ACC291 WEEK 3 HOMEWORK DONE ON JUNE 2015

| October 3, 2018

Question 1
During the month of March, Olinger Company’s employees
earned wages of $63,800. Withholdings related to these wages were $4,881 for
Social Security (FICA), $7,477 for federal income tax, $3,090 for state income
tax, and $399 for union dues. The company incurred no cost related to these
earnings for federal unemployment tax but incurred $698 for state unemployment
tax.

Prepare the necessary March 31
journal entry to record salaries and wages expense and salaries and wages
payable. Assume that wages earned during March will be paid during April.
(Credit account titles are automatically indented when amount is entered. Do
not indent manually.)
Date Account
Titles and Explanation Debit Credit
Mar. 31

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.)
Date Account
Titles and Explanation Debit Credit
Mar. 31

Question 2
On August 1, 2014, Ortega Corporation issued $907,200, 8%,
10-year bonds at face value. Interest is payable annually on August 1. Ortega’s
year-end is December 31.
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Prepare journal entries to record
the issuance of the bonds. (Credit account titles are automatically indented
when amount is entered. Do not indent manually.)
Date Account
Titles and Explanation Debit Credit
Aug. 1

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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.)
Date Account
Titles and Explanation Debit Credit
Dec. 31

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.)
Date Account
Titles and Explanation Debit Credit
Aug. 1

Question 3
Romine Company issued $546,900 of 8%, 10-year bonds on
January 1, 2014, at face value. Interest is payable annually on January 1.

Prepare the journal entries to
record the issuance of the bonds. (Credit account titles are automatically
indented when amount is entered. Do not indent manually.)
Date Account
Titles and Explanation Debit Credit
Jan. 1, 2014

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.)
Date Account
Titles and Explanation Debit Credit
Dec. 31, 2014

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.)
Date Account
Titles and Explanation Debit Credit
Jan. 1, 2015

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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.)
Date Account
Titles and Explanation Debit Credit
Jan. 1, 2024

Question 4
Cole Corporation issued $441,000, 7%, 25-year bonds on
January 1, 2014, for $354,367. This price resulted in an effective-interest
rate of 9% on the bonds. Interest is payable annually on January 1. Cole uses
the effective-interest method to amortize bond premium or discount.

Prepare the schedule using
effective-interest method to amortize bond premium or discount of Cole
Corporation. (Round answers to 0 decimal places, e.g. 125.)
Interest
Periods Interest
to
Be Paid Interest
Expense
to Be Recorded Discount
Amortization Unamortized
Discount Bond
Carrying Value
Issue date $
$
$
$
$

1

2

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.)
Date Account
Titles and Explanation Debit Credit
Jan. 1, 2014

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.)
Date Account
Titles and Explanation Debit Credit
Dec. 31, 2014

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.)
Date Account
Titles and Explanation Debit Credit
Jan. 1, 2015

Question 5
Nance Co. receives $478,900 when it issues a $478,900, 7%,
mortgage note payable to finance the construction of a building at December 31,
2014. The terms provide for semiannual installment payments of $26,038 on June
30 and December 31.

Prepare the schedule using
effective-interest method to amortize bond premium or discount of Nance Co.
(Round answers to 0 decimal places, e.g. 125.)
Semiannual
Interest
Period Cash
Payment Interest
Expense Reduction
of Principal Principal
Balance
Issue date $
$
$
$

6/30/15

12/31/15

Prepare the journal entries to
record the mortgage loan. (Round answers to 0 decimal places, e.g. 125. Credit
account titles are automatically indented when amount is entered. Do not indent
manually.)
Date Account
Titles and Explanation Debit Credit
Dec. 31, 2014

Prepare the journal entries to
record the first two installment payments. (Round answers to 0 decimal places,
e.g. 125. Credit account titles are automatically indented when amount is
entered. Do not indent manually.)
Date Account
Titles and Explanation Debit Credit
First
Installment Payment
June 30, 2015

Second
Installment Payment
Dec. 31, 2015

Question 6
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.
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What were Tootsie Roll’s total
current liabilities at December 31, 2011? (Enter amount in thousands.)
Current liabilities as at December 31, 2011 $

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

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

Question 7
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.
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Based on the information
contained in these financial statements, compute the current ratio for 2011 for
each company. (Round answers to 2 decimal places, e.g. 15.25.)
Hershey Tootsie Roll
Current ratio
: 1
:1
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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
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Question 8
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 $134,000 $35,900 9 Straight-line
2 July
1, 2013 73,000 10,500 5 Declining-balance
3 Nov.
1, 2013 96,350 6,450 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 31,000. Actual hours of use in the first 3 years were: 2013,
810; 2014, 5,520; and 2015, 7,250.
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Compute the amount of accumulated
depreciation on each machine at December 31, 2015.
MACHINE
1 MACHINE 2 MACHINE 3
Accumulated Depreciation at December 31 $
$
$

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If machine 2 was purchased on
April 1 instead of July 1, what would be the depreciation expense for this
machine in 2013? In 2014?
2013 2014
Depreciation Expense $
$

Question 9
Wempe Co. sold $3,400,000, 7%, 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.
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Prepare the journal entries to
record the issuance of the bonds assuming they sold at: (1) 102 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

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Prepare amortization tables for
issuance of the bonds sold at 102 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

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Prepare the journal entries to
record interest expense for 2014 under both of the bond issuances assuming they
sold at: (1) 102 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. 12/31/14

2. 12/31/14

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Show the long-term liabilities
balance sheet presentation for issuance of the bonds sold at 102 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

$

:

$

Question 10
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 $211,000 at an annual interest rate of 5%. The
loan is repayable over 5 years in annual installments of $48,736, 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.
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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

*

* Amount may be off due to rounding.
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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.)
Date Account
Titles and Explanation Debit Credit
July 1/13

June 30/14

June 30/15

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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

$

$

Question 11
Ratzlaff Company issues €2 million, 10-year, 8% bonds at 97,
with interest payable on July 1 and January 1.
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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

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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
Jan. 1

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s

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