During fiscal 2013, Stanley Black & Decker Corporation reported Net income of $490.3 million and paid dividends of $307.1 million.Which of the following describes how these transactions would affect Stanley Black and Decker's equity accounts? (in millions)

A)Increase contributed capital by $490.3 and decrease earned capital by $307.1

B)Decrease contributed capital by $307.1 and increase earned capital by $490.3

C)Increase contributed capital by $183.2

D)Increase earned capital by $183.2

E)None of the above

2.During its first three months of operations, Cari's Bakery, Inc. purchased supplies such as plates, napkins, bags, and cutlery for $6,000 and recorded this as an expense. Supplies on hand at the end of the first quarter, amount to $1,600.

To prepare financial statement for the first quarter, the company must record which of the following accounting adjustments?

A)Increase Supplies expense by $1,600 and decrease Supplies inventory by $1,600

B)Increase Supplies expense by $4,400 and decrease Supplies inventory by $4,400

C)Increase Supplies inventory by $1,600 and decrease Supplies expense by $1,600

D)Increase Supplies inventory by $4,400 and decrease Supplies expense by $4,400

E)None of the above

3. During the month of March 2014, Weimar World, a tax-preparation service, had the following transactions.

Billed $296,000 in revenues on credit

Received $164,000 from customers' accounts receivable

Incurred expenses of $134,000 but only paid $77,700 cash for these expenses

Prepaid $22,220 for computer services to be used next month

What was the company's accrual basis net income for the month?

A)$ 162,000

B)$64,080

C)$41,860

D)None of the above

4.The unadjusted trial balance for Let's Move World for December 31, 2014 reported Supplies inventory of $2,120. The adjusted trial balance reported Supplies inventory of $0.

Which of the following is a plausible explanation for this difference?

A)The Supplies inventory account was closed so that next period's account will begin afresh.

B)Supplies inventory should never appear on a trial balance, so the error was fixed.

C)Supplies expense had not been properly recorded during the period.

D)Supplies had been erroneously excluded from the unadjusted trial balance, so they were added.

E)None of the above.

5.Mattel Inc.'s 2013 financial statements show operating profit before tax of $1,168,103 thousand, net income of $903,944 thousand, provision for income taxes of $195,184 thousand and net nonoperating expense before tax of $68,975 thousand.

Assume Mattel's statutory tax rate for 2013 is 37%. Mattel's 2013 tax shield is:

A) $43,454 thousand

B) $25,521 thousand

C) $ 264,159 thousand

D) $ 238,638 thousand

E)None of the above

6. The 2013 balance sheet of The New York Times Company shows net operating profit margin (NOPM) of 6.2%, net operating asset turnover (NOAT) of 3.35, return on equity of 8.7%, and adjusted return on assets of 2.4%.

What is the company's nonoperating return?

A) -12.1%

B) 0.7%

C) -1.8%

D) 2.5%

E) None of the above

7.The fiscal year-end 2014 financial statements for Staples, Inc. report revenues of $23,114,263 thousand, net operating profit after tax of $779,262 thousand, net operating assets of $6,752,490 thousand. The fiscal year-end 2013 balance sheet reports net operating assets of $6,920,568 thousand.

Staples' 2014 net operating profit margin is:

A) 29.2%

B) 11.5%

C) 3.4%

D) 12.7%

E) There is not enough information to calculate the ratio.

8. The 2013 balance sheet of Microsoft Corp. reports total assets of $142,431 million, operating liabilities of $47,242 million, and total shareholders' equity of $78,944 million. Microsoft 2013 nonoperating liabilities are:

A) $63,487 million

B) $16,245 million

C) $95,189 million

D) $31,702 million

E)There is not enough information to calculate the amount.

9. The fiscal 2013 balance sheet for Whole Foods Market reports the following data (in millions). What is the company's current ratio?

Cash and cash equivalents

Accounts receivable

Merchandise inventories

Current

assets

Current liabilities

$290

$188

$414

$1,980

$1,088

A) 0.82

B) 1.55

C) 0.44

D) 1.82

E)None of the above

10. The fiscal 2013 balance sheet for Whole Foods Market reports the following data (in millions). What is the company's quick ratio?

Cash and cash equivalents

Accounts receivable

Merchandise inventories

Current

assets

Current liabilities

$290

$188

$414

$1,980

$1,088

A) 0.82

B) 1.55

C) 0.44

D) 1.82

E) None of the above

EMBA 7010 MID-TERM EXAM 1. During fiscal 2013, Stanley Black & Decker Corporation reported Net income of $490.3 million and paid dividends of $307.1 million. Which of the following describes how these transactions would affect Stanley Black and Decker's equity accounts? (in millions) A) Increase contributed capital by $490.3 and decrease earned capital by $307.1 B) Decrease contributed capital by $307.1 and increase earned capital by $490.3 C) Increase contributed capital by $183.2 D) Increase earned capital by $183.2 E) None of the above 2. During its first three months of operations, Cari's Bakery, Inc. purchased supplies such as plates, napkins, bags, and cutlery for $6,000 and recorded this as an expense. Supplies on hand at the end of the first quarter, amount to $1,600. To prepare financial statement for the first quarter, the company must record which of the following accounting adjustments? A) Increase Supplies expense by $1,600 and decrease Supplies inventory by $1,600 B) Increase Supplies expense by $4,400 and decrease Supplies inventory by $4,400 C) Increase Supplies inventory by $1,600 and decrease Supplies expense by $1,600 D) Increase Supplies inventory by $4,400 and decrease Supplies expense by $4,400 E) None of the above 3. During the month of March 2014, Weimar World, a tax-preparation service, had the following transactions. Billed $296,000 in revenues on credit Received $164,000 from customers' accounts receivable Incurred expenses of $134,000 but only paid $77,700 cash for these expenses Prepaid $22,220 for computer services to be used next month What was the company's accrual basis net income for the month? A) $ 162,000 B) $ 64,080 C) $ 41,860 D) None of the above 4. The unadjusted trial balance for Let's Move World for December 31, 2014 reported Supplies inventory of $2,120. The adjusted trial balance reported Supplies inventory of $0. Which of the following is a plausible explanation for this difference? A) The Supplies inventory account was closed so that next period's account will begin afresh. B) Supplies inventory should never appear on a trial balance, so the error was fixed. C) Supplies expense had not been properly recorded during the period. D) Supplies had been erroneously excluded from the unadjusted trial balance, so they were added. E) None of the above. 5. Mattel Inc.'s 2013 financial statements show operating profit before tax of $1,168,103 thousand, net income of $903,944 thousand, provision for income taxes of $195,184 thousand and net nonoperating expense before tax of $68,975 thousand. Assume Mattel's statutory tax rate for 2013 is 37%. Mattel's 2013 tax shield is: A) $ 43,454 thousand B) $ 25,521 thousand C) $ 264,159 thousand D) $ 238,638 thousand E) None of the above 6. The 2013 balance sheet of The New York Times Company shows net operating profit margin (NOPM) of 6.2%, net operating asset turnover (NOAT) of 3.35, return on equity of 8.7%, and adjusted return on assets of 2.4%. What is the company's nonoperating return? A) -12.1% B) 0.7% C) -1.8% D) 2.5% E) None of the above 7. The fiscal year-end 2014 financial statements for Staples, Inc. report revenues of $23,114,263 thousand, net operating profit after tax of $779,262 thousand, net operating assets of $6,752,490 thousand. The fiscal year-end 2013 balance sheet reports net operating assets of $6,920,568 thousand. Staples' 2014 net operating profit margin is: A) 29.2% B) 11.5% C) 3.4% D) 12.7% E) There is not enough information to calculate the ratio. 8. The 2013 balance sheet of Microsoft Corp. reports total assets of $142,431 million, operating liabilities of $47,242 million, and total shareholders' equity of $78,944 million. Microsoft 2013 nonoperating liabilities are: A) $63,487 million B) $16,245 million C) $95,189 million D) $31,702 million E) There is not enough information to calculate the amount. 9. The fiscal 2013 balance sheet for Whole Foods Market reports the following data (in millions). What is the company's current ratio? A) B) C) D) E) Cash and cash equivalents Accounts receivable Merchandise inventories Current assets Current liabilities $290 $188 $414 $1,980 $1,088 0.82 1.55 0.44 1.82 None of the above 10. The fiscal 2013 balance sheet for Whole Foods Market reports the following data (in millions). What is the company's quick ratio? A) B) C) D) E) Cash and cash equivalents Accounts receivable Merchandise inventories Current assets Current liabilities $290 $188 $414 $1,980 $1,088 0.82 1.55 0.44 1.82 None of the above 11. Selected balance sheet amounts for Harley Davidson Inc. for five recent years follow. Compute the missing balance sheet amounts for each of the five years. ($ millions) Current Assets 2009 4,341.9 2010 4,066.6 2011 2012 2013 Long-term Assets Current Liabilities Long-term Liabilities Total Liabilities 4,779.2 7,047.4 2,013.8 5,210.0 7,223.8 2,698.6 4,555.3 1,503.1 5,110.0 2,509.6 3,885.9 9,155.5 5,364.1 5,132.0 4,050.9 Total Assets 9,674.2 5,119.8 5,416.2 9,405.0 Equity 2,108.1 2,420.3 6,613.1 12. The February 2, 2013 income statement and balance sheet for Kohl's Corporation shows the following items (in millions): 3,009.5 Net sales Cost of merchandise sold Merchandise inventories $19,279 12,289 3,748 Required: Prepare the journal entries to record Net sales and Cost of goods sold for Kohl's for 2013. Assume all sales are for cash. 13. The December 28, 2013 adjusted trial balance of Cabela's Incorporated shows the amounts below. Prepare the company's income statement and balance sheet for December 28, 2013. (in $ thousands) Accounts payable Accounts receivable Gift certificates (unredeemed) Income tax expense Inventories Merchandise costs Other current assets Cash and cash equivalents Contributed capital Interest expense, net Long-term liabilities Other current liabilities Long-term assets Retained earnings Selling, distribution, and administrative expenses Total revenue Debits Credits 261,200 3,981,498 291,444 119,138 644,883 2,030,829 137,868 222,263 347,241 17,833 3,677,750 560,136 1,410,352 1,034,703 1,207,387 9,772,051 3,599,577 9,772,051 14. Use the following selected balance sheet and income statement data for Mattel Inc. (in $ thousands) to compute a) return on equity, b) profit margin (PM), c) asset turnover (AT), and d) financial leverage (FL) for fiscal 2013. Show that ROE = PM AT FL. (in thousands) Net sales Operating income Interest expense Net income Total assets Total liabilities 2013 $ 6,484,892 1,168,103 5,555 903,944 6,439,626 3,188,067 2012 $ 6,420,881 1,021,015 6,841 776,464 6,526,785 3,459,741 15. Income statements and balance sheets follow for The New York Times Company. Refer to these financial statements to answer the requirements. The New York Times Company Consolidated Statements of Income (in thousands) Operating revenues Circulation Advertising Other Total revenues Production Costs Raw materials Wages and benefits Other Total production costs Selling, general and administrative expenses Depreciation and amortization Total operating costs Pension settlement expense Multiemployer pension plan withdrawal expense Other expense Operating profit Gain on sale of investments Impairment of investments (Loss)/income from joint ventures Premium on debt redemption Interest expense, net Income from continuing operations before income taxes Income tax expense Income from continuing operations Discontinued operations: (Loss) from discontinued operations, net of tax Gain on sale, net of tax Income/(loss) from discontinued operations, net of tax Net income/(loss) Net (income)/loss attributable to the noncontrolling interest Net income/(loss) attributable to New York Times Company common stockholders Continued next page Fiscal year ended Dec. 29, 2013 Dec. 30, 2012 $ 824,277 666,687 86,266 1,577,230 $ 795,037 711,829 88,475 1,595,341 92,886 332,085 201,942 626,913 706,354 78,477 1,411,744 3,228 6,171 0 156,087 0 0 (3,215) 0 58,073 106,381 331,321 213,616 651,318 711,112 78,980 1,441,410 47,657 0 2,620 103,654 220,275 5,500 2,936 0 62,808 94,799 37,892 56,907 258,557 94,617 163,940 (20,413) 28,362 (113,447) 85,520 7,949 64,856 (27,927) 136,013 249 (166) 65,105 135,847 The New York Times Company Consolidated Balance Sheets (in thousands) Cash and cash equivalents Short-term investments Accounts receivable, net Deferred income taxes Prepaid assets Other current assets Assets held for sale Total current assets Long-term marketable securities Investments in joint ventures Property plant and equipment, net Goodwill, net Deferred income taxes Miscellaneous assets Total assets As of Dec. 29, 2013 Dec. 30, 2012 $ 482,745 364,880 202,303 65,859 20,250 36,230 0 1,172,267 176,155 40,213 713,356 125,871 179,989 164,701 $2,572,552 $ 820,490 134,820 197,589 58,214 23,085 26,320 137,050 1,397,568 4,444 40,872 773,469 122,691 302,212 166,214 $2,807,470 Accounts payable Accrued payroll and other related liabilities Unexpired subscriptions Accrued expenses Accrued incomes taxes Liabilities held for sale Total current liabilities $ 90,982 91,629 58,007 107,755 138 0 348,511 $ 88,990 86,772 57,336 118,753 38,932 32,373 423,156 Long-term debt and capital lease obligations Pension benefits obligation Postretirement benefits obligation Other Total other liabilities 684,142 444,328 90,602 158,435 1,377,507 696,752 737,889 110,347 173,690 1,718,678 15,129 82 33,045 1,283,518 (86,253) 15,027 82 25,610 1,230,450 (96,278) (402,611) 842,910 3,624 846,534 $2,572,552 (512,566) 662,325 3,311 665,636 $2,807,470 Stockholders' equity Common stock of $0.10 par value: Class A common stock Class B convertible Additional paid-in capital Retained earnings Common stock held in treasury, at cost Accumulated other comprehensive income loss), net of tax Total New York Times Company stockholders' equity Noncontrolling interest Total stockholders' equity Total liabilities and stockholders' equity Continued next page continued Required: a. Compute net operating profit after tax (NOPAT) for 2013 and 2012. Assume that combined federal and state statutory tax rates are 37% for both years. b. Compute net operating assets (NOA) for 2013 and 2012. c. Compute return on net operating assets (RNOA) for 2013 and 2012. Net operating assets are $412,630 thousand in 2011. d. Compute return on common shareholders equity (ROE) for 2013 and 2012. Stockholders' equity attributable to New York Times Company in 2011 is $506,360 thousand. e. What is nonoperating return component of ROE for 2013 and 2012? f. Comment on the difference between ROE and RNOA. What inference do you draw from this comparison