CONTABILIDAD FINANCIERA
125
WALGREEN COMPANY
Analysis of Transactions
(In Thousands of Dollars)
Assets
Accounts
Description of Transactions
Cash
Balance August 31
8,819
1. Issuance of stock
+ Receivable
Inven+ tories
288,538
1,631,974
Assets
+120
125
84
Balance September 2
8,566
288,468
14
+120
=
=
+ 90
354
1,632,064
1,704,459
120
691,572
898,705
Balance Sheet
September 2, 1996
(In Thousands of Dollars)
Assets
Accounts receivable
Notes payable
Accounts payable
2,043,160
3,633,557
WALGREEN COMPANY
2,043,105
3,633,557
Cash
Equity
+ 33
+14
+ 84
898,705
+ 22
+ 90
691,836
+ Liabilities
354
8. Cash collections
+ Payable
holders'
=
=
7. Sale of equipment
Payable
Other
+ 33
+125
5. Acquisition on account
6. Payments to creditors
Accounts
+ 22
Notes
1,704,315
2. Issuance of stock
3. Borrowing
Stock-
and Other
120
691,572
Inventories
1,632,064
Other liabilities
1,704,459
Stockholders' equity
898,705
2,043,160
1-28
1. See Exhibit 1-28 on the following page.
2.
YUKON PRODUCTS
Balance Sheet
March 31, 19X1
Liabilities and
Stockholders' Equity
Assets
Cash
Receivables
Inventory
Equipment
$127,800
2,600
26,600
17,500
Total
$174,500
Liabilities:
Accounts payable
Note payable
Total liabilities
You, capital
Total
4,500
5,000
$
9,500
165,000
$174,500
EXHIBIT 128
YUKON PRODUCTS
Analysis of Transactions
For the Month Ended March 31, 19X1
Assets
Description of Transactions
1. Initial investment
2. Inventory acquired for cash
3. Inventory acquired on credit
4. Equipment acquired
5. No entry
6. Gloves for family
7. Gloves returned to
supplier for cash
8. No effect on total inventory
9. Caps returned to
supplier for credit
10. Payment on note
11. Equipment acquired
12. Payment to creditors
13. No entry
14. No entry
15. Exchange of equipment
Cash
+160,000
20,000
Receivables
+20,000
+ 8,000
5,000
+ 600
+Inventory
300
5,000
Equip+ ment
+15,000
600
300
=
=
500
=
=
+ 5,000 =
3,000
500
+2,000
+127,800
+2,600
Liabilities
+ Owners' Equity
Accounts
Note
=
Payable
+ Payable
=
=
=
+ 8,000
=
+10,000
=
=
+26,600
4,000
+ 1,500
+17,500
174,500
500
5,000
+5,000
3,000
+4,500
You,
+ Capital
+160,000
+ 5,000
+165,000
174,500
2-34
1.
2.
GUENTHER COMPANY
Balance Sheet
April 30, 19X2
Liabilities and
Stockholders' Equity
Assets
Cash
Accounts receivable
Merchandise inventory
Prepaid rent
Equipment and fixtures
Total
$ 46,000
50,000
43,000
4,000
35,000
$178,000
Liabilities:
Note payable
Accounts payable
Total liabilities
Stockholders' equity:
Paid-in capital
Retained income
Total stk. equity
Total
$ 24,000
7,000
31,000
$140,000
7,000
$147,000
$178,000
EXHIBIT 234
1.
GUENTHER COMPANY
Analysis of Transactions for April 19X2
(In Thousands of Dollars)
Description
1.
Incorporation
2.
Purchased
merchandise
3.
Assets
Accounts
MerReceivchandise
+ able
+
Inventory
Cash
Equipment &
+ Fixtures
+140
Note
Pay
able
45
+45
+35
+140
Purchased
merchandise
4a.
=
Prepaid
+Rent
Sales
+ 25
+65
b. Cost of inventory
37
+35
sold
5.
Collections
6.
Disbursements to
expense)
+ 15
trade creditors
28
7.
Purchased equipt.
12
8.
Prepaid rent
9.
Rent expense
9*
10.
Wages, etc.
11.
Depreciation
12.
Rent expense
15
=
+36
+6
28
+24
=
=
34
1
2
9* (rent expense)
34 (wages expense)
1 (deprec. expense)
2 (rent expense)
Balances,
April 30 19X2
+ 46
+50
+43
+4
178
* 10% x $90,000 = $9,000.
+35
+24
+ 7
+140
+ 7
178
2-34
(continued)
GUENTHER COMPANY
Income Statement
For the Month Ended April 30, 19X2
Sales (revenue)
Deduct expenses:
Cost of goods sold
Wages, salaries and commissions
Rent, 2,000 + 9,000
Depreciation
Total expenses
Net Income
3.
$90,000
$37,000
34,000
11,000
1,000
83,000
$ 7,000
Most businesses tend to have net losses during their infant months, so Guenthers ability to show a net income for
April is impressive. Indeed, the rate of return on beginning investment is $7,000 $140,000 = 5% per month, or 60%
per year. Many points can be raised, including the problem of maintaining an "optimum" cash balance so that
creditors can be paid neither too quickly nor too slowly. See the next solution also.
2-38
This alternate to problem 2-36 includes dividends; 2-36 does not.
1.
2.
$72
$40
29
3
72
$ 0
$882
0
$882
2
$880
EXHIBIT 238
WM. WRIGLEY JR. COMPANY
Analysis of Transactions for January
(In Millions of Dollars)
Assets
Description
Balance, 12/31
1a. Sales
1b. Cost of invty
sold
2.
Collections
3.
Depreciation
4.
5.
6.
7.
Selling and
administrative
expense
Selling and
administrative
expense
Reduce liability
New liability
Balances,
January 31
Cash
+301
+ 32
+233
50
Other
Current
+ Assets.
+
Property,
Plant, &
Other
+ Equip. + Assets
31
+388
24
+20
+241
+16
+
+155
+193
26
+116
+1,214
20
2
+75
+241
+16
(depreciation
expense)
(sell &
24 adm. exp.)
=
=
=
+385
+882
72 (sales revenue)
40 (cost of goods
sold expense)
20
+339
+75
=
=
=
50
=
=
40
+116
(sell &
5 adm. exp.)
2 (dividend)
+880
+1,214
2-38
(continued)
WM. WRIGLEY JR. COMPANY
Balance Sheet
January 31
(In Millions)
Liabilities and
Stockholders' Equity
Assets
Cash
Receivables
Inventories
Prepaid expenses
Property, plant and equipment
Other assets
Total
3-25
Date
19X6
April 1
April 2
April 3
339
155
193
26
385
116
$1,214
Accounts payable
Dividends payable
Other liabilities
Paid-in capital
Retained earnings
75
2
241
16
880
Total
$1,214
(20 min.)
Entry
Number
Cash
Accounts and
Explanations
100 100,000
Paid-in capital
Issued common stock
Post.
Ref.
Debit
140
Credit
100,000
Equipment
Cash
Note payable
Acquired equipment for
$25,000 down payment
plus a note payable
111
100
130
75,000
Accounts receivable
Sales
Credit sales to local hotel
101
200
2,200
25,000
50,000
2,200
3-25
April 3
April 3
April 30
Supplies expense
Accounts payable
Supplies acquired and
used
300
120
200
Wages expense
Cash
Wages earned and paid
301
100
700
Depreciation expense
Accumulated depreciation, equipment
302
1,000
200
700
111A
1,000
Date
4/1
Ref.
J1
Amount
100,000
4/3
Accounts Receivable
J1
2,200
4/2
J1
2
5
J1
J1
Note Payable
2
J1
Sales
4/3
J1
111A
1,000
J1
120
200
130
J1 50,000
Accounts Payable
25,000
700
Paid-in Capital
4/1
1
111
Accumulated Depreciation,
Equipment
4/30
6
4/2
4/2
4/3
101
Equipment
75,000
4/3
100
J1
140
100,000
200
2,200
Depreciation Expense
6
J1
1,000
302
Supplies Expense
4
J1
200
300
4/3
4/3
4/30
Wages Expense
J1
700
301
3-25
(continued)
LOMBARDI CONSTRUCTION COMPANY
Trial Balance
April 30, 19X6
Account
Number
100
101
111
111A
120
130
140
200
300
301
302
Balance
Account Titles
Debit
Cash
Accounts receivable
Equipment
Accumulated depreciation,
equipment
Accounts payable
Note payable
Paid-in capital
Sales
Supplies expense
Wages expense
Depreciation expense
Totals
$ 74,300
2,200
75,000
Credit
1,000
200
50,000
100,000
2,200
200
700
1,000
$153,400
$153,400
3-32
1.
b.
c.
d.
Inventory
Accounts payable
Acquisition of inventories
550
Accounts receivable
Sales
Sales on account
800
440
Cash
550
800
440
80
Note payable
Borrowed from a supplier on
June 1, 19X8. Four-year note,
interest at 15%, and principal
payable at end of four years
e.
f.
g.
h.
i.
j.
k.
l.
80
Prepaid rent
Cash
Paid rent in advance
25
25
Wages expense
Cash
Paid wages
Miscellaneous expenses
Cash
Paid miscellaneous expenses
165
165
76
76
Note receivable
Cash
Loan to office manager one-year
note, 10 % interest
Cash
20
20
690
Accounts receivable
Collections on accounts
690
Accounts payable
Cash
Payments on accounts
470
470
Rent expense
Prepaid rent
To reduce prepaid rent to $3,000
Depreciation expense
Accumulated depreciation,
store equipment
Depreciation for the year 19X8
26
26
6
6
m.
n.
o.
Wages expense
Cash
Adjustment for wages
Interest expense
Cash
Adjustment: .15 x $80,000 x 7/12
Cash
Interest revenue
Adjustment: .10 x $20,000 x 6/12
2.
*
(d)
(i)
(o)
**
Cash
22 (e)
80 (f)
690 (g)
1 (h)
(j)
25
165
76
20
470
Note Payable
(m)
5
(n)
7
*
(b)
**
Accounts Receivable
37 (i)
800
147
690
Accounts Payable
(j)
470
*
(a)
**
111
550
191
Note
(h)
Receivable
20
(d)
80
25
*
(a)
**
Inventory
131 (c)
550
241
*
(e)
**
Prepaid Rent
4 (k)
25
3
*
**
Store Equipment
60
60
Accumulated Depreciation,
Store Equipment
*
(l)
**
440
(c)
Paid-in Capital
*
40
26
(k)
Rent Expense
26
Retained Income
*
79
(l)
Depreciation Expense
6
(n)
Interest Expense
7
24
6
30
Sales
(b)
Interest Revenue
(o)
800
3-32 (continued)
(f)
(m)
**
Wages Expense
165
5
170
(g)
Miscellaneous Expense
76
* Balance 12/31/X7
** Balance 12/31/X8
3.
CANSECO GARDENS
Trial Balance
December 31, 19X8
Debits
Cash
Accounts receivable
Note receivable
Inventory
Prepaid rent
Store equipment
Accumulated depreciation,
store equipment
Accounts payable
Note payable
Paid-in capital
Retained income
Sales
Interest revenue
Cost of goods sold
Rent expense
Depreciation
Interest expense
Miscellaneous expenses
Wages expense
Total
Credits
25
147
20
241
3
60
$
440
26
6
7
76
170
$1,221
30
191
80
40
79
800
1
$ 1,221
4-38
1.
a.
Rent paid
Cash
Prepaid
Expenses
18
+18
SE
Journal entry:
Prepaid expenses
Cash
18
18
Prepaid
Expenses
b.
December expense
1.5
Rent
Expense
=
Journal entry:
Rent expense
Prepaid expenses
1.5
1.5
Air Traffic
Liability
Cash
c.
Unearned revenue
1.5
+200
+200
Journal entry:
Cash 200
Air traffic liability
d.
200
Earned revenue
Air Traffic
Liability
Passenger
Revenues
100
+100
Journal entry:
Air traffic liability
Passenger revenues
100
100
Accrued
Interest
Receivable
e.
Earned revenue
Journal entry:
Accrued interest receivable
Interest revenue
+160
Interest
Revenue
=
+160
160
160
Accrued
Wages
Payable
Wages
Expense
f.
Wages to be paid
Journal entry:
Wages expense
Accrued wages payable
2.
140
+140
140
140
123.8
4-42
1.
$936,800
590,000
$346,800
Salaries
Advertising
Depreciation
Insurance
Telephone
Maintenance
Miscellaneous expense
Operating income
Other revenue and expense:
Rent revenue
Interest revenue
Total other revenue
Deduct interest expense
Income before income taxes
Income taxes (at 40%)
Net income
$129,500
98,300
6,100
2,500
2,900
4,300
3,400
1,600
600
2,200
600
(a)
247,000
$ 99,800
(c)
(b)
1,600
$101,400
40,560
$ 60,840
4-42
2.
3.
$164,000
60,840
$224,840
60,000
$164,840
Assets
Current assets:
Cash
Accounts receivable
Note receivable
Accrued int. receivable
Merchandise inventory
Unexpired insurance
Total current assets
Long-term assets:
Land
Building
Accum. depr.,
building
$ 99,300
183,100
36,000
600
201,900
2,300
$523,200
169,200
$300,000
26,100
(d)
Total
273,900
$966,300
60,000
$181,460
$620,000
164,840 784,840
Total
$966,300
(d) 20,000 + 6,100; (e) 4,800 1,600; 1,600 = 2 months @ 800 per month
(The land and building could be reported under a classification called fixed assets or property, plant, and
equipment.)
Reconciliations (not required):
Net income: 110,500 5,200 + 600 + 1,600 6,100 40,560 = 60,840
Retained income, Dec. 31, 19X3: 274,500 110,500 + 60,840 60,000 = 164,840
5-37
Except for the entry of July 12, these entries are straightforward.
June 9
June 11
June 18
Accounts receivable
Sales
20,000
Accounts receivable
Sales
12,000
Cash
19,600
Cash discounts on sales
Accounts receivable
20,000
12,000
400
20,000
June 26
July 10
July 12
1,000
1,000
11,000
Accounts receivable
No cash discount was available
but the $1,000 return on
June 26 reduced the amount
due
11,000
100
98
2
5-44
1.
Cash
Accounts receivable 600,000
Sales
To record sales
400,000
1,000,000
Cash
530,000
Accounts receivable
To record collections
530,000
12,000
11,000
11,000
2.
December 31
19X8
Accounts receivable
Allowance for bad debts
Book value
19X7
$104,000*
5,000**
$ 99,000
$45,000
4,000
$41,000
3.
The central question is whether the current balance of Allowance for Bad Debts is adequate. While receivables rose
sharply, the allowance barely changed. What is the collectibility of the $104,000 gross balance of receivables?
What is the composition of the receivables? Many new customers? How old are the balances in relation to the ages
in previous years?
6-32
1.
Invoice price
Add: Freight-in
Deduct: Purchase allowance
Deduct: Cash discount
Total cost of steel acquired
$160,000
12,000
(15,000)
(2,900)*
$153,100
Purchases 160,000
Accounts payable
160,000
Freight-in
Accounts payable (or cash)
12,000
Accounts payable
Purchase allowances
15,000
Accounts payable
Cash discounts on purchases
Cash
12,000
15,000
145,000
2,900
142,100
6-48
This problem is very similar to the Summary Problem for Your Review for this chapter. The detailed income
statement is in the accompanying exhibit. Note the classification of operating expenses into a selling category and a
general and administrative category. The list of accounts in the problem contained one item that belongs in a balance sheet
rather than an income statement, the Allowance for Bad Debts (an offset to Accounts Receivable).
The delivery expenses and the bad debts expense are shown under selling expenses. Some accountants prefer to show
the bad debts expense as an offset to gross sales.
6-48
(continued)
MARCHESI KITCHEN SUPPLY COMPANY
Income Statement
For the Year Ended December 31, 19X5
(In Thousands)
Revenues:
Gross sales
$1,085
$ 50
10
Net sales
60
$1,025
$200
$600
$40
15
55
$545
Add Freight in
50
595
$795
325
470
555
Operating expenses:
Selling expenses:
Sales salaries and commissions
$160
90
Advertising expense
45
29
Delivery expenses
20
$352
60
10
3
6
13
92
444
44
$
67
111
13-47
1.
For Comparison
1990
1993
a.
b.
c.
.9 times
1.0 times
Inventory turnover
62.3 days
=
=
2.
1.9 times
(2,504 + 2,398) x (1 / 2)
14,236
x 365 = 62.8 days
d.
1.7 times
67.2 days
3.4 times
3.5 times
3M's liquidity is below the average of the industry for all four ratios, although the current and quick
ratios are near the industry averages. The current and quick ratios have declined since 1993, while the
average collection period and inventory turnover have improved.
13-48
1.
For Comparison
1990
1993
a.
b.
2.
=
=
=
(13,364 6,284)/13,364
53.0%
(13,364 6,284)/6,284
=
112.7%
44.9%
50.1%
81.3%
114.8
3M's solvency ratios are slightly better than the industry averages. If students are given the 1990 and 1993
values for comparison, it is clear that the solvency has declined since 1990, even though it has stayed
better than industry averages.
13-49
1.
a.
b.
c.
d.
1990
For Comparison
1993
22.8%
20.0%
41.2%
40.4%
Return on sales
= 1,526/14,236 = 10.7%
10.0%
8.8%
Asset turnover
f.
2.
1.3 times
1.2 times
20.5%
16.8%
$2.96
$3.13
3M's profitability measures are excellent, especially the return on stockholders' equity of 23.2% compared
with the industry average of 12%. 3M's asset turnover is below the industry average, but this is more than
offset by a return on sales that is more than triple the industry average. A primary reason for the high
return is the excellent gross profit rate.
Note that a comparison of 3M's earnings per share to the industry average is meaningless. Why? Because a
share represents a different proportional interest in each company.