Case: Transaction Analysis for Nike, Inc. We all know abou Nike! The largest seller of athletic footwear and apparel in the world! Please refer to the 2020 Nike, Inc. 10-K, the income statement (they refer to it as the Consolidated Statements of Income) is on page 56, the balance sheet page 58, and the statement of shareholders' equity is on page 60. Interestingly, because of a repurchase of common stock their retained earnings is in a deficit (negative). Required: The financial statements and original balances and transaction columns have already been set up and formatted. 1) Sum across and copy across so there are adjusted totals after recording the transactions. 2) Link all income statement changes to the net income line item on the statement of retained earnings. 3) Link any changes in retained earnings to the retained earnings line item on the balance sheet. 4) When finished, double check format. Look for any page break problems and correct accordingly. 5) Record the transactions and adjustments shown below. Transactions (amounts in $millions): a) Purchased inventories, on account, terms 2/10, n/45, $1,300. b) Sales of inventories, on account, terms 3/10, n/30, $1,500. Cost of these inventories was $800. c) The customer paid for the merchandise sold in "b," 6 days after sale. d) Paid salaries of $980, cash. Use the expense you feel is most appropriate. e) Paid a cash dividend on common stock, $459. f) Incurred and paid additional income taxes, $130, cash. a b d e f Updated Nike, Inc. Statement of Income Year ended May 31, 2020 in Smillions Revenues Cost of sales Gross profit Demand creation expense Operating overhead expense Total selling and administrative expense Interest expense (income), net Other (income) expense, net Income before income taxes Income tax expense NET INCOME 37,403 21,162 16,241 3,592 9,534 13,126 89 139 2,887 348 2,539 37,403 21,162 16,241 3,592 9,534 13,126 89 139 2,887 348 2,539 Nike, Inc. Statement of Retained Earnings Year ended May 31, 2020 Balance, May 31, 2019 Repurchase of Class B Common Stock Dividends on common stock Issuance of shares to employees, net Net income Adoption of ASC Topic 842 Balance, May 31, 2020 1,643 (2,872) (1,491) (9) 2,539 (1) (191) 1,643 (2,872) (1,491) (9) 2,539 (1) (191) 0 0 0 0 0 0 b d e f Updated 8,348 439 Nike, Inc. Balance Sheet May 31, 2020 $millions ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Operating lease right-of-use assets, net Identifiable intangible assets, net Goodwill Deferred income taxes and other assets TOTAL ASSETS 8,348 439 2,749 7,367 1,653 20,556 4,866 3,097 274 223 2,326 31,342 2,749 7,367 1,653 20,556 4,866 3,097 274 223 2,326 31,342 3 248 3 248 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt Notes payable Accounts payable Current portion of operating lease liabilities Accrued liabilities Income taxes payabale Total current liabilities Long-term debt Operating lease liabilities Deferred income taxes and other liabilities Commitments and contingencies Redeemable preferred stock Stockholders' equity Class A convertible common stock Class B common stock Capital in excess of stated value Accumulated other comprehensive (loss) Retained earnings (deficit) Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2,248 445 5,184 156 8,284 9,406 2,913 2,684 2,248 445 5,184 156 8,284 9,406 2,913 2,684 3 3 8,299 (56) (191) 8,055 0 0 0 0 0 0 8,299 (56) (191) 8,055 31,342 31,342 Case: Transaction Analysis for Nike, Inc. We all know abou Nike! The largest seller of athletic footwear and apparel in the world! Please refer to the 2020 Nike, Inc. 10-K, the income statement (they refer to it as the Consolidated Statements of Income) is on page 56, the balance sheet page 58, and the statement of shareholders' equity is on page 60. Interestingly, because of a repurchase of common stock their retained earnings is in a deficit (negative). Required: The financial statements and original balances and transaction columns have already been set up and formatted. 1) Sum across and copy across so there are adjusted totals after recording the transactions. 2) Link all income statement changes to the net income line item on the statement of retained earnings. 3) Link any changes in retained earnings to the retained earnings line item on the balance sheet. 4) When finished, double check format. Look for any page break problems and correct accordingly. 5) Record the transactions and adjustments shown below. Transactions (amounts in $millions): a) Purchased inventories, on account, terms 2/10, n/45, $1,300. b) Sales of inventories, on account, terms 3/10, n/30, $1,500. Cost of these inventories was $800. c) The customer paid for the merchandise sold in "b," 6 days after sale. d) Paid salaries of $980, cash. Use the expense you feel is most appropriate. e) Paid a cash dividend on common stock, $459. f) Incurred and paid additional income taxes, $130, cash. a b d e f Updated Nike, Inc. Statement of Income Year ended May 31, 2020 in Smillions Revenues Cost of sales Gross profit Demand creation expense Operating overhead expense Total selling and administrative expense Interest expense (income), net Other (income) expense, net Income before income taxes Income tax expense NET INCOME 37,403 21,162 16,241 3,592 9,534 13,126 89 139 2,887 348 2,539 37,403 21,162 16,241 3,592 9,534 13,126 89 139 2,887 348 2,539 Nike, Inc. Statement of Retained Earnings Year ended May 31, 2020 Balance, May 31, 2019 Repurchase of Class B Common Stock Dividends on common stock Issuance of shares to employees, net Net income Adoption of ASC Topic 842 Balance, May 31, 2020 1,643 (2,872) (1,491) (9) 2,539 (1) (191) 1,643 (2,872) (1,491) (9) 2,539 (1) (191) 0 0 0 0 0 0 b d e f Updated 8,348 439 Nike, Inc. Balance Sheet May 31, 2020 $millions ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Operating lease right-of-use assets, net Identifiable intangible assets, net Goodwill Deferred income taxes and other assets TOTAL ASSETS 8,348 439 2,749 7,367 1,653 20,556 4,866 3,097 274 223 2,326 31,342 2,749 7,367 1,653 20,556 4,866 3,097 274 223 2,326 31,342 3 248 3 248 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt Notes payable Accounts payable Current portion of operating lease liabilities Accrued liabilities Income taxes payabale Total current liabilities Long-term debt Operating lease liabilities Deferred income taxes and other liabilities Commitments and contingencies Redeemable preferred stock Stockholders' equity Class A convertible common stock Class B common stock Capital in excess of stated value Accumulated other comprehensive (loss) Retained earnings (deficit) Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2,248 445 5,184 156 8,284 9,406 2,913 2,684 2,248 445 5,184 156 8,284 9,406 2,913 2,684 3 3 8,299 (56) (191) 8,055 0 0 0 0 0 0 8,299 (56) (191) 8,055 31,342 31,342