Case: Transaction Analysis for Nike, Inc.A1:A24

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

are in a deficit (negative).

Please record the adjustments in the first two preformatted worksheets and post the updated figures. The 5 images of consolidated events are just for the references if needed

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. The cost of these inventories was $800.

c) The customer paid for the merchandise sold in "b," 6 days after the sale.

d) Paid salaries of $980, cash. Use the expense you feel is most appropriate.

e) Paid a cash dividend on the common stock, $459.

f) Incurred and paid additional income taxes, $130, cash.

As of May 31, 2020, we had approximately 75,400 employees worldwide

real consolidated blc sheet, stmt of cash flow & stmt of shareholder equity as follows

B C D E F G H 1 a b d f Updated $ 1 Nike, Inc. 2 Statement of Income 3 Year ended May 31, 2020 4 in Smillions 5 Revenues 6 Cost of sales 7 Gross profit 8 Demand creation expense 9 Operating overhead expense 10 Total selling and administrative expense 11 Interest expense (income), net 12 Other (income) expense, net 13 Income before income taxes 14 Income tax expense 15 NET INCOME 16 17 Nike, Inc. 18 Statement of Retained Earnings 19 Year ended May 31, 2020 20 Balance, May 31, 2019 21 Repurchase of Class B Common Stock 22 Dividends on common stock 23 Issuance of shares to employees, net 24 Net income 25 Adoption of ASC Topic 842 26 Balance, May 31, 2020 37,403 21,162 16,241 3,592 9,534 13,126 89 139 2,887 348 2,539 $ $ 1,643 (2,872) (1,491) (9) 2,539 (1) (191) $ c D E F G H 1 1. 2 3 4 5 b d f Updated 7 8 9 10 11 12 A Nike, Inc. Balance Sheet May 31, 2020 millions ASSETS Current assets: Cash and cash equivalents Short-term investmento Accounts receivable, net Inventorics Prepaid expenses and other current pote Total current assets Property, plant and equipment, net Operating lease right-of-use assets, net Identifiable intangible sot, 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 15 274 17 223 2,326 31342 20 LIABILITIES AND SHAREHOLDERS' EQUITY 21 Current liabilities: 22 Current portion of long-term debt Notas payable Accounts payable 25 Current portion of operating lease liabilities Accrued liabilities 27 Income taxes payabal 28 Total current liabilities Long-term debt Operating losse liabilities 31 Deferred income taxes and other liabilities 32 Commitments and contingencies Redeemable preferred stock 34 Stockholders' cquity 35 Class A convertible common stock Class B common stock 37 Capital in excess of stated value Accumulated other comprehensive (logo) Retained ournings (deficit) 20 Total shareholders' cquity 41 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 248 2,248 445 5,184 156 8,284 9,406 2,913 2,684 3 8,299 (56) (191) 8,055 31,342 CONSOLIDATED STATEMENTS OF INCOME $ (In millions, except per share data) 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 Earings per common share: Basic Diluted Weighted average common shares outstanding Basic Diluted YEAR ENDED MAY 31, 2020 2019 37,403 $ 39,117 S 21,162 21,643 16,241 17,474 3,592 3,753 9,534 8,949 13,126 12,702 89 49 139 (78) 2,887 4,801 348 772 2,539 $ 4,029 $ 2018 36,397 20,441 15,956 3,577 7,934 11,511 54 66 4,325 2.392 1,933 $ $ $ 1.63 $ 1.60 $ 2.55 $ 2.49 $ 1.19 1.17 1,558.8 1,591.6 1,579.7 1,618.4 1,623.8 1,659.1 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEAR ENDED MAY 31, 2020 2019 2,539 $ 4,029 S 2018 1,933 $ (Dollars in millions) Net income Other comprehensive income (loss), net of tax: Change in net foreign currency translation adjustment Change in net gains (losses) on cash flow hedges Change in net gains (losses) on other Total other comprehensive income (loss), net of tax TOTAL COMPREHENSIVE INCOME (173) 503 (148) (130) (9) (287) 2,252 $ (6) 76 34 104 2,037 323 4,352 $ $ MAY 31, 2019 (Ir millions) 2020 ASSETS $ 8,348 S 439 2,749 7,367 1,653 20,556 4,866 3,097 274 223 2,326 31,342 $ 4,466 197 4.272 5,622 1,968 16,525 4,744 283 154 2,011 23,717 $ $ 6 9 2,612 Current assets: Cash and 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 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 payable Total current liabilities Long-term debt Operating lease liabilities Deferred income taxes and other liabilities Commitments and contingencies (Note 18) Redeemable preferred stock Shareholders' equity: Common stock at stated value: Class A convertible 315 and 315 shares outstanding Class B - 1,243 and 1,253 shares outstanding Capital in excess of stated value Accumulated other comprehensive income (loss) Retained earnings (deficit) Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3 S 248 2.248 445 5,184 156 8,284 9,406 2,913 2,684 5.010 229 7,866 3,464 3,347 3 3 8,299 (56) (191) 8,055 31,342 s 7,163 231 1.643 9.040 23,717 $ YEAR ENDED MAY 31, 2019 2020 2018 2.539 s 4,029 $ 1.933 705 34 721 (380) 429 398 23 747 647 218 27 (99) 15 233 1.239 (1,854) (654) (270) (490) (203) 187 (255) 35 24 1,525 5.903 1,515 4.955 2.488 (Dollars in millions) Cash provided (used) by operations: Net Income $ Adjustments to reconcile net income to net cash provided (used) by operations: Depreciation Deferred income taxes Stock-based compensation Amortization, impairment and other Net foreign currency adjustments Changes in certain working capital components and other assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in inventories (Increase) decrease in prepaid expenses, operating lease right-of-use assets and other current and non-current assets Increase (decrease) in accounts payable, accrued liabilities, operating lease liabilities and other current and non-current liabilities Cash provided (used) by operations Cash provided (used) by investing activities: Purchases of short-term investments Maturities of short-term investments Sales of short-term investments Additions to property, plant and equipment Other investing activities Cash provided (used) by investing activities Cash provided (used) by financing activities: Proceeds from borrowings, net of debt issuance costs Increase (decrease) in notes payable.net Proceeds from exercise of stock options and other stock issuances Repurchase of common stock Dividends-common and preferred Other financing activities Cash provided (used) by financing activities Effect of exchange rate changes on cash and equivalents Net increase (decrease) in cash and equivalents Cash and equivalents, beginning of year CASH AND EQUIVALENTS, END OF YEAR $ Supplemental disclosure of cash flow information: Cash paid during the year for Interest, net of capitalized interest $ Income taxes Non-cash additions to property, plant and equipment Dividends declared and not paid (2.426) 74 2.379 (1.086) 31 (1.028) (2.937) 1.715 2.072 (1.119) 5 (264) (4.783) 3,613 2.496 (1.028) (22) 276 6.134 49 885 (325) 700 13 733 (3.067) (1.452) (58) 2.491 (66) (4.286) (1.332) (50) (5.293) (129) 217 4.249 4,466 $ (4.254) (1.243) (84) (4.835) 45 441 3.808 4,249 3,882 4,466 8,348 $ 140 S 1.028 121 385 153 $ 757 160 347 125 529 294 320 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. COMMON STOCK CAPITAL IN CLASS A CLASS B EXCESS OF STATED SHARES AMOUNT SHARES AMOUNT VALUE 329 $ 1,314 $ 3 $ 5,710 $ 24 600 ACCUMULATED OTHER RETAINED COMPREHENSIVE EARNINGS INCOME (LOSS) (DEFICIT) (213) $ 6,907 $ TOTAL 12,407 600 (4.267) (70) (254) (4,013) (1,265) (1.265) 4 110 (28) 82 218 218 1,933 1.933 104 104 17 (17) 3,517 $ 329 $ 1,272 $ 3 $ (92) $ 9,812 6,384 $ 539 18 539 (14) 14 (54) (227) (4.056) (4.283) (1,360) (1.360) (In millions, etcept per share data) Balance at May 31, 2017 Stock options exercised Repurchase of Class B Common Stock Dividends on common stock (S0.78 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes Stock-based compensation Net Income Other comprehensive income (loss) Reclassifications to retained eamings in accordance with ASU 2018-02 Balance at May 31, 2018 Stock options exercised Conversion to Class B Common Stock Repurchase of Class B Common Stock Dividends on common stock (50.86 per share) and preferred stock (50.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes Stock-based compensation Net income Other comprehensive income (loss) Adoption of ASU 2016-16 (Note 1) Adoption of ASC Topic 606 (Note 1) Balance at May 31, 2019 Stock options exercised Repurchase of Class B Common Stock Dividends on common stock ($0.955 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes Stock-based compensation Net Income Other comprehensive income (loss) Adoption of ASC Topic 842 (Note 1) Balance at May 31, 2020 3 142 (3) 139 325 325 4,029 4.029 323 323 (507) 23 (507) 23 315$ 1,253 $ 3 $ 7,163 $ 231 $ 1,643 $ 9,040 703 20 703 (34) (161) (2.872) (3.033) (1,491) (1.491) 165 (9) 156 429 429 2,539 2.539 (287) (287) (1) (1) (191) $ 315 $ 1,243 $ 3 $ 8,299 $ (56) $ 8,055 B C D E F G H 1 a b d f Updated $ 1 Nike, Inc. 2 Statement of Income 3 Year ended May 31, 2020 4 in Smillions 5 Revenues 6 Cost of sales 7 Gross profit 8 Demand creation expense 9 Operating overhead expense 10 Total selling and administrative expense 11 Interest expense (income), net 12 Other (income) expense, net 13 Income before income taxes 14 Income tax expense 15 NET INCOME 16 17 Nike, Inc. 18 Statement of Retained Earnings 19 Year ended May 31, 2020 20 Balance, May 31, 2019 21 Repurchase of Class B Common Stock 22 Dividends on common stock 23 Issuance of shares to employees, net 24 Net income 25 Adoption of ASC Topic 842 26 Balance, May 31, 2020 37,403 21,162 16,241 3,592 9,534 13,126 89 139 2,887 348 2,539 $ $ 1,643 (2,872) (1,491) (9) 2,539 (1) (191) $ c D E F G H 1 1. 2 3 4 5 b d f Updated 7 8 9 10 11 12 A Nike, Inc. Balance Sheet May 31, 2020 millions ASSETS Current assets: Cash and cash equivalents Short-term investmento Accounts receivable, net Inventorics Prepaid expenses and other current pote Total current assets Property, plant and equipment, net Operating lease right-of-use assets, net Identifiable intangible sot, 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 15 274 17 223 2,326 31342 20 LIABILITIES AND SHAREHOLDERS' EQUITY 21 Current liabilities: 22 Current portion of long-term debt Notas payable Accounts payable 25 Current portion of operating lease liabilities Accrued liabilities 27 Income taxes payabal 28 Total current liabilities Long-term debt Operating losse liabilities 31 Deferred income taxes and other liabilities 32 Commitments and contingencies Redeemable preferred stock 34 Stockholders' cquity 35 Class A convertible common stock Class B common stock 37 Capital in excess of stated value Accumulated other comprehensive (logo) Retained ournings (deficit) 20 Total shareholders' cquity 41 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 248 2,248 445 5,184 156 8,284 9,406 2,913 2,684 3 8,299 (56) (191) 8,055 31,342 CONSOLIDATED STATEMENTS OF INCOME $ (In millions, except per share data) 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 Earings per common share: Basic Diluted Weighted average common shares outstanding Basic Diluted YEAR ENDED MAY 31, 2020 2019 37,403 $ 39,117 S 21,162 21,643 16,241 17,474 3,592 3,753 9,534 8,949 13,126 12,702 89 49 139 (78) 2,887 4,801 348 772 2,539 $ 4,029 $ 2018 36,397 20,441 15,956 3,577 7,934 11,511 54 66 4,325 2.392 1,933 $ $ $ 1.63 $ 1.60 $ 2.55 $ 2.49 $ 1.19 1.17 1,558.8 1,591.6 1,579.7 1,618.4 1,623.8 1,659.1 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEAR ENDED MAY 31, 2020 2019 2,539 $ 4,029 S 2018 1,933 $ (Dollars in millions) Net income Other comprehensive income (loss), net of tax: Change in net foreign currency translation adjustment Change in net gains (losses) on cash flow hedges Change in net gains (losses) on other Total other comprehensive income (loss), net of tax TOTAL COMPREHENSIVE INCOME (173) 503 (148) (130) (9) (287) 2,252 $ (6) 76 34 104 2,037 323 4,352 $ $ MAY 31, 2019 (Ir millions) 2020 ASSETS $ 8,348 S 439 2,749 7,367 1,653 20,556 4,866 3,097 274 223 2,326 31,342 $ 4,466 197 4.272 5,622 1,968 16,525 4,744 283 154 2,011 23,717 $ $ 6 9 2,612 Current assets: Cash and 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 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 payable Total current liabilities Long-term debt Operating lease liabilities Deferred income taxes and other liabilities Commitments and contingencies (Note 18) Redeemable preferred stock Shareholders' equity: Common stock at stated value: Class A convertible 315 and 315 shares outstanding Class B - 1,243 and 1,253 shares outstanding Capital in excess of stated value Accumulated other comprehensive income (loss) Retained earnings (deficit) Total shareholders' equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3 S 248 2.248 445 5,184 156 8,284 9,406 2,913 2,684 5.010 229 7,866 3,464 3,347 3 3 8,299 (56) (191) 8,055 31,342 s 7,163 231 1.643 9.040 23,717 $ YEAR ENDED MAY 31, 2019 2020 2018 2.539 s 4,029 $ 1.933 705 34 721 (380) 429 398 23 747 647 218 27 (99) 15 233 1.239 (1,854) (654) (270) (490) (203) 187 (255) 35 24 1,525 5.903 1,515 4.955 2.488 (Dollars in millions) Cash provided (used) by operations: Net Income $ Adjustments to reconcile net income to net cash provided (used) by operations: Depreciation Deferred income taxes Stock-based compensation Amortization, impairment and other Net foreign currency adjustments Changes in certain working capital components and other assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in inventories (Increase) decrease in prepaid expenses, operating lease right-of-use assets and other current and non-current assets Increase (decrease) in accounts payable, accrued liabilities, operating lease liabilities and other current and non-current liabilities Cash provided (used) by operations Cash provided (used) by investing activities: Purchases of short-term investments Maturities of short-term investments Sales of short-term investments Additions to property, plant and equipment Other investing activities Cash provided (used) by investing activities Cash provided (used) by financing activities: Proceeds from borrowings, net of debt issuance costs Increase (decrease) in notes payable.net Proceeds from exercise of stock options and other stock issuances Repurchase of common stock Dividends-common and preferred Other financing activities Cash provided (used) by financing activities Effect of exchange rate changes on cash and equivalents Net increase (decrease) in cash and equivalents Cash and equivalents, beginning of year CASH AND EQUIVALENTS, END OF YEAR $ Supplemental disclosure of cash flow information: Cash paid during the year for Interest, net of capitalized interest $ Income taxes Non-cash additions to property, plant and equipment Dividends declared and not paid (2.426) 74 2.379 (1.086) 31 (1.028) (2.937) 1.715 2.072 (1.119) 5 (264) (4.783) 3,613 2.496 (1.028) (22) 276 6.134 49 885 (325) 700 13 733 (3.067) (1.452) (58) 2.491 (66) (4.286) (1.332) (50) (5.293) (129) 217 4.249 4,466 $ (4.254) (1.243) (84) (4.835) 45 441 3.808 4,249 3,882 4,466 8,348 $ 140 S 1.028 121 385 153 $ 757 160 347 125 529 294 320 The accompanying Notes to the Consolidated Financial Statements are an integral part of this statement. COMMON STOCK CAPITAL IN CLASS A CLASS B EXCESS OF STATED SHARES AMOUNT SHARES AMOUNT VALUE 329 $ 1,314 $ 3 $ 5,710 $ 24 600 ACCUMULATED OTHER RETAINED COMPREHENSIVE EARNINGS INCOME (LOSS) (DEFICIT) (213) $ 6,907 $ TOTAL 12,407 600 (4.267) (70) (254) (4,013) (1,265) (1.265) 4 110 (28) 82 218 218 1,933 1.933 104 104 17 (17) 3,517 $ 329 $ 1,272 $ 3 $ (92) $ 9,812 6,384 $ 539 18 539 (14) 14 (54) (227) (4.056) (4.283) (1,360) (1.360) (In millions, etcept per share data) Balance at May 31, 2017 Stock options exercised Repurchase of Class B Common Stock Dividends on common stock (S0.78 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes Stock-based compensation Net Income Other comprehensive income (loss) Reclassifications to retained eamings in accordance with ASU 2018-02 Balance at May 31, 2018 Stock options exercised Conversion to Class B Common Stock Repurchase of Class B Common Stock Dividends on common stock (50.86 per share) and preferred stock (50.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes Stock-based compensation Net income Other comprehensive income (loss) Adoption of ASU 2016-16 (Note 1) Adoption of ASC Topic 606 (Note 1) Balance at May 31, 2019 Stock options exercised Repurchase of Class B Common Stock Dividends on common stock ($0.955 per share) and preferred stock ($0.10 per share) Issuance of shares to employees, net of shares withheld for employee taxes Stock-based compensation Net Income Other comprehensive income (loss) Adoption of ASC Topic 842 (Note 1) Balance at May 31, 2020 3 142 (3) 139 325 325 4,029 4.029 323 323 (507) 23 (507) 23 315$ 1,253 $ 3 $ 7,163 $ 231 $ 1,643 $ 9,040 703 20 703 (34) (161) (2.872) (3.033) (1,491) (1.491) 165 (9) 156 429 429 2,539 2.539 (287) (287) (1) (1) (191) $ 315 $ 1,243 $ 3 $ 8,299 $ (56) $ 8,055