Determining Financial Statement Effects of Various Transactions LO3-4

Wolverine World Wide, Incorporated, designs, markets, and licenses casual, industrial, performance outdoor, and athletic footwear and apparel under a variety of brand names, such as Hush Puppies, Wolverine, Merrell, Sperry, and Saucony, to a global market. The following transactions occurred during a recent year. Dollars are in millions.

Issued common stock to investors for $19.4 cash (example).

Purchased $1,690.6 of additional inventory on account.

Paid $63.1 on long-term debt principal and $5.6 in interest on the debt.

Sold $2,306 of products to customers on account.

Cost of the products sold was $1,405.6.

Paid cash dividends of $26 to shareholders.

Purchased for cash $34.4 in additional property, plant, and equipment.

Incurred $704.6 in selling expenses, paying three-fourths in cash and owing the rest on account.

Earned $1 of interest on investments, receiving 80 percent in cash.

Incurred $41 in interest expense to be paid at the beginning of next year.

Required:

For each of the transactions, complete the tabulation, indicating the effect (positive value for increase, negative value for decrease, and leave blank if no effect) of each transaction. (Remember that Assets = Liabilities + Stockholders Equity; Revenues - Expenses = Net Income; and Net Income affects Stockholders Equity through Retained Earnings.) The first transaction is provided as an example. Note: Enter the increasing and decreasing effect of the transaction on separate lines in the table. Do not net the effects on Assets, Stockholders' Equity or Net Income. Enter your answers in millions rather than in dollars (for example, 22.4 million should be entered as 22.4 rather than 22,400,000).