University of WindsorCenter
for Executive and Professional EducationalMaster
of Management ProgramAccounting
Concepts and Techniques (78-611)Fall
2013-Mid-Term ExamQuestion No. 1Use
the accounts below for Black and Decker to prepare a balance sheet at December
31, 2009 ($ millions).

Contributed
capital

$ 149.9

Cash

1,083.2

Long-term
debt

1,715.0

Accounts
receivable

832.8

Other
current assets

308.8

Other
long-term assets

2,019.9

Current
liabilities

1,195.9

Inventory

777.1

Other
long-term liabilities

1,285.2

Property
plant and equipment

473.4

Retained
earnings

1,622.0

Other
equity

(472.8)

Question No. 2 15Use
the income statement for Staples, Inc. to compute NOPAT (net operating profit after
tax)The
companys combined federal and state statutory tax rate is 37.9%.

STAPLES,
INC. AND SUBSIDIARIES
Consolidated
Statement of Income for February 2, 2008

(in thousands)

Sales

$19,372,682

Cost
of goods sold and occupancy costs

13,822,011

Gross
profit

5,550,671

Operating
and selling expenses

3,131,774

General
and administrative expenses

854,984

Amortization
of intangibles

15,664

Total
operating expenses

4,002,422

Operating
income

1,548,249

Other
nonoperating income (expense):

Interest
income

46,726

Interest
expense

(28,335)

Miscellaneous
expense

(2,158)

Income
before income taxes and minority interest

1,564,482

Income
tax expense

559,614

Income
before minority interests

1,004,868

Minority
interest income

802

Net
Income

$ 1,005,670

Question No. 3 20Use
the balance sheets for the fiscal 2010 (year ended January 29, 2011) for
Staples, Inc. to compute the following:a. Operating assets b. Operating liabilitiesc. Net operating assets (NOA)

STAPLES, INC. AND
SUBSIDIARIES
Consolidated Balance
Sheets
(in thousands)

January 29, 2011

Cash and cash equivalents

$ 1,461,257

Receivables, net

1,954,148

Merchandise inventories, net

2,359,173

Deferred income tax asset

295,232

Prepaid expenses and other current assets

398,357

Total current assets

6,468,167

Net property and equipment

2,147,771

Intangible assets, net

522,722

Goodwill

4,073,162

Other assets

699,845

Total assets

$13,911,667

Accounts payable

$ 2,208,386

Accrued expenses and other current liabilities

1,497,851

Debt maturing within one year

587,356

Total current liabilities

4,293,593

Long-term debt

2,014,407

Other long-term obligations

652,486

Common stock

545

Additional paid-in capital

4,334,735

Accumulated other comprehensive loss

(96,933)

Retained earnings

6,492,340

Treasury stock

(3,786,977)

Total Staples, Inc. stockholders’ equity

6,943,710

Noncontrolling interests

7,471

Total stockholders equity

6,951,181

Total liabilities and stockholders’ equity

$13,911,667

Question No. 4 10Magic
Animation Corporation has aged its accounts receivable and estimated
uncollectible accounts as follows (in thousands):

Age
of Receivables

Balance

Estimated % uncollectible

Current

$4,000

1%

30-60
days past due

1,600

3%

61-90
days past due

900

6%

Over
90 days past due

510

10%

Total

$7,010

a. Determine the appropriate allowance for
uncollectible accounts.b. How will Magic Animation report its accounts
receivable on the balance sheet?Question No. 5 15The
asset side of the 2011 balance sheet for Leggett & Platt is below. The company reported cost of goods sold
$2,970.7 million in 2011 and $2,703.7 million in 2010.

LEGGETT & PLATT,
INCORPORATED

Consolidated Balance
Sheets

December 31

2011

2010

(in millions)

Cash and cash equivalents

$ 236.3

$ 244.5

Accounts and other receivables, net of allowance of $24.3 and
$22.1

503.6

478.9

Finished goods

261.3

241.1

Work in process

41.5

47.7

Raw materials and supplies

223.9

218.2

LIFO reserve

(85.7)

(71.7)

Total inventories, net

441.0

435.3

Other current assets

43.1

60.4

Total current assets

1,224.0

1,219.1

Machinery and equipment

1,120.1

1,136.6

Buildings and other

608.5

613.0

Land

45.2

48.5

Total property, plant and equipment

1,773.8

1,798.1

Less accumulated depreciation

1,193.2

1,173.9

Net property, plant and equipment

580.6

624.2

Goodwill

926.6

930.3

Other intangibles, less accumulated amortization of $106.2 and
$107.8 at December 31, 2011 and 2010, respectively

116.6

152.3

Sundry

67.3

75.1

TOTAL ASSETS

$2,915.1

$3,001.0

a.
Compute inventory turnover for the years
2011 and 2010 and interpret any change. At December 31, 2009, Total
inventories, net were $409.1 million.b.
Leggett & Platt uses LIFO for at
least some of its inventory method. What would the company have reported as
inventory in 2011 and 2010 if the company had used the FIFO method? At December
31, 2009, the LIFO reserve was $(58.7) million.c.
Recalculate cost of goods sold (COGS)
under the FIFO method for 2011 and 2010. Question No. 6 15Neel Industries recently issued $40
million of 11% coupon bonds, payable semiannually, which mature in 15 years.
The bonds were sold for $37,247,026 to yield a 12% annual rate. Use the table
below to show the amortization of the discount, interest expense, and the
carrying amount of the bonds from issuance till the end of period 4.

University of WindsorCenter
for Executive and Professional EducationalMaster
of Management ProgramAccounting
Concepts and Techniques (78-611)Fall
2013-Mid-Term ExamQuestion No. 1Use
the accounts below for Black and Decker to prepare a balance sheet at December
31, 2009 ($ millions).Contributed
capital$ 149.9 Cash 1,083.2 Long-term
debt 1,715.0 Accounts
receivable 832.8 Other
current assets 308.8 Other
long-term assets 2,019.9 Current
liabilities 1,195.9 Inventory 777.1 Other
long-term liabilities 1,285.2 Property
plant and equipment 473.4 Retained
earnings 1,622.0 Other
equity (472.8)Question No. 2 15Use
the income statement for Staples, Inc. to compute NOPAT (net operating profit after
tax)The
companys combined federal and state statutory tax rate is 37.9%.STAPLES,
INC. AND SUBSIDIARIESConsolidated
Statement of Income for February 2, 2008(in thousands)Sales $19,372,682 Cost
of goods sold and occupancy costs 13,822,011 Gross
profit5,550,671Operating
and selling expenses 3,131,774 General
and administrative expenses854,984 Amortization
of intangibles15,664Total
operating expenses4,002,422Operating
income1,548,249Other
nonoperating income (expense):Interest
income46,726 Interest
expense(28,335)Miscellaneous
expense (2,158)Income
before income taxes and minority interest1,564,482Income
tax expense559,614Income
before minority interests1,004,868 Minority
interest income 802Net
Income$ 1,005,670Question No. 3 20Use
the balance sheets for the fiscal 2010 (year ended January 29, 2011) for
Staples, Inc. to compute the following:a. Operating assets b. Operating liabilitiesc. Net operating assets (NOA)STAPLES, INC. AND
SUBSIDIARIESConsolidated Balance
Sheets(in thousands)January 29, 2011Cash and cash equivalents$ 1,461,257Receivables, net1,954,148Merchandise inventories, net2,359,173Deferred income tax asset295,232Prepaid expenses and other current assets398,357Total current assets6,468,167Net property and equipment2,147,771Intangible assets, net522,722Goodwill4,073,162Other assets699,845Total assets$13,911,667Accounts payable$ 2,208,386Accrued expenses and other current liabilities1,497,851Debt maturing within one year587,356Total current liabilities4,293,593Long-term debt2,014,407Other long-term obligations652,486Common stock545Additional paid-in capital4,334,735Accumulated other comprehensive loss(96,933)Retained earnings6,492,340Treasury stock(3,786,977)Total Staples, Inc. stockholders’ equity6,943,710Noncontrolling interests7,471Total stockholders equity6,951,181Total liabilities and stockholders’ equity$13,911,667Question No. 4 10Magic
Animation Corporation has aged its accounts receivable and estimated
uncollectible accounts as follows (in thousands):Age
of ReceivablesBalanceEstimated % uncollectibleCurrent $4,0001%30-60
days past due 1,6003%61-90
days past due9006%Over
90 days past due51010%Total$7,010a. Determine the appropriate allowance for
uncollectible accounts.b. How will Magic Animation report its accounts
receivable on the balance sheet?Question No. 5 15The
asset side of the 2011 balance sheet for Leggett & Platt is below. The company reported cost of goods sold
$2,970.7 million in 2011 and $2,703.7 million in 2010. LEGGETT & PLATT,
INCORPORATEDConsolidated Balance
SheetsDecember 3120112010(in millions)Cash and cash equivalents$ 236.3 $ 244.5 Accounts and other receivables, net of allowance of $24.3 and
$22.1503.6478.9 Finished goods261.3 241.1 Work in process 41.5 47.7 Raw materials and supplies223.9 218.2 LIFO reserve(85.7) (71.7)Total inventories, net441.0 435.3 Other current assets 43.1 60.4 Total current assets 1,224.0 1,219.1 Machinery and equipment 1,120.11,136.6 Buildings and other608.5 613.0 Land 45.2 48.5 Total property, plant and equipment 1,773.8 1,798.1 Less accumulated depreciation 1,193.2 1,173.9 Net property, plant and equipment580.6 624.2 Goodwill926.6 930.3 Other intangibles, less accumulated amortization of $106.2 and
$107.8 at December 31, 2011 and 2010, respectively116.6 152.3 Sundry 67.3 75.1 TOTAL ASSETS $2,915.1 $3,001.0 a.
Compute inventory turnover for the years
2011 and 2010 and interpret any change. At December 31, 2009, Total
inventories, net were $409.1 million.b.
Leggett & Platt uses LIFO for at
least some of its inventory method. What would the company have reported as
inventory in 2011 and 2010 if the company had used the FIFO method? At December
31, 2009, the LIFO reserve was $(58.7) million.c.
Recalculate cost of goods sold (COGS)
under the FIFO method for 2011 and 2010. Question No. 6 15Neel Industries recently issued $40
million of 11% coupon bonds, payable semiannually, which mature in 15 years.
The bonds were sold for $37,247,026 to yield a 12% annual rate. Use the table
below to show the amortization of the discount, interest expense, and the
carrying amount of the bonds from issuance till the end of period 4.