2-50 Analysis of Transactions, Preparation of Statements

H.J. Heinz Company s actual condensed balance

sheet data for April 27, 2011, follow ($ in millions):

Cash $ 724 Accounts payable $ 1,500

Receivables 1,265 Other liabilities 7,549

Inventories 1,452

Other assets 6,285 Shareholders equity 3,182

Property, plant, and equipment 2,505

Total $12,231 Total $12,231

The following summarizes a few transactions during May 2011 ($ in millions):

a. Ketchup carried in inventory at a cost of $4 was sold for cash of $3 and on open account of $8,

for a grand total of $11.

b. Acquired inventory on account, $6.

c. Collected receivables, $5.

d. On May 2, used $12 cash to prepay some rent and insurance for 12 months. Heinz classifies

prepaid expenses as Other Assets.

e. Payments on accounts payable (for inventories), $4.

f. Paid selling and administrative expenses in cash, $1.

g. Prepaid expenses of $1 for rent and insurance expired in May.

h. Depreciation expense of $2 was recognized for May.

Required

1. Prepare an analysis of Heinzs transactions Show all amounts in millions.

2. Prepare a statement of earnings for the month ended May 31 and a balance sheet as of

May 31. Ignore income taxes.