ACC 291 Week 3 WileyPLUS Assignment

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ACC 291 Entire Course Link

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

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ACC 291 WileyPLUS Assignment: Week 3 Assignment

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.

Your answer is correct.

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.)

Your answer is correct.

Prepare the entry to record the company’s payroll tax expense. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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

Prepare journal entries to record the accrual of interest on December 31, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare journal entries to record the payment of interest on August 1, 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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.

Your answer is correct.

Prepare the journal entries to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Your answer is correct.

Prepare the journal entries to record the accrual of interest on December 31, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Your answer is correct.

Prepare the journal entries to record the payment of interest on January 1, 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Your answer is correct.

Prepare the journal entries to record the redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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.

Your answer is correct.

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.)

Your answer is correct.

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 not indent manually.)

Your answer is correct.

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

Your answer is correct.

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.

Your answer is correct.

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.)

Semiannual

Interest

Period Cash

Payment Interest

Expense Reduction

of Principal Principal

Balance

Issue date $

$

$

$

6/30/15

12/31/15

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

Your answer is correct.

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

Your answer is correct.

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 not indent manually.)

Date Account Titles and Explanation Debit Credit

First Installment Payment

June 30, 2015

Second Installment Payment

Dec. 31, 2015

Broadening Your Perspective 10-1

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.)

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 $

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

Accounts payable $

Broadening Your Perspective 10-2

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.)

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

Based on the information contained in these financial statements, compute the following 2011 ratios for each company. (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

times

times

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) Depreciation

Method

1 Jan. 1, 2012 $126,000 $39,600 8 Straight-line

2 July 1, 2013 89,000 11,800 5 Declining-balance

3 Nov. 1, 2013 101,610 7,110 7 Units-of-activity

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

Your answer is correct.

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

Your answer is correct.

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 $

$

Problem 10-9A

Wempe Co. sold $3,012,000, 8%, 10-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straight-line amortization on bond premiums and discounts. Financial statements are prepared annually.

Your answer is correct.

Prepare the journal entries to record the issuance of the bonds assuming they sold at: (1) 104 and (2) 96. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No. Date Account Titles and Explanation Debit Credit

1. 1/1/14

2. 1/1/14

Prepare amortization tables for issuance of the bonds sold at 104 for the first three interest payments.

Annual

Interest

Periods Interest to

Be Paid Interest Expense

to Be Recorded Premium

Amortization Unamortized

Premium Bond

Carrying Value

Issue date $ $ $ $ $

1

2

3

Prepare amortization tables for issuance of the bonds sold at 96 for the first three interest payments.

Annual

Interest

Periods Interest to

Be Paid Interest Expense

to Be Recorded Premium

Amortization Unamortized

Premium Bond

Carrying Value

Issue date $ $ $ $ $

1

2

3

Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 104 at December 31, 2014.

WEMPE Co.

Balance Sheet (Partial)

December 31, 2014

$

:

$

Show the long-term liabilities balance sheet presentation for issuance of the bonds sold at 96 at December 31, 2014.

WEMPE Co.

Balance Sheet (Partial)

December 31, 2014

$

:

$

Problem 10-13A

Grace Herron has just approached a venture capitalist for financing for her new business venture, the development of a local ski hill. On July 1, 2013, Grace was loaned $168,000 at an annual interest rate of 5%. The loan is repayable over 5 years in annual installments of $38,804, principal and interest, due each June 30. The first payment is due June 30, 2014. Grace uses the effective-interest method for amortizing debt. Her ski hill company’s year-end will be June 30.

Your answer is correct.

Prepare an amortization schedule for the 5 years, 2013–2018. (Round answers to 0 decimal places, e.g. 125.)

Period Cash

Payment Interest

Expense Principal

Reduction Balance

July 1, 2013 $

$

$

$

June 30, 2014

June 30, 2015

June 30, 2016

June 30, 2017

June 30, 2018

*

Prepare all journal entries for Grace Herron for the first 2 fiscal years ended June 30, 2014, and June 30, 2015. (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Show the balance sheet presentation of the note payable as of June 30, 2015. (Hint: Be sure to distinguish between the current and long-term portions of the note.) (Round answers to 0 decimal places, e.g. 125.)

GRACE HERRON

Balance Sheet (Partial)

June 30, 2015

$

$

IFRS 10-4

Ratzlaff Company issues €2 million, 10-year, 8% bonds at 97, with interest payable on July 1 and January 1.

Your answer is correct.

Prepare the journal entry to record the sale of these bonds on January 1, 2014. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date Account Titles and Explanation Debit Credit

Jan. 1

Your answer is correct.

Assuming instead that the above bonds sold for 104, prepare the journal entry to record the sale of these bonds on January 1, 2014. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date Account Titles and Explanation Debit Credit
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