The financial statements of Tootsie Roll are presented in Appendix A at the end of this book.

Instructions

(a) Using the consolidated income statement and balance sheet, identify items that may result in adjusting entries for prepayments.

(b) Using the consolidated income statement, identify two items that may result in adjusting entries for accruals.

(c) What was the amount of depreciation expense for 2004 and 2003? (You will need to examine the notes to the financial statements or the statement of cash flows.) Where was accumulated depreciation reported?

(d) What was the cash paid for income taxes during 2004, reported at the bottom of the consolidated statement of cash flows? What was income tax expense (provision for income taxes) for 2004? Where is the remainder presumably reported in the balance sheet?

COMPARATIVE ANALYSIS PROBLEM: Tootsie Roll vs. Hershey Foods