Problem #1 Nike

Assume Nike, Inc. had the following condensed balance sheet on May 31, 2023 (in thousands):

Assets					Liabilities and Owners' Equity
Cash		$445,421			Notes Payable		$553,153
Accounts Receivable		1,754,137			Accounts Payable		687,121
Inventories		1,338,640			Other Liabilities		965,095
Equipment and other assets		1,823,009			Total liabilities		$2,205,369
					Owners' equity		3,155,838
					Total liabilities and
Total assets		$5,361,207			owners' equity		$5,361,207

Consider the following transaction that occurred during the first three days of June (in thousands of dollars):

1 Inventories were acquired for cash, $160,000.

2 Inventories were acquired on open account (accounts payable), $190,000

3 Unsatisfactory shoes acquired on open account in March were returned by Nike for full credit, $40,000

4 Cash was disbursed on account (to reduce accounts payable), $170,000.

5 Collected cash on account, $190,000.

6 Borrowed cash from a bank and issued a note for $700,000

7 Sold additional common stock for cash to new investors, $900,000.

8 The president of the company sold 10,000 shares of his personal holdings of Nike stock through his stockbroker.

Requirement:

1 Prepare journal entries for the above transactions, indicating whether the account is an asset (A), liability (L), stockholder's equity (SE), revenue (R), or expense (E) account (the first one is shown below for an example.)

2 Prepare a balance sheet as of June 3.

JE:

1 Inventory (A) $160,000

Cash (A) $160,000

Required: Access the American Eagle 2020 Annual Report/10K (In the appendix to the textbook or obtain online). Look at the financial statements and Notes to the financial statements closely and attempt to infer what kinds of information they report. Then, answer the following questions based on the Report.

1. On what day of the year does their fiscal year end (their policy in general, not just for one year)?

2. For how many years do they present complete:

a. Balance Sheets

b. Income Statements

c. Cash Flow Statements

3. Are their financial statements audited by independent CPAs? How do you know?

4. Did their total assets increase or decrease over the last year?

5. What was the ending balance of Inventory?

6. Write out their basic accounting equation in dollars at year-end.

7. Use the amounts in the financial statements to write out the retained earnings equation for the 2020 fiscal year (include effects of repurchase of stock).

8. Assume Target sold goods costing $1,100 on account for $1,600. Prepare the (complete) journal entry to record this transaction.

9. Show (in detail) the effect of the transaction in question #9 on the balance sheet equation (if more than one account affects a category, show the effect of each account and the total effect on that category)