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ACC 291The Latest Version A+ Study Guide

Entire Course

https://uopcourses.com/category/acc-291/

ACC 291 WileyPLUS Assignment: Week 1 Assignment

Resource: WileyPLUS

Click Assignment: Week 1 Assignment within WileyPLUS to complete the following exercises:

Exercise 8-4

Exercise 8-11

BYP 8-1

BYP 8-2

Exercise 8-4

Answer

The ledger of Wainwright Company at the end of the current year shows Accounts Receivable $87,000;

Credit Sales $820,000; and Sales Returns and Allowances $52,600. (Credit account titles are

automatically indented when amount is entered. Do not indent manually.)

(a) If Wainwright uses the direct write-off method to account for uncollectible accounts, journalize the

adjusting entry at December 31, assuming Wainwright determines that Hiller’s $1,100 balance is

uncollectible.

(b) If Allowance for Doubtful Accounts has a credit balance of $850 in the trial balance, journalize the adjusting

entry at December 31, assuming bad debts are expected to be 10% of accounts receivable.

Exercise 8-11

Suppose the following information was taken from the 2014 financial statements of FedEx Corporation,

a major global transportation/delivery company.

(in millions) 2014 2013

Accounts receivable (gross) $ 3,490 $ 4,420

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Accounts receivable (net) 3,335 4,296

Allowance for doubtful accounts 155 124

Sales revenue 35,898 38,861

Total current assets 7,011 7,189

Answer each of the following questions.

Broadening Your Perspective 8-1

Your answer is correct.

The financial statements of Tootsie Roll are presented below.

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF

Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data)

For the year ended December 31,

2011 2010 2009

Net product sales $528,369 $517,149 $495,592

Rental and royalty revenue 4,136 4,299 3,739

Total revenue 532,505 521,448 499,331

Product cost of goods sold 365,225 349,334 319,775

Rental and royalty cost 1,038 1,088 852

Total costs 366,263 350,422 320,627

Product gross margin 163,144 167,815 175,817

Rental and royalty gross margin 3,098 3,211 2,887

Total gross margin 166,242 171,026 178,704

Selling, marketing and administrative expenses 108,276 106,316 103,755

Impairment charges — — 14,000

Earnings from operations 57,966 64,710 60,949

Other income (expense), net 2,946 8,358 2,100

Earnings before income taxes 60,912 73,068 63,049

Provision for income taxes 16,974 20,005 9,892

Net earnings $43,938 $53,063 $53,157

Net earnings $43,938 $53,063 $53,157

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Other comprehensive earnings (loss) (8,740) 1,183 2,845

Comprehensive earnings $35,198 $54,246 $56,002

Retained earnings at beginning of year. $135,866 $147,687 $144,949

Net earnings 43,938 53,063 53,157

Cash dividends (18,360) (18,078 ) (17,790 )

Stock dividends (47,175) (46,806 ) (32,629 )

Retained earnings at end of year $114,269 $135,866 $147,687

Earnings per share $0.76 $0.90 $0.89

Average Common and Class B Common shares outstanding 57,892 58,685 59,425

(The accompanying notes are an integral part of these statements.)


Financial Position

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per share data)

Assets December 31,

2011 2010

CURRENT ASSETS:

Cash and cash equivalents $78,612 $115,976

Investments 10,895 7,996

Accounts receivable trade, less allowances of $1,731 and $1,531 41,895 37,394

Other receivables 3,391 9,961

Inventories:

Finished goods and work-in-process 42,676 35,416

Raw materials and supplies 29,084 21,236

Prepaid expenses 5,070 6,499

Deferred income taxes 578 689


PROPERTY, PLANT AND EQUIPMENT, at cost:

Land 21,939 21,696

Buildings 107,567 102,934

Machinery and equipment 322,993 307,178

Construction in progress 2,598 9,243

455,097 440,974

Less—Accumulated depreciation 242,935 225,482

Net property, plant and equipment 212,162 215,492

OTHER ASSETS:

Goodwill 73,237 73,237

Trademarks 175,024 175,024


Split dollar officer life insurance 74,209 74,441


Equity method investment 3,935 4,254

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Deferred income taxes 7,715 9,203

Total other assets 433,493 407,300

Total assets $857,856 $857,959

Liabilities and Shareholders’ Equity December 31,

2011 2010

CURRENT LIABILITIES:

Accounts payable $10,683 $9,791

Dividends payable 4,603 4,529

Accrued liabilities 43,069 44,185

Total current liabilities 58,355 58,505

NONCURRENT LIABILITES:


Postretirement health care and life insurance benefits 26,108 20,689

Industrial development bonds 7,500 7,500

Liability for uncertain tax positions 8,345 9,835

Deferred compensation and other liabilities 48,092 46,157

Total noncurrent liabilities 133,566 132,046

SHAREHOLDERS’ EQUITY:

Common stock, $.69-4/9 par value—120,000 shares authorized—36,479 and

36,057 respectively, issued25,333 25,040

Class B common stock, $.69-4/9 par value—40,000 shares authorized—21,025

and 20,466 respectively, issued14,601 14,212

Capital in excess of par value 533,677 505,495

Retained earnings, per accompanying statement 114,269 135,866

Accumulated other comprehensive loss (19,953) (11,213)

Treasury stock (at cost)—71 shares and 69 shares, respectively (1,992) (1,992)

Total shareholders’ equity 665,935 667,408

Total liabilities and shareholders’ equity $857,856 $857,959



Cash Flows (in thousands)


2011 2010 2009

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings $43,938 $53,063 $53,157

Adjustments to reconcile net earnings to net cash provided by

operating activities:

Depreciation 19,229 18,279 17,862


Impairment of equity method investment — — 4,400

Loss from equity method investment 194 342 233

Amortization of marketable security premiums 1,267 522 320

Changes in operating assets and liabilities:

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Accounts receivable (5,448) 717 (5,899)

Other receivables 3,963 (2,373) (2,088)

Inventories (15,631) (1,447) 455

Prepaid expenses and other assets 5,106 4,936 5,203

Accounts payable and accrued liabilities 84 2,180 (2,755)

Income taxes payable and deferred (5,772) 2,322 (12,543)

Postretirement health care and life insurance benefits 2,022 1,429 1,384

Deferred compensation and other liabilities 2,146 2,525 2,960

Others (708) 310 305

Net cash provided by operating activities 50,390 82,805 76,994

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures (16,351) (12,813) (20,831)

Net purchase of trading securities (3,234) (2,902) (1,713)

Purchase of available for sale securities (39,252) (9,301) (11,331)

Sale and maturity of available for sale securities 7,680 8,208 17,511

Net cash used in investing activities (51,157) (16,808) (16,364)

CASH FLOWS FROM FINANCING ACTIVITIES:

Shares repurchased and retired (18,190) (22,881) (20,723)

Dividends paid in cash (18,407) (18,130) (17,825)

Net cash used in financing activities (36,597) (41,011) (38,548)

Increase (decrease) in cash and cash equivalents (37,364) 24,986 22,082

Cash and cash equivalents at beginning of year 115,976 90,990 68,908

Cash and cash equivalents at end of year $78,612 $115,976 $90,990

Supplemental cash flow information

Income taxes paid $16,906 $20,586 $22,364

Interest paid $38 $49 $182

Stock dividend issued $47,053 $46,683 $32,538


Five Year Summary of Earning and Financial Hightlights

TOOTISE ROLL. INDUSTRY, INC. AND SUBSIDIARIES

(Thousands of dollars except per share, percentage and ratio figures)

2011 2010 2009 2008 2007

Sales and Earnings Data

Net product sales $528,369 $517,149 $495,592 $492,051 $492,742

Product gross margin 163,144 167,815 175,817 158,055 165,456

Interest expenses 121 142 243 378 535

Provision for income taxes 16,974 20,005 9,892 16,347 25,401

Net earnings 43,938 53,063 53,157 38,880 52,175

% of net product sales 8.3% 10.3% 10.7% 7.9% 10.6%

% of shareholders' equity 6.6% 8.0% 8.1% 6.1% 8.1%

Per Common Share Data

Net earnings $0.76 $0.90 $0.89 $0.65 $0.85

Cash dvidends declared 0.32 0.32 0.32 0.32 0.32

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Stock dividends 3% 3% 3% 3% 3%

Additional Financial Data

Working capital $153,846 $176,662 $154,409 $129,694 $142,163

Net cash provided by opreating

activities 50,390 82,805 76,994 57,333 90,148

Net cash provided by (used by)

investing activities(51,157) (16,808) (16,364) (7,565) (43,429)

Net cash used in financing

activities(36,597) (41,011) (38,548) (38,666) (44,842)

Property, plant & equipment

additions16,351 12,813 20,831 34,355 14,767

Net property, plant & equipment 212,162 215,492 220,721 217,628 201,401

Total assets 857,856 857,959 836,844 813,252 813,134

Long-term debt 7,500 7,500 7,500 7,500 7,500Shareholders' equity 665,935 667,408 654,244 636,847 640,204

Average shares outstanding 57,892 58,685 59,425 60,152 61,580

Notes to Consolidated Financial Statements ($ in thousands)

Revenue recognition:

Products are sold to customers based on accepted purchase orders which include quantity, sales price

and other relevant terms of sale. Revenue, net of applicable provisions for discounts, returns,

allowances and certain advertising and promotional costs, is recognized when products are delivered

to customers and collectability is reasonably assured. Shipping and handling costs of $45,850,

$43,034, and $38,628 in 2011, 2010 and 2009, respectively, are included in selling, marketing and

administrative expenses. Accounts receivable are unsecured. Revenues from a major customer

aggregated approximately 23.3%, 21.4% and 22.9% of net product sales during the years ended

December 31, 2011, 2010 and 2009, respectively.

SEGMENT AND GEOGRAPHIC INFORMATION:

The Company operates as a single reportable segments encompassing the manufacturing and sale of

confectionery products. Its principal manufacturing operations are located in the United States and Canada, and

its principal market is in the United States. The Company also manufactures and sells confectionery products in

Mexico, and exports products to Canada and countries worldwide.

The following geographic data includes net product sales summarized on the basis of the customer location and

long-lived assets based on their location:

2011 2010 2009

Net product sales:

United states $487,185 $471,714 $455,517

Foreign 41,184 45,435 40,075

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$528,369 $517,149 $495,592

Long-lived assets:

United states $170,173 $172,087 $176,044

Foreign 41,989 43,405 44,677

$212,162 $215,492 $220,721



The financial statements of The Hershey Company and Tootsie Roll are presented below.

THE HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF INCOME

For the years ended December 31, 2011 2010 2009

In thousands of dollars except per share amounts

Net Sales $6,080,788 $5,671,009 $5,298,668

Costs and Expenses:

Cost of sales 3,548,896 3,255,801 3,245,531

Selling, marketing and administrative 1,477,750 1,426,477 1,208,672

Business realignment and impairment (credits) charges, net (886) 83,433 82,875

Total costs and expenses 5,025,760 4,765,711 4,537,078

Income before Interest and Income Taxes 1,055,028 905,298 761,590

Interest expense, net 92,183 96,434 90,459

Income before Income Taxes 962,845 808,864 671,131


Net Income $628,962 $509,799 $435,994

Net Income Per Share—Basic—Class B Common Stock $2.58 $2.08 $1.77

Net Income Per Share—Diluted—Class B Common Stock $2.56 $2.07 $1.77

Net Income Per Share—Basic—Common Stock $2.85 $2.29 $1.97

Net Income Per Share—Diluted—Common Stock $2.74 $2.21 $1.90

Cash Dividends Paid Per Share:

Common Stock $1.3800 $1.2800 $1.1900

Class B Common Stock 1.2500 1.1600 1.0712

The notes to consolidated financial statements are an integral part of these statements and are included in the

Hershey's 2011 Annual Report, available at www.thehersheycompany.com.

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THE HERSHEY COMPANY

CONSOLIDATED BALANCE SHEETS

December 31, 2011 2010

In thousands of dollars

ASSETS

Current Assets:


Accounts receivable—trade 399,499 390,061

Inventories 648,953 533,622


Prepaid expenses and other 167,559 141,132

Total current assets 2,046,558 2,005,217

Property, Plant and Equipment, Net 1,559,717 1,437,702

Goodwill 516,745 524,134

Other Intangibles 111,913 123,080

Deferred Income Taxes 38,544 21,387

Other Assets 138,722 161,212

Total assets $4,412,199 $4,272,732

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:



Accrued income taxes 1,899 9,402

Short-term debt 42,080 24,088Current portion of long-term debt 97,593 261,392

Total current liabilities 1,173,775 1,298,845

Long-term Debt 1,748,500 1,541,825

Other Long-term Liabilities 617,276 494,461

Total liabilities 3,539,551 3,335,131

Commitments and Contingencies — —

Stockholders’ Equity:

The Hershey Company Stockholders’ Equity

Preferred Stock, shares issued: none in 2011 and 2010 — —

Common Stock, shares issued: 299,269,702 in 2011 and 299,195,325 in

2010299,269 299,195

Class B Common Stock, shares issued: 60,632,042 in 2011 and 60,706,419

in 201060,632 60,706

Additional paid-in capital 490,817 434,865

Retained earnings 4,699,597 4,374,718

Treasury—Common Stock shares, at cost: 134,695,826 in 2011 and

132,871,512 in 2010(4,258,962) (4,052,101)


The Hershey Company stockholders’ equity 849,022 902,316

Noncontrolling interests in subsidiaries 23,626 35,285

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Total stockholders’ equity 872,648 937,601

Total liabilities and stockholders’equity $4,412,199 $4,272,732

THE HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2011 2010 2009


Cash Flows Provided from (Used by) Operating Activities

Net income $628,962 $509,799 $435,994

Adjustments to reconcile net income to net cash provided from

operations:

Depreciation and amortization 215,763 197,116 182,411

Stock-based compensation expense, net of tax of $15,127,

$17,413 and $19,223, respectively28,341 32,055 34,927

Excess tax benefits from stock-based compensation (13,997) (1,385) (4,455)

Deferred income taxes 33,611 (18,654) (40,578)

Gain on sale of trademark licensing rights, net of tax of $5,962 (11,072) — —

Business realignment and impairment charges, net of tax of

$18,333, $20,635 and $38,308, respectively30,838 77,935 60,823

Contributions to pension plans (8,861) (6,073) (54,457)

Changes in assets and liabilities, net of effects from business

acquisitions and divestitures:

Accounts receivable—trade (9,438) 20,329 46,584

Inventories (115,331) (13,910) 74,000

Accounts payable 7,860 90,434 37,228

Other assets and liabilities (205,809) 13,777 293,272

Net Cash Provided from Operating Activities 580,867 901,423 1,065,749

Cash Flows Provided from (Used by) Investing Activities

Capital additions (323,961) (179,538) (126,324)

Capitalized software additions (23,606) (21,949) (19,146)

Proceeds from sales of property, plant and equipment 312 2,201 10,364

Proceeds from sales of trademark licensing rights 20,000 — —

Business acquisitions (5,750) — (15,220)

Net Cash (Used by) Investing Activities (333,005) (199,286) (150,326)

Cash Flows Provided from (Used by) Financing Activities

Net change in short-term borrowings 10,834 1,156 (458,047)

Long-term borrowings 249,126 348,208 —

Repayment of long-term debt (256,189) (71,548) (8,252)

Proceeds from lease financing agreement 47,601 — —

Cash dividends paid (304,083) (283,434) (263,403)

Exercise of stock options 184,411 92,033 28,318

Excess tax benefits from stock-based compensation 13,997 1,385 4,455

Contributions from noncontrolling interests in subsidiaries — 10,199 7,322Repurchase of Common Stock (384,515) (169,099) (9,314)

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Net Cash (Used by) Financing Activities (438,818) (71,100) (698,921)

(Decrease) Increase in Cash and Cash Equivalents (190,956) 631,037 216,502

Cash and Cash Equivalents as of January 1 884,642 253,605 37,103

Cash and Cash Equivalents as of December 31 $693,686 $884,642 $253,605

Interest Paid $97,892 $97,932 $91,623Income Taxes Paid 292,315 350,948 252,230





2011 2010 2009



Total revenue 532,505 521,448 499,331



Total costs 366,263 350,422 320,627










Net earnings $43,938 $53,063 $53,157

Net earnings $43,938 $53,063 $53,157




Net earnings 43,938 53,063 53,157

Cash dividends (18,360) (18,078 ) (17,790 )

Stock dividends (47,175) (46,806 ) (32,629 )





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Financial Position


Assets December 31,

2011 2010

CURRENT ASSETS:





Inventories:







Land 21,939 21,696

Buildings 107,567 102,934



455,097 440,974


Net property, plant and equipment 212,162 215,492OTHER ASSETS:

Goodwill 73,237 73,237

Trademarks 175,024 175,024







Total assets $857,856 $857,959


2011 2010









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2011 2010 2009


Net earnings $43,938 $53,063 $53,157

Adjustments to reconcile net earnings to net cash provided byoperating activities:

Depreciation 19,229 18,279 17,862








Inventories (15,631) (1,447) 455






Others (708) 310 305





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Based on the information contained in these financial statements, compute the following 2011 values

for each company. (Round answers to 1 decimal place, e.g. 15.2.)

(1) Accounts receivable turnover. (For Tootsie Roll, use “Net product sales.” Assume all sales were credit

sales.)

(2) Average collection period for accounts receivable.

Tootsie Roll Hershey Company

Accounts receivable turnover times times

Average collection period days days


Resource: WileyPLUS

Complete the following Week 2 Assignment in WileyPLUS:

Problem 8-3A

Brief Exercise 9-11

DO IT! 9-5

Exercise 9-7

Exercise 9-8

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BYP 9-1

BYP 9.2

Problem 9-2A

Brief Exercise 9-11

Suppose Nike, Inc. reported the following plant assets and intangible assets for the year ended

May 31, 2014 (in millions): other plant assets $937.7; land $241.9; patents and trademarks (at cost)

$537.8; machinery and equipment $2,185.8; buildings $958; goodwill (at cost) $175.6;

accumulated amortization $53.2; and accumulated depreciation $2,195.

Prepare a partial balance sheet for Nike for these items. (L ist Property, Plant and Equipment in

order of Land, Buildings and Equipment.)

NIKE, INC.

Partial Balance Sheet

As of May 31, 2014

(in millions)

$

$

:

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$

:

Do It! Review 9-5


Match the statement with the term most directly associated with it.

1. Rights, privileges, and competitive advantages that

result from the ownership of long-lived assets that do

not possess physical substance.

2. The allocation of the cost of an intangible asset to

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expense in a rational and systematic manner.

3. A right to sell certain products or services, or use

certain trademarks or trade names within a

designated geographic area.

4. Costs incurred by a company that often lead to

patents or new products. These costs must be

expensed as incurred.

5. The excess of the cost of a company over the fair

value of the net assets required.

Exercise 9-7


Wang Co. has delivery equipment that cost $56,840 and has been depreciated $23,520.

Record entries for the disposal under the following assumptions. (Credit account titles are automatically

indented when amount is entered. Do not indent manually.)

(a) It was scrapped as having no value.

(b) It was sold for $37,330.

(c) It was sold for $18,850.

Exercise 9-8


Here are selected 2014 transactions of Cleland Corporation.

Jan. 1 Retired a piece of machinery that was purchased on January 1, 2004. The machine cost

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$61,550 and had a useful life of 10 years with no salvage value.

June 30 Sold a computer that was purchased on January 1, 2012. The computer cost $36,600 and had a

useful life of 4 years with no salvage value. The computer was sold for $4,460 cash.

Dec. 31 Sold a delivery truck for $9,170 cash. The truck cost $23,710 when it was purchased on January 1,

2011, and was depreciated based on a 5-year useful life with a $3,550 salvage value.

Journalize all entries required on the above dates, including entries to update depreciation on assets disposed

of, where applicable. Cleland Corporation uses straight-line depreciation. (Record entries in the order

displayed in the problem statement. Credit account titles are automatically indented when amount

is entered. Do not indent manually.)





Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share

data)


2011 2010 2009



Total revenue 532,505 521,448 499,331



Total costs 366,263 350,422 320,627










Net earnings $43,938 $53,063 $53,157

Net earnings $43,938 $53,063 $53,157

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Net earnings 43,938 53,063 53,157

Cash dividends (18,360) (18,078) (17,790)

Stock dividends (47,175) (46,806) (32,629)






Financial Position


Assets December 31,

2011 2010

CURRENT ASSETS:





Inventories:







Land 21,939 21,696

Buildings 107,567 102,934



455,097 440,974



OTHER ASSETS:

Goodwill 73,237 73,237

Trademarks 175,024 175,024




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Total assets $857,856 $857,959


2011 2010














Common stock, $.69-4/9 par value—120,000 shares authorized—36,479


Class B common stock, $.69-4/9 par value—40,000 shares

authorized—21,025 and 20,466 respectively, issued14,601 14,212











2011 2010 2009


Net earnings $43,938 $53,063 $53,157

Adjustments to reconcile net earnings to net cash provided

by operating activities:

Depreciation 19,229 18,279 17,862




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Inventories (15,631) (1,447) 455






Others (708) 310 305




















Notes to Consolidated Financial Statements ($ in thousands)

PROPERTY, PLANT AND EQUIPMENT:

Depreciation is computed for financial reporting purposes by use of the straight-line method based on the

useful lives of 20 to 35 years for building and 5 to 25 years for machinery and equipment. Depreciation

expenses was $19,229, $18,279 and $17,862 in 2011, 2010 and 2009, respectively.

Goodwill and intangible assets:

In accordance with authoritative guidance, goodwill and intangible assets with indefinite lives are not

amortized, but rather tested for impairment at least annually unless certain interim triggering events or

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circumstances require more frequent testing. All trademarks have been assessed by management to have

indefinite lives because they are expected to generate cash flows indefinitely. The Company has

completed its annual impairment testing of its goodwill and trademarks at December 31 of each of the

years presented. As of December 31, 2009, management ascertained that certain trademarks were

impaired, and recorded a pre-tax charge of $14,000. No impairments of intangibles were recorded in 2011

and 2010. This determination is made by comparing the carrying value of the asset with its estimated fair

value, which is calculated using estimates including discounted projected future cash flows. If the carrying

value of goodwill exceeds the fair value, a second step would measure the carrying value and implied fair

value of goodwill. Management believes that all assumptions used for the impairment tests are consistent

with those utilized by market participants performing similar valuations.

Answer the following questions.




THE HERSHEY COMPANY




Net Sales $6,080,788 $5,671,009 $5,298,668

Costs and Expenses:

Cost of sales 3,548,896 3,255,801 3,245,531








Net Income $628,962 $509,799 $435,994






Common Stock $1.3800 $1.2800 $1.1900


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THE HERSHEY COMPANY


December 31, 2011 2010


ASSETS

Current Assets:








Goodwill 516,745 524,134



Other Assets 138,722 161,212

Total assets $4,412,199 $4,272,732



Accounts payable $420,017 $410,655Accrued liabilities 612,186 593,308


Short-term debt 42,080 24,088

Current portion of long-term debt 97,593 261,392


Long-term Debt 1,748,500 1,541,825

Other Long-term Liabilities 617,276 494,461







2010299,269 299,195


in 201060,632 60,706



Treasury—Common Stock shares, at cost: 134,695,826 in 2011 and132,871,512 in 2010

(4,258,962) (4,052,101)

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THE HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS




Net income $628,962 $509,799 $435,994


operations:










Changes in assets and liabilities, net of effects from businessacquisitions and divestitures:


Inventories (115,331) (13,910) 74,000


















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Contributions from noncontrolling interests in subsidiaries — 10,199 7,322

Repurchase of Common Stock (384,515) (169,099) (9,314)


(Decrease) Increase in Cash and Cash Equivalents (190,956) 631,037 216,502

Cash and Cash Equivalents as of January 1 884,642 253,605 37,103


Interest Paid $97,892 $97,932 $91,623

Income Taxes Paid 292,315 350,948 252,230





2011 2010 2009



Total revenue 532,505 521,448 499,331



Total costs 366,263 350,422 320,627










Net earnings $43,938 $53,063 $53,157

Net earnings $43,938 $53,063 $53,157




Net earnings 43,938 53,063 53,157

Cash dividends (18,360) (18,078 ) (17,790 )

Stock dividends (47,175) (46,806 ) (32,629 )



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Financial Position


Assets December 31,

2011 2010

CURRENT ASSETS:





Inventories:







Land 21,939 21,696

Buildings 107,567 102,934



455,097 440,974



OTHER ASSETS:

Goodwill 73,237 73,237

Trademarks 175,024 175,024







Total assets $857,856 $857,959


2011 2010






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2011 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings $43,938 $53,063 $53,157



Depreciation 19,229 18,279 17,862








Inventories (15,631) (1,447) 455






Others (708) 310 305Net cash provided by operating activities 50,390 82,805 76,994

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Based on the information in these financial statements and the accompanying notes and schedules, compute

the following values for each company in 2011. (Round all percentages to 1 decimal places, e.g. 15.1%

and asset turnover ratio to 2 decimal places, e.g. 15.21.)

(1) Return on assets.

Return on assets

Tootsie Roll %

Hershey Company %

(2) Profit margin (use “Total Revenue”).

Profit margin

Tootsie Roll %

Hershey Company %

(3) Asset turnover.

Asset turnover

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Tootsie Roll times

Hershey Company times

Problem 9-2A

At December 31, 2014, Navaro Corporation reported the following plant assets.

Land $ 3,036,000

Buildings $35,400,000

Less: Accumulated depreciation—buildings 12,068,100 23,331,900

Equipment 40,480,000

Less: Accumulated depreciation—equipment 5,060,000 35,420,000

Total plant assets $61,787,900

During 2015, the following selected cash transactions occurred.

Apr. 1 Purchased land for $2,226,400.

May 1 Sold equipment that cost $607,200 when purchased on January 1, 2008. The equipment was

sold for $172,040.

June 1 Sold land for $1,619,200. The land cost $1,012,000.

July 1 Purchased equipment for $1,113,200.

Dec. 31 Retired equipment that cost $708,400 when purchased on December 31, 2005. No salvage

value was received.


Journalize the transactions. Navaro uses straight-line depreciation for buildings and equipment. The

buildings are estimated to have a 40-year useful life and no salvage value; the equipment is estimated to

have a 10-year useful life and no salvage value. Update depreciation on assets disposed of at the time of

sale or retirement. (Record entries in the order displayed in the problem statement. Credit

account titles are automatically indented when amount is entered. Do not indent manually.)

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Solution

Problem 9-2A

May 1:

Accumulated Depreciation—Equipment = ($607,200 x 1/10 x 4/12) = $20,240

Cost $607,200

Accum. depr.—Equipment [($607,200 x 1/10) x 7 + $20,240)] (445,280)

Book value 161,920

Cash proceeds 172,040

Gain on disposal $ 10,120

Dec. 31

Accumulated Depreciation—Equipment = ($708,400 x 1/10) = $70,840

Cost $708,400

Accum. depr.—Equipment ($708,400 x 1/10 x 10) (708,400)

Book value $ 0

Record adjusting entries for depreciation for 2015. (Credit account titles are automatically indented

when amount is entered. Do not indent manually.)

Problem 8-3A

Presented below is an aging schedule for Bosworth Company.

Customer Total Not Yet Due

Number of Days Past Due

1–30 31–60 61–90 Over 90

Aneesh $ 24,100 $ 9,100 $15,000

Bird 45,700 $ 45,700

Cope 59,600 8,500 8,900 $42,200

DeSpears 48,600 $48,600

Others 156,700 88,600 43,000 25,100

$334,700 $142,800 $61,000 $40,100 $42,200 $48,600

Estimated percentage uncollectible 5% 7% 14% 24% 59%

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Total estimated bad debts $ 55,826 $ 7,140 $4,270 $5,614 $ 10,128 $28,674

At December 31, 2013, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $6,200.

Journalize the adjusting entry for bad debts at December 31, 2013. (Credit account titles are automatically


Problem 8-3A

Post the adjusting entry for bad debts at December 31, 2013.

Bad Debts Expense

Allowance for Doubtful Accounts

Journalize the 2014 transactions: (Credit account titles are automatically indented when amount is

entered. Do not indent manually.)

1. March 1, a $810 customer balance originating in 2013 is judged uncollectible.

2.May 1, a check for $810 is received from the customer whose account was written off as uncollectible on

March 1.

Post to the allowance account these 2014 events. (Post entries in the order of journal entries posted in

the previous part.)

Journalize the adjusting entry for bad debts at December 31, 2014, assuming that the unadjusted balance in

Allowance for Doubtful Accounts is a debit of $1,400 and the aging schedule indicates that total estimated bad

debts will be $36,000. (Credit account titles are automatically indented when amount is entered. Do

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not indent manually.)


Resource: WileyPLUS

Complete the following Week 3 Assignment in WileyPLUS:

Problem 9-7A

Exercise 10-5 Exercise 10-8

Exercise 10-13

Exercise 10-22

Exercise 10-24

BYP 10-1

BYP 10-2

Problem 10-9A

Problem 10-13A

IFRS 10-4

Exercise 10-5

During the month of March, Olinger Company’s employees earned wages of $73,700. Withholdings

related to these wages were $5,638 for Social Security (FICA), $8,637 for federal income tax, $3,570 for

state income tax, and $461 for union dues. The company incurred no cost related to these earnings for

federal unemployment tax but incurred $806 for state unemployment tax.


Prepare the necessary March 31 journal entry to record salaries and wages expense and salaries and

wages payable. Assume that wages earned during March will be paid during April. (Credit account

titles are automatically indented when amount is entered. Do not indent manually.)

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Prepare the entry to record the company’s payroll tax expense. (Credit account titles are


Exercise 10-8

On August 1, 2014, Ortega Corporation issued $980,400, 6%, 10-year bonds at face value. Interest is payable

annually on August 1. Ortega’s year-end is December 31.

Prepare journal entries to record the issuance of the bonds. (Credit account titles are automatically


Prepare journal entries to record the accrual of interest on December 31, 2014. (Credit account titles are


Prepare journal entries to record the payment of interest on August 1, 2015. (Credit account titles are


Exercise 10-13

Romine Company issued $531,000 of 9%, 10-year bonds on January 1, 2014, at face value. Interest is

payable annually on January 1.


Prepare the journal entries to record the issuance of the bonds. (Credit account titles are

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Prepare the journal entries to record the accrual of interest on December 31, 2014. (Credit account



Prepare the journal entries to record the payment of interest on January 1, 2015. (Credit account



Prepare the journal entries to record the redemption of the bonds at maturity, assuming interest for thelast interest period has been paid and recorded. (Credit account titles are automatically indented

when amount is entered. Do not indent manually.)

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Exercise 10-22

Cole Corporation issued $445,000, 7%, 22-year bonds on January 1, 2014, for $360,961. This price

resulted in an effective-interest rate of 9% on the bonds. Interest is payable annually on January 1. Cole

uses the effective-interest method to amortize bond premium or discount.


Prepare the schedule using effective-interest method to amortize bond premium or discount of Cole

Corporation. (Round answers to 0 decimal places, e.g. 125.)


Prepare the journal entries to record the issuance of the bonds. (Round answers to 0 decimal

places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do



Prepare the journal entries to record the accrual of interest and the discount amortization on December

31, 2014. (Round answers to 0 decimal places, e.g. 125. Credit account titles are


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Prepare the journal entries to record the payment of interest on January 1, 2015. (Round answers to 0

decimal places, e.g. 125. Credit account titles are automatically indented when amount is

entered. Do not indent manually.)

Exercise 10-24

Nance Co. receives $327,800 when it issues a $327,800, 5%, mortgage note payable to finance the

construction of a building at December 31, 2014. The terms provide for semiannual installment payments

of $15,662 on June 30 and December 31.


Prepare the schedule using effective-interest method to amortize bond premium or discount of Nance

Co. (Round answers to 0 decimal places, e.g. 125.)

Semiannua

l

Interest

Period

Cash

Payment

Interest

Expense

Reduction

of Principal

Principal

Balance

Issue date

$

$

$

$

6/30/15

12/31/15

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Semiannual

Interest

Period

(A)

Cash

Payment

(B)

Interest

Expense

(D x 2.50%)

(C)

Reduction

of Principal

(A) – (B)

(D)

Principal

Balance

(D) – (C)

Issue date

6/30/15

12/31/15


Prepare the journal entries to record the mortgage loan. (Round answers to 0 decimal places, e.g.

125. Credit account titles are automatically indented when amount is entered. Do not indent

manually.)

Date Account Titles and Explanation Debit Credit

Dec. 31, 2014


Prepare the journal entries to record the first two installment payments. (Round answers to 0 decimal

places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do


Date Account Titles and Explanation Debit Credit

First Installment Payment

June 30, 2015

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Second Installment Payment

Dec. 31, 2015







2011 2010 2009



Total revenue 532,505 521,448 499,331



Total costs 366,263 350,422 320,627










Net earnings $43,938 $53,063 $53,157

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Net earnings $43,938 $53,063 $53,157




Net earnings 43,938 53,063 53,157

Cash dividends (18,360) (18,078 ) (17,790 )

Stock dividends (47,175) (46,806 ) (32,629 )






Financial Position


Assets December 31,

2011 2010

CURRENT ASSETS:



Accounts receivable trade, less allowances of $1,731 and $1,531 41,895 37,394Other receivables 3,391 9,961

Inventories:







Land 21,939 21,696

Buildings 107,567 102,934



455,097 440,974



OTHER ASSETS:

Goodwill 73,237 73,237

Trademarks 175,024 175,024



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Total assets $857,856 $857,959


2011 2010

















and 20,466 respectively, issued

14,601 14,212











2011 2010 2009


Net earnings $43,938 $53,063 $53,157



Depreciation 19,229 18,279 17,862




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Inventories (15,631) (1,447) 455






Others (708) 310 305




















Answer the following questions.

What were Tootsie Roll’s total current liabilities at December 31, 2011? (Enter amount in thousands.)

Current liabilities as at December 31, 2011$

What was the increase/decrease in Tootsie Roll’s total current liabilities from the prior year? (Enter amount in

thousands.)

Change in current liabilities$

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How much were the accounts payable at December 31, 2011? (Enter amount in thousands.)

Accounts payable$



THE HERSHEY COMPANY




Net Sales $6,080,788 $5,671,009 $5,298,668

Costs and Expenses:

Cost of sales 3,548,896 3,255,801 3,245,531








Net Income $628,962 $509,799 $435,994






Common Stock $1.3800 $1.2800 $1.1900




THE HERSHEY COMPANY


December 31, 2011 2010

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ASSETS

Current Assets:








Goodwill 516,745 524,134



Other Assets 138,722 161,212

Total assets $4,412,199 $4,272,732






Short-term debt 42,080 24,088

Current portion of long-term debt 97,593 261,392


Long-term Debt 1,748,500 1,541,825Other Long-term Liabilities 617,276 494,461







2010299,269 299,195


in 2010 60,632 60,706



Treasury—Common Stock shares, at cost: 134,695,826 in 2011 and

132,871,512 in 2010(4,258,962) (4,052,101)






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THE HERSHEY COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS




Net income $628,962 $509,799 $435,994


operations:










Changes in assets and liabilities, net of effects from business

acquisitions and divestitures:


Inventories (115,331) (13,910) 74,000



















Contributions from noncontrolling interests in subsidiaries — 10,199 7,322

Repurchase of Common Stock (384,515) (169,099) (9,314)


(Decrease) Increase in Cash and Cash Equivalents (190,956) 631,037 216,502Cash and Cash Equivalents as of January 1 884,642 253,605 37,103

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Interest Paid $97,892 $97,932 $91,623

Income Taxes Paid 292,315 350,948 252,230

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF



2011 2010 2009



Total revenue 532,505 521,448 499,331



Total costs 366,263 350,422 320,627










Net earnings $43,938 $53,063 $53,157

Net earnings $43,938 $53,063 $53,157




Net earnings 43,938 53,063 53,157

Cash dividends (18,360) (18,078 ) (17,790 )

Stock dividends (47,175) (46,806 ) (32,629 )






Financial Position


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Assets December 31,

2011 2010

CURRENT ASSETS:





Inventories:







Land 21,939 21,696

Buildings 107,567 102,934



455,097 440,974



OTHER ASSETS:

Goodwill 73,237 73,237

Trademarks 175,024 175,024Investments 96,161 64,461






Total assets $857,856 $857,959


2011 2010












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2011 2010 2009


Net earnings $43,938 $53,063 $53,157



Depreciation 19,229 18,279 17,862

Impairment charges — — 14,000Impairment of equity method investment — — 4,400






Inventories (15,631) (1,447) 455






Others (708) 310 305








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NOTE 6—OTHER INCOME (EXPENSE), NET:

Other income (expense), net is comprised of the following:

2011 2010 2009

Interest and dividend income $1,087 $879 $1,439

Gains (losses) on trading securities relating to deferred compensation plans 29 3,364 4,524

Interest expense (121) (142) (243)

Impairment of equity method investment. _ _ (4,400)

Equity method investment loss (194) (342) (233)

Foreign exchange gains (losses) 2,098 4,090 951

Capital gains (losses) (277) (28) (38)

Miscellaneous, net 274 537 100

$2,946 $8,358 $2,100

As of December 31, 2009, management determined that the carrying value of an equity method investment was

impaired as a result of accumulated losses from operations and review of future expectations. The Company

recorded a pre-tax impairment charge of $4,400 resulting in an adjusted carrying value of $4,961 as of

December 31, 2009. The fair value was primarily assessed using the present value of estimated future cash

flows.

Based on the information contained in these financial statements, compute the current ratio for 2011 for each

company. (Round answers to 2 decimal places, e.g. 15.25.)

Hershey Tootsie Roll

Current ratio : 1 :1

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Basedontheinformationcontainedinthesefinancialstatements,compute

thefollowing2011ratiosforeachcompany. (Round answers to 1 decimal

places, e.g. 15.2 or 15.2 times.)

(1) Debt to assets.

(2)Times interest earned. (Hershey’s total interest expense for 2011 was $94,780,000. See Tootsie Roll’s Note

6 for its interest expense.)

Hershey Tootsie Roll

Debt to assets % %

Times interest earned timestimes

Problem 9-7A

In recent years, Farr Company has purchased three machines. Because of frequent employee turnover in

the accounting department, a different accountant was in charge of selecting the depreciation method for

each machine, and various methods have been used. Information concerning the machines is summarized

in the table below.

Machine Acquired Cost

Salvage

Value

Useful Life

(in years)

1 Jan. 1, 2012 $126,000 $39,600 8

2 July 1, 2013 89,000 11,800 5

3 Nov. 1, 2013 101,610 7,110 7

For the declining-balance method, Farr Company uses the double-declining rate. For the units-of-activity

method, total machine hours are expected to be 35,000. Actual hours of use in the first 3 years were:

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2013, 800; 2014, 3,950; and 2015, 5,500.


Compute the amount of accumulated depreciation on each machine at December 31, 2015.

MACHINE 1 MACHINE 2 MACHINE 3

Accumulated Depreciation

at December 31

$

$

$

Solution

CLOSE

Problem 9 7A

Year Computation Accumulated

Depreciation 12/31

MACHINE 1

2012 $86,400a x 1/8 = $10,800 $10,800

2013 $86,400 x 1/8 = $10,800 21,600

2014 $86,400 x 1/8 = $10,800 32,400

2015 $86,400 X 1/8 = $10,800 43,200

MACHINE 2

2013 $89,000 x 40%b x 6/12 = $17,800 $17,800

2014 $71,200 x 40% = $28,480 46,280

2015 $42,720 x 40% = $17,088 63,368

MACHINE 3

2013 800 x $2.70c = $ 2,160 $ 2,160

2014 3,950 x $2.70 = 10,665 12,825

2015 5,500 x $2.70 = 14,850 27,675

a($126,000 – $39,600) = $86,400

b(1/5) x 2 = 40%

c

($101,610 – $7,110) ÷ 35,000 = $2.70

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If machine 2 was purchased on April 1 instead of July 1, what would be the depreciation expense for this

machine in 2013? In 2014?

2013 2014

Depreciation Expense$ $

Pr

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