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Financial Accounting Tutorial 3:
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Short Description: Financial Accounting Tutorial 3:. 1. During 20X3 Hershey Foods Corporation made sales of 4173 CHF (assume all on. account) and collected cash of 4136 CHF ...
Content Inside: Financial Accounting Tutorial 3: 1. During 20X3 Hershey Foods Corporation made sales of 4,173 CHF (assume all on account) and collected cash of 4,136 CHF from customers. Operating expenses totaled 816 CHF, all paid in cash. At year end, 20X3, Hershey customers owed the company 408 CHF. Hershey owed creditors 132 CHF on account. All amounts are in millions. a. For these facts, show what Hershey reported on the income statement and balance sheet b. Suppose Hershey had used the cash basis of accounting. What would Hershey have reported for these facts? Solution: All amounts in millions Statement Report 1. Income statement Sales revenue 4,173 Operating expenses 816 Balance sheet Accounts receivable 408 Accounts payable 132 2. Cash basis would report only the cash collections of 4,136 CHF from customers and the payment of operating expenses (816 CHF). 2. Fossil, Inc., the popular watch and leather-goods company, made sales of 781 million CHF during 20X3. Of this amount, Fossil collected cash for all but 36 million CHF. The company's cost of goods sold was 380 million CHF, and all other expenses for the year totalled 333 million CHF. Also during 20X3, Fossil paid 391 million CHF for its inventory and 308 million CHF for everything else. Beginning cash was 112 million CHF. Please answer the following questions: a. How much was Fossil's net income for 20X3? b. How much was Fossil's cash balance at the end of 20X3? Solution: Millions Sales revenue.................................................... 781 Cost of goods sold............................................. (380) All other expenses............................................. (333) Net income........................................................ 68 Beginning cash.................................................. 112 Collections (781 36)...................................... 745 Payments for: inventory..................................... (391) everything else........................... (308) Ending cash...................................................... 158
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