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ACC 291 WileyPLUS Assignment: Week 5 Assignment

Resource: WileyPLUS

Complete the following Week 5 Assignment in WileyPLUS:

• Exercise 7-3

• Exercise 12-1

• Problem 12-9A

• Problem 12-10A

• IFRS 13-1

• Problem 13-2A

• BYP 13-2

Exercise 12-1

Putnam Corporation had these transactions during 2014.

Analyze the transactions and indicate whether each transaction resulted in a cash flow from operating activities, investing activities, financing activities, or noncash investing and financing activities.

(a) Purchased a machine for $30,000, giving a long-term note in exchange.

(b) Issued $50,000 par value common stock for cash.

(c) Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000.

(d) Declared and paid a cash dividend of $13,000.

(e) Sold a long-term investment with a cost of $15,000 for $15,000 cash.

(f) Collected $16,000 of accounts receivable.

(g) Paid $18,000 on accounts payable.

IFRS 13-1

Your answer is correct.

Ling Company reports the following information for the year ended December 31, 2014: sales revenue $1,000,000, cost of goods sold $700,000, operating expenses $200,000, and an unrealized gain on non-trading securities of $75,000. Prepare a statement of comprehensive income using the one-statement approach.

Problem 12-9A

Your answer is correct.

Condensed financial data of Odgers Inc. follow.

ODGERS INC.

Comparative Balance Sheets

December 31

Assets 2014 2013

Cash $ 167,256 $ 100,188

Accounts receivable 181,746 78,660

Inventory 232,875 212,900

Prepaid expenses 58,788 53,820

Long-term investments 285,660 225,630

Plant assets 589,950 501,975

Accumulated depreciation (103,500 ) (107,640 )

Total $1,412,775 $1,065,533

Liabilities and Stockholders’ Equity

Accounts payable $ 211,140 $ 139,311

Accrued expenses payable 34,155 43,470

Bonds payable 227,700 302,220

Common stock 455,400 362,250

Retained earnings 484,380 218,282

Total $1,412,775 $1,065,533

ODGERS INC.

Income Statement Data

For the Year Ended December 31, 2014

Sales revenue $804,112

Less:

Cost of goods sold $280,402

Operating expenses, excluding depreciation 25,689

Depreciation expense 96,255

Income tax expense 56,470

Interest expense 9,791

Loss on disposal of plant assets 15,525 484,132

Net income $ 319,980

Additional information:

1. New plant assets costing $207,000 were purchased for cash during the year.

2. Old plant assets having an original cost of $119,025 and accumulated depreciation of $100,395 were sold for $3,105 cash.

3. Bonds payable matured and were paid off at face value for cash.

4. A cash dividend of $53,882 was declared and paid during the year.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Problem 12-10A

Condensed financial data of Odgers Inc. follow.

ODGERS INC.

Comparative Balance Sheets

December 31

Assets 2014 2013

Cash $ 186,648 $ 111,804

Accounts receivable 202,818 87,780

Inventory 259,875 237,584

Prepaid expenses 65,604 60,060

Long-term investments 318,780 251,790

Plant assets 658,350 560,175

Accumulated depreciation (115,500 ) (120,120 )

Total $1,576,575 $1,189,073

Liabilities and Stockholders’ Equity

Accounts payable $ 235,620 $ 155,463

Accrued expenses payable 38,115 48,510

Bonds payable 254,100 337,260

Common stock 508,200 404,250

Retained earnings 540,540 243,590

Total $1,576,575 $1,189,073

ODGERS INC.

Income Statement Data

For the Year Ended December 31, 2014

Sales revenue $897,343

Less:

Cost of goods sold $312,913

Operating expenses, excluding depreciation 28,667

Depreciation expense 107,415

Income taxes 63,017

Interest expense 10,926

Loss on disposal of plant assets 17,325 540,263

Net income $ 357,080

Additional information:

1. New plant assets costing $231,000 were purchased for cash during the year.

2. Old plant assets having an original cost of $132,825 and accumulated depreciation of $112,035 were sold for $3,465 cash.

3. Bonds payable matured and were paid off at face value for cash.

4. A cash dividend of $60,130 was declared and paid during the year.

Further analysis reveals that accounts payable pertain to merchandise creditors.

Prepare a statement of cash flows for Odgers Inc. using the direct method. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Problem 13-2A

The comparative statements of Osborne Company are presented here.

OSBORNE COMPANY

Income Statements

For the Years Ended December 31

2014 2013

Net sales $1,898,996 $1,758,956

Cost of goods sold 1,066,996 1,014,456

Gross profit 832,000 744,500

Selling and administrative expenses 508,456 487,456

Income from operations 323,544 257,044

Other expenses and losses

Interest expense 23,377 21,377

Income before income taxes 300,167 235,667

Income tax expense 93,377 74,377

Net income $ 206,790 $ 161,290

OSBORNE COMPANY

Balance Sheets

December 31

Assets 2014 2013

Current assets

Cash $ 60,100 $ 64,200

Debt investments (short-term) 74,000 50,000

Accounts receivable 126,256 111,256

Inventory 127,377 116,877

Total current assets 387,733 342,333

Plant assets (net) 660,464 531,764

Total assets $1,048,197 $874,097

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable $ 168,456 $153,856

Income taxes payable 44,877 43,377

Total current liabilities 213,333 197,233

Bonds payable 231,464 211,464

Total liabilities 444,797 408,697

Stockholders’ equity

Common stock ($5 par) 290,000 300,000

Retained earnings 313,400 165,400

Total stockholders’ equity 603,400 465,400

Total liabilities and stockholders’ equity $1,048,197 $874,097

All sales were on account. Net cash provided by operating activities for 2014 was $250,780. Capital expenditures were $136,700, and cash dividends were $58,790.

Compute the following ratios for 2014. (Round all answers to 2 decimal places, e.g. 1.83 or 12.61%.)

Exercise 7-3

Your answer is correct.

The following control procedures are used in Kelton Company for over-the-counter cash receipts.

(a) For each procedure, explain the weakness in internal control and identify the control principle that is violated.

Procedure Weakness Principle Violated

1. Each store manager is responsible for interviewing applicants for cashier jobs. They are hired if they seem honest and trustworthy.

2. All over-the-counter receipts are registered by three clerks who share a cash register with a single cash drawer.

3. To minimize the risk of robbery, cash in excess of $100 is stored in an unlocked attaché case in the stock room until it is deposited in the bank.

4. At the end of each day the total receipts are counted by the cashier on duty and reconciled to the cash register total.

5. The company accountant makes the bank deposit and then records the day’s receipts.

Broadening Your Perspective 13-2

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

Provision for income taxes 333,883 299,065 235,137

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.

THE HERSHEY COMPANY

CONSOLIDATED BALANCE SHEETS

December 31, 2011 2010

In thousands of dollars

ASSETS

Current Assets:

Cash and cash equivalents $693,686 $884,642

Accounts receivable—trade 399,499 390,061

Inventories 648,953 533,622

Deferred income taxes 136,861 55,760

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:

Accounts payable $420,017 $410,655

Accrued liabilities 612,186 593,308

Accrued income taxes 1,899 9,402

Short-term debt 42,080 24,088

Current 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 2010 299,269 299,195

Class B Common Stock, shares issued: 60,632,042 in 2011 and 60,706,419 in 2010 60,632 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 )

Accumulated other comprehensive loss (442,331 ) (215,067 )

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

Noncontrolling interests in subsidiaries 23,626 35,285

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

In thousands of dollars

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, respectively 28,341 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, respectively 30,838 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 7,322

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

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 $91,623

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

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

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.)

CONSOLIDATED STATEMENTS OF

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

Total current assets 212,201 235,167

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

Investments 96,161 64,461

Split dollar officer life insurance 74,209 74,441

Prepaid expenses 3,212 6,680

Equity method investment 3,935 4,254

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:

Deferred income taxes 43,521 47,865

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, issued 25,333 25,040

Class B common stock, $.69-4/9 par value—40,000 shares authorized—21,025 and 20,466 respectively, issued 14,601 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

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF

Cash Flows (in thousands)

For the year ended December 31,

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 charges — — 14,000

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:

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

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

Based on the information in the financial statements, determine each of the following for each company: