need assistance questions 5 6 7 and 8 only

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Question 5
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  
 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.)

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 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.

Warning

 

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What were the total cost and book value of property, plant, and equipment at December 31, 2011? (Enter the amounts in thousands.)

Total cost $[removed]
Book value $[removed]

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What was the amount of depreciation expense for each of the 3 years 2009–2011? (Hint: Use the statement of cash flows.) (Enter the amounts in thousands.)

  Depreciation
2009 $[removed]
2010 $[removed]
2011 $[removed]

Warning

 

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Using the statement of cash flows, what are the amounts of property, plant, and equipment purchased (capital expenditures) in 2011 and 2010? (Enter the amounts in thousands.)

  20112010
Property, plant, and equipment purchased [removed][removed]

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Broadening Your Perspective 9-2

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Question 6
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 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 [removed]%
Hershey Company [removed]%

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

  Profit margin
 
Tootsie Roll [removed]%
Hershey Company [removed]%

(3) Asset turnover.

  Asset turnover
 
Tootsie Roll [removed]times
Hershey Company [removed]times

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Problem 9-2A

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Question 7
At December 31, 2014, Navaro Corporation reported the following plant assets.

Land   
$ 3,000,000
Buildings 
$26,500,000
  
Less: Accumulated depreciation—buildings 
11,925,000
 
14,575,000
Equipment 
40,000,000
  
Less: Accumulated depreciation—equipment 
5,000,000
 
35,000,000
Total plant assets   
$52,575,000

During 2015, the following selected cash transactions occurred.

Apr. 1 Purchased land for $2,200,000.
May 1 Sold equipment that cost $600,000 when purchased on January 1, 2008. The equipment was sold for $170,000.
June 1 Sold land for $1,600,000. The land cost $1,000,000.
July 1 Purchased equipment for $1,100,000.
Dec. 31 Retired equipment that cost $700,000 when purchased on December 31, 2005. No salvage value was received.

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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.)

Date
Account Titles and Explanation
Debit
Credit
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(To record depreciation on equipment sold)
  
 
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(To record depreciation on equipment retired)
  
 
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Record adjusting entries for depreciation for 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date.
Account Titles and Explanation
Debit
Credit
Dec. 31
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(To record depreciation on buildings.)
  
31
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Prepare the plant assets section of Navaro’s balance sheet at December 31, 2015. (Hint: You may wish to set up T accounts, post beginning balances, and then post 2015 transactions.) (List Plant Assets in order of Land, Building and Equipment.)

NAVARO CORPORATION
Partial Balance Sheet
December 31, 2015
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$[removed]
 

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Problem 8-3A

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Question 8
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 $ 24,000   $ 9,000 $15,000    
Bird 30,000 $ 30,000        
Cope 50,000 5,000 5,000   $40,000  
DeSpears 38,000         $38,000
Others 
120,000
 
72,000
 
35,000
 
13,000
    
   
$262,000
 
$107,000
 
$49,000
 
$28,000
 
$40,000
 
$38,000
Estimated percentage uncollectible   
3%
 
7%
 
12%
 
24%
 
60%
Total estimated bad debts 
$ 42,400
 
$ 3,210
 
$3,430
 
$3,360
 
$ 9,600
 
$22,800

At December 31, 2013, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $8,000.

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Journalize the adjusting entry for bad debts at December 31, 2013. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation
Debit
Credit
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Post the adjusting entry for bad debts at December 31, 2013.

Bad Debts Expense
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Allowance for Doubtful Accounts
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Journalize the 2014 transactions: (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

1.  March 1, a $600 customer balance originating in 2013 is judged uncollectible.
2.  May 1, a check for $600 is received from the customer whose account was written off as uncollectible on March 1.

No.
Date
Account Titles and Explanation
Debit
Credit
1.[removed]
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2.[removed]
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(To reinstate account previously written off)
  
  
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Post to the allowance account these 2014 events. (Post entries in the order of journal entries posted in the previous part.)

Allowance for Doubtful Accounts
2013 12/31 Bal.
8,000
  12/31 
34,400
  12/31 Bal.
42,400
2014    
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[removed]
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[removed]

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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 $36,700. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation
Debit
Credit
[removed]
[removed]
[removed]
[removed]
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[removed]

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