,336 8,107 $28,603 Target Corporation declared and paid dividends of $203 million during fiscal Year 1 2 and ^2 I 8 million during fiscal Year 13.

a. Compute net income for fiscal Year 12 and Year 13 b\ analyzing the change in retained earnings.

b. Demonstrate that the following relation holds:

Net Income = Increase in Assets - Increase in Liabilities

- Increase in Contributed Capital + Dividends