E3-6 Determining Financial Statement Effects of Various Transactions LO3-4

Wolverine World Wide, Inc., manufactures military, work, sport, and casual footwear and leather accessories under a variety of brand names, such as Hush Puppies, Wolverine, Merrell, Stride Rite, and Bates, to a global market. The following transactions occurred during a recent year. Dollars are in thousands.

1. Issued common stock to investors for $14,082 cash (example).
2. Purchased $882,418 of additional inventory on account.
3. Borrowed $10,000.
4. Sold $1,425,068 of products to customers on account; cost of the products sold was $752,547.
5. Paid cash dividends of $21,658.
6. Purchased for cash $25,726 in additional property, plant, and equipment.
7. Incurred $345,584 in selling expenses, paying three-fourths in cash and owing the rest on account.
8. Earned $1,771 interest on investments, receiving 90 percent in cash.
9. Incurred $2,920 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 A = L + SE, R E = NI, and NI affects SE through Retained Earnings). The first transaction is provided as an example. ("Enter the revenue side and the cost of goods sold side of the transaction on separate lines in the table. Do not net the effects on Stockholders' Equity or Net Income.)

Balance Sheet Income Statement Transaction Assets Liabilities Revenues Expenses Net Income Stockholders' Equity 14,082 a. 14,082 b. C. d. e. f. g. h