Create journal entries for verbiage listed and increases(decreases) to accounts on page 1. Adjust statements; leasing standard not listed
Pls show work! Check figures to help below , thx
- Revised Property, Plant and Equipment, Y11 = $4,471,558
- Revised Other Long-term Liabilities, Y11 = $1,500,276
- Revised retained earnings 12/31/Y10 = $4,324,668
Change in GAAP, The Hershey Company Suppose Hershey Company, in Y11, adopted the new leasing accounting standards promulgated by the Financial Accounting Standards Board. Adoption of this standard resulted in capitalizing more assets as capital assets, and increasing depreciation expense, which conversely reduced tax expense. More specifically, the effect is shown below: Prior to Y11 Y10 Y10 Increase property, plant, and equipment $168,000 $129,000 $586,000 Increase other long-term liabilities $ 168,000 $129,000 $586,000 Increase depreciation expense $16,800 $12,900 $58,600 Decrease tax expense due to increased depreciation charges $5,040 $3,870 $17,580 To record this accounting change, the company debited Property, plant, and equipment and credited Other long-term liabilities to record capitalization of the leases per the new lease standard. Depreciation expense is a component of Selling, marketing, and administrative expense, Tax expense is provision for income taxes on the income statement, and Tax payable is shown on the balance sheet as Accrued income taxes. Your journal entries will swing the account to a debit balance; that's fine, just show it as a negative liability on the balance sheet for purposes of this problem. Required: 1) Journalize the adjusting entries below, resulting from adoption of the new accounting standard. 2) Update the comparative financial statements by drawing a single line through the numbers that need to be restated, writing the restated numbers as well as showing the computation needed to arrive at the restated numbers. Also on the financial statements, update all subtotals and total accordingly. THE HERSHEY COMPANY INCOME STATEMENT YEARS' ENDED DECEMBER 31, Y11 Y10 $ 6,080,788 $ 5,671,009 Net Sales Costs and Expenses: Cost of sales Selling, marketing, admin. Business realignment Total costs and expenses Income before interest and taxes Interest expense, net Income before taxes Provision for income taxes Net Income 3,548,896 1,477,750 (886) 5,025,760 1,055,028 92,183 962,845 333,883 628,962 3,255,801 1,426,477 83,433 4,765,711 905,298 96,434 808,864 299,065 509,799 $ $ THE HERSHEY COMPANY STATEMENT OF RETAINED EARNINGS Beginning retained earnings Net income Dividends Ending retained earnings $ 4,374,718 628,962 (304,083) $ 4,699,597 $ 4,148,353 509,799 (283,434) $ 4,374,718 THE HERSHEY COMPANY BALANCE SHEET DECEMBER 31, Y11 Y10 $ 884,642 390,069 (8) $ 693,686 399,519 (20) 399,499 648,953 136,861 167,559 2,046,558 3,588,558 (2,028,841) 1,559,717 516,745 111,913 38,544 138,722 $ 4,412,199 390,061 533,622 55,760 141,132 2,005,217 3,324,763 (1,887,061) 1,437,702 524,134 123,080 21,387 161,212 $ 4,272,732 ASSETS Current Assets: Cash and equivalents Accounts receivable Less allowances Net Inventories Deferred income taxes Prepaid expenses and other Total current assets Property, Plant and Equipment Less accumulated depreciation Property, Plant and Equipment, net Goodwill Other Intangibles Deferred income taxes Other Assets Total Assets LIABILITIES, MINORITY INTEREST, AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable Accrued liabilities Accrued income taxes Short-term debt Current portion of long-term debt Total current liabilities Long-term Debt Other Long-term Liabilities Total liabilities Commitments and Contingencies Stockholders' Equity: Common Stock Class B Common Stock Additional paid in capital Retained earnings Treasury - Common Stock Accumulated other comp. loss Hershey Company stockholders' equity Noncontrolling interests in subsidiaries Total stockholders' equity Total liabilities and stockholders' equity $ $ 420,017 612,186 1,899 42,080 97,593 1,173,775 1,748,500 617,276 3,539,551 410,655 593,308 9,402 24,088 261,392 1,298,845 1,541,825 494,461 3,335,131 299,269 60,632 490,817 4,699,597 (4,258,962) (442,331) 849,022 23,626 872,648 $ 4,412,199 299,195 60,706 434,865 4,374,718 (4,052, 101) (215,067) 902,316 35,285 937,601 $ 4,272,732 Change in GAAP, The Hershey Company Suppose Hershey Company, in Y11, adopted the new leasing accounting standards promulgated by the Financial Accounting Standards Board. Adoption of this standard resulted in capitalizing more assets as capital assets, and increasing depreciation expense, which conversely reduced tax expense. More specifically, the effect is shown below: Prior to Y11 Y10 Y10 Increase property, plant, and equipment $168,000 $129,000 $586,000 Increase other long-term liabilities $ 168,000 $129,000 $586,000 Increase depreciation expense $16,800 $12,900 $58,600 Decrease tax expense due to increased depreciation charges $5,040 $3,870 $17,580 To record this accounting change, the company debited Property, plant, and equipment and credited Other long-term liabilities to record capitalization of the leases per the new lease standard. Depreciation expense is a component of Selling, marketing, and administrative expense, Tax expense is provision for income taxes on the income statement, and Tax payable is shown on the balance sheet as Accrued income taxes. Your journal entries will swing the account to a debit balance; that's fine, just show it as a negative liability on the balance sheet for purposes of this problem. Required: 1) Journalize the adjusting entries below, resulting from adoption of the new accounting standard. 2) Update the comparative financial statements by drawing a single line through the numbers that need to be restated, writing the restated numbers as well as showing the computation needed to arrive at the restated numbers. Also on the financial statements, update all subtotals and total accordingly. THE HERSHEY COMPANY INCOME STATEMENT YEARS' ENDED DECEMBER 31, Y11 Y10 $ 6,080,788 $ 5,671,009 Net Sales Costs and Expenses: Cost of sales Selling, marketing, admin. Business realignment Total costs and expenses Income before interest and taxes Interest expense, net Income before taxes Provision for income taxes Net Income 3,548,896 1,477,750 (886) 5,025,760 1,055,028 92,183 962,845 333,883 628,962 3,255,801 1,426,477 83,433 4,765,711 905,298 96,434 808,864 299,065 509,799 $ $ THE HERSHEY COMPANY STATEMENT OF RETAINED EARNINGS Beginning retained earnings Net income Dividends Ending retained earnings $ 4,374,718 628,962 (304,083) $ 4,699,597 $ 4,148,353 509,799 (283,434) $ 4,374,718 THE HERSHEY COMPANY BALANCE SHEET DECEMBER 31, Y11 Y10 $ 884,642 390,069 (8) $ 693,686 399,519 (20) 399,499 648,953 136,861 167,559 2,046,558 3,588,558 (2,028,841) 1,559,717 516,745 111,913 38,544 138,722 $ 4,412,199 390,061 533,622 55,760 141,132 2,005,217 3,324,763 (1,887,061) 1,437,702 524,134 123,080 21,387 161,212 $ 4,272,732 ASSETS Current Assets: Cash and equivalents Accounts receivable Less allowances Net Inventories Deferred income taxes Prepaid expenses and other Total current assets Property, Plant and Equipment Less accumulated depreciation Property, Plant and Equipment, net Goodwill Other Intangibles Deferred income taxes Other Assets Total Assets LIABILITIES, MINORITY INTEREST, AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable Accrued liabilities Accrued income taxes Short-term debt Current portion of long-term debt Total current liabilities Long-term Debt Other Long-term Liabilities Total liabilities Commitments and Contingencies Stockholders' Equity: Common Stock Class B Common Stock Additional paid in capital Retained earnings Treasury - Common Stock Accumulated other comp. loss Hershey Company stockholders' equity Noncontrolling interests in subsidiaries Total stockholders' equity Total liabilities and stockholders' equity $ $ 420,017 612,186 1,899 42,080 97,593 1,173,775 1,748,500 617,276 3,539,551 410,655 593,308 9,402 24,088 261,392 1,298,845 1,541,825 494,461 3,335,131 299,269 60,632 490,817 4,699,597 (4,258,962) (442,331) 849,022 23,626 872,648 $ 4,412,199 299,195 60,706 434,865 4,374,718 (4,052, 101) (215,067) 902,316 35,285 937,601 $ 4,272,732
