Financial Statement Analysis Cases

Case 1 Kellogg Company

Kellogg Company is the world?s leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its profitability and earnings per share. Presented below are some basic facts for Kellogg.

Instructions

Net sales Net income Total assets Total liabilities Common stock, $0.25 par value Capital in excess of par value Retained earnings Treasury stock, at cost Number of shares outstanding (in millions)

FOLLOW THE ATTACHMENT Financial Statement Analysis Cases Case 1 Kellogg Company Kellogg Company is the world's leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its profitability and earnings per share. Presented below are some basic facts for Kellogg. Instructions Net sales Net income Total assets Total liabilities Common stock, $0.25 par value Capital in excess of par value Retained earnings Treasury stock, at cost Number of shares outstanding (in millions) (a) What are some of the reasons that management purchases its own stock? (b) Explain how earnings per share might be affected by treasury stock transactions (c) Calculate the ratio of debt to assets for 2010 and 2011, and discuss the implications of the change Case 2 Wiebold, Incorporated The following note related to stockholders' equity was reported in Wiebold, Inc.'s annual report. Instructions On February 1, the Board of Directors declared a 3-for-2 stock split, distributed on February 22 to shareholders of record on February 10. Accordingly, all numbers of common shares, except unissued shares and treasury shares, and all per share data have been restated to reflect this stock split. On the basis of amounts declared and paid, the annualized quarterly dividends per share were $0.80 in the current year and $0.75 in the prior year. (a) What is the significance of the date of record and the date of distribution? (b) Why might Wiebold have declared a 3-for-2 for stock split? (c) What impact does Wiebold's stock split have on (1) total stockholders' equity, (2) total par value, (3) outstanding shares, and (4) book value per share? E15-15 (Dividend Entries) The following data were taken from the balance sheet accounts of Masefield Corporation on December 31, 2013. Current assets - $540,000 Debt investments - 624,000 Common stock (par value $10)- 500,000 Paid-in capital in excess of par - 150,000 Retained earnings - 840,000 Prepare the required journal entries for the following unrelated items. (a) A 5% stock dividend is declared and distributed at a time when the market price per share is $39. (b) The par value of the common stock is reduced to $2 with a 5-for-1 stock split. (c) A dividend is declared January 5, 2014, and paid January 25, 2014, in bonds held as an investment. The bonds have a book value of $100,000 and a fair value of $135,000. E15-18 (Dividends and Stockholders' Equity Section) Anne Cleves Company reported the following amounts in the stockholders' equity section of its December 31, 2013, balance sheet. During 2014, Cleves took part in the following transactions concerning stockholders' equity. 1. Paid the annual 2013 $10 per share dividend on preferred stock and a $2 per share dividend on common stock. These dividends had been declared on December 31, 2013. 2. Purchased 1,700 shares of its own outstanding common stock for $40 per share. Cleves uses the cost method. 3. Reissued 700 treasury shares for land valued at $30,000. 4 Issued 500 shares of preferred stock at $105 per share. 5. Declared a 10% stock dividend on the outstanding common stock when the stock is selling for $45 per share. 6. Issued the stock dividend. 7. Declared the annual 2014 $10 per share dividend on preferred stock and the $2 per share dividend on common stock. These dividends are payable in 2015. Instructions (a) prepare journal entries to record the transactions described above. (b) Prepare the December 31, 2014, stockholders' equity section. Assume 2014 net income was $330,000