Financial Accounting: An Integrated Statements Approach, 2nd Edition

Shiver Corporation began operations on September 1, 2006, as an online retailer of camping and

outdoor recreational equipment. The following financial statement data were taken from Shiver’s

records at the end of its first year of operations, August 31, 2007:

Accounts payable $ 32,400

Accounts receivable 51,840

Cash?

Cash receipts from operating activities 903,960

Cash payments for operating activities 756,000

Capital stock 270,000

Cost of sales 432,000

Dividends 27,000

Income tax expense 151,200

Income taxes payable 21,600

Interest expense 16,200

Inventories 97,200

Note payable (due in 2015) 108,000

Property, plant, and equipment 408,240

Retained earnings?

Sales 955,800

Selling and administrative expense 113,400

Instructions

1. Prepare an income statement for the year ended August 31, 2007.


2. Prepare a retained earnings statement for the year ended August 31, 2007.


3. Prepare a balance sheet as of August 31, 2007.


4. Prepare a statement of cash flows for the year ended August 31, 2007.

46 Chapter 1 The Role of Accounting in Business

Alternate Problem

1-5B

Financial statements, including

statement of cash flows

Goal 4

1. Net income, $243,000

FINANCIAL ANALYSIS AND REPORTING

The financial statements of Hershey Foods Corporationare shown in Exhibits 4 through 7 of

this chapter. Based upon these statements, answer the following questions.

1. What are Hershey’s sales (in millions)?


2. What is Hershey’s cost of sales (in millions)?


3. What is Hershey’s net income (in millions)?


4. What is Hershey’s percent of the cost of sales to sales? Round to one decimal place.


5. The percent that a company adds to its cost of sales to determine the selling price is called
   a markup. What is Hershey’s markup percent? Round to one decimal place.


6. What is the percentage of net income to sales for Hershey? Round to one decimal
   place.

The following data (in thousands of dollars) were adapted from the December 31, 2004, financial

statements of Tootsie Roll Industries Inc.:

Sales $420,110

Cost of goods sold 244,501

Net income 64,174

1. What is Tootsie Roll’s percent of the cost of sales to sales? Round to one decimal place.


2. The percent a company adds to its cost of sales to determine selling price is called a
   markup. What is Tootsie Roll’s markup percent? Round to one decimal place.

Case 1-1

Hershey’s annual report

Case 1-2

Income statement analysis