The purpose of this case is to show our understanding of the Statement of Stockholders' Equity by re-creating the journal entries that would have occurred based upon the information from the financial statements. Let's start by looking at the heading of the Consolidated Statement of Equity for Ford Motor Company and its subsidiaries. 1. The heading of the statement is not quite clear. You may need to refer to the text. What is the date of the statement for the most current year? Is it for a period of time or at a point in time? Explain. 2. Each column heading represents a line item in the Equity section of the Balance Sheet. However, there are seven line items on the Balance Sheet and on columns. What items were combined on the Equity Statement? Why do you think Ford combined the two items? Let's journalize. Only prepare journal entries for the most current year. 3. Start with the Capital Stock and Capital in Excess of Par Value columns on the Consolidated Statement of Equity for Ford Motor Company. We see that Capital in Excess of Part increased $163 mill, but the par value account did not change. We can also see on the cash flow statement that no stock was issued. Since the line item says that the increase to the account includes share-based compensation impacts, we will assume that the entire amount is for share-based compensation. Show the journal entry here. Date Accounts Debit Credit 4. Move to the Retained Earnings Column. Show the journal entry to close out net income to Retained Earnings. (6 points) Date Accounts Debit Credit FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EQUITY (in millions) Equity Attributable to Ford Motor Company Cap. In Excess of Par Value of Stock $ 21,421 Capital Stock $ 41 Treasury Accumulated Other Comprehensive Income/(Loss) (Note 21) (6,257) Equity Attributable to Non- controlling Interests $ 15 Retained Earnings/(Accumulated Deficit) $ 14,980 4,589 Total Equity Stock $ (977) $ $ Balance at December 31, 2015 Net income ther comprehensive income/(loss), net of tax Common stock issued (including share-based compensation impacts) Total 29,208 4,589 (756) 29,223 4,600 (757) (756) (1) 209 209 (148) Treasury stock/other (145) (3) 209 (145) (3,376) 29,729 Cash dividends declared (a) Balance at December 31, 2016 (3,376) 16,193 (3,381) 29,746 $ 41 $ 21,630 $ $ (7,013) $ (1,122) $ $ 17 $ $ 41 $ 21,630 $ 16.193 $ (7,013) $ (1,122) $ $ 17 $ 566 29,729 572 7,731 29,746 572 7,757 52 7.731 26 (2) Balance at December 31, 2016 Adoption of accounting standards Net income Other comprehensive income/(loss), net of tax ommon stock issued (including share-based compensation impacts) Treasury stock/other Cash dividends declared (a) Balance at December 31, 2017 (131) 207 (131) (2,584) 35,578 207 (133) (2,595) 35,606 (11) 28 $ 41 (2,584) 21,906 $ 21,843 $ (6,959) $ (1,253) $ $ $ $ 41 $ 21,843 $ $ (6,959) $ (1,253) $ $ $ 21,906 3,677 35,578 3,677 28 18 - 35,606 3,695 (407) (407) (407) Balance at December 31, 2017 Net income 5ther comprehensive income/(loss), net of tax Common stock issued (including share-based compensation impacts) Treasury stock/other Dividend and dividend equivalents declared (a) Balance at December 31, 2018 163 - (164) 163 (164) (2,915) 35,932 163 (164) (2.927) 35,966 (2,915) 22.668 $ 41 $ 2006 men 22,006 1.0), nam, sou 2.0, (12) 34 (7.366) $ (1,417) $ $ $ (a) We declared dividends per share of common and Class B Stock of $0.85, $0.65, and $0.73 per share in 2016, 2017 and 2018, respectively. The accompanying notes are part of the consolidated financial statements. FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT (in millions, except per share amounts) For the years ended December 31, 2017 2016 2018 $ $ Revenues Automotive Ford Credit Mobility Total revenues (Note 4) 141,546 10,253 145,653 11,113 10 148,294 12,018 26 160,338 151,800 156,776 Costs and expenses Cost of sales Selling, administrative, and other expenses Ford Credit interest, operating, and other expenses Total costs and expenses 126,195 10,972 8,847 146,014 131,321 11,527 9,047 151,895 136,269 11,403 9,463 157,135 1,133 1,171 Interest expense on Automotive debt Interest expense on Other debt 894 57 2,247 123 Other income/loss), net (Note 5) Equity in net income of affiliated companies Income before income taxes Provision for (Benefit from) income taxes (Note 7) Net Income Less: Income (Loss) attributable to noncontrolling interests Net Income attributable to Ford Motor Company 169 1,780 6,784 2,184 3,267 1,201 8,159 402 7.757 26 7.731 4,345 650 3,695 4.600 4.589 $ 3.677 EARNINGS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 8) Basic income Diluted income $ $ $ 1.16 1.15 1.94 1.93 0.93 0.92 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (in millions) For the years ended December 31, 2016 2017 $ 4,600 $ 7.757 $ 2018 3,695 Net Income Other comprehensive income/loss), net of tax (Note 21) Foreign currency translation Marketable securities (1,024) (523) (11) Derivative Instruments 219 183 314 (34) (265) 37 52 7,809 56 Pension and other postretirement benefits Total other comprehensive income (loss), net of tax (757) 3,843 (56) (407) 3,288 Comprehensive Income ess: Comprehensive income/(loss) attributable to noncontrolling interests Comprehensive income attributable to Ford Motor Company 3,833 7.785 $ 3,270 The accompanying notes are part of the consolidated financial statements. FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in millions) December 31, 2017 December 31, 2018 $ ASSETS Cash and cash equivalents (Note 9) Marketable securities (Note 9) Ford Credit finance receivables, net (Note 10) Trade and other receivables, less allowances of $412 and $94 Inventories (Note 12) Other assets Total current assets Ford Credit finance receivables, net (Note 10) Net investment in operating leases (Note 13) Net property (Note 14) Equity in net assets of affiliated companies (Note 15) Deferred income taxes (Note 7) 18,492 20,435 52.210 10,599 11,176 3,889 116.801 56,182 28.235 35,327 3,085 10,762 8,104 258,496 16,718 17,233 54.353 11,195 11,220 3.930 114,649 55,544 29,119 36,178 2,709 10,412 7,929 256,540 Other assets Total assets $ $ LIABILITIES $ 23,282 19,697 Payables Other liabilities and deferred revenue (Note 16) Automotive debt payable within one year (Note 18) Ford Credit debt payable within one year (Note 18) Total current liabilities 3,356 48,265 94,600 21,520 20,556 2,314 51,179 95,569 24.711 12.575 89.492 Other liabilities and deferred revenue (Note 16) Automotive long-term debt (Note 18) Ford Credit long-term debt (Note 18) Other long-term debt (Note 18) Deferred income taxes (Note 7) Total liabilities 23,588 11,233 88,887 600 599 597 815 222.792 220,474 Redeemable con controlling interest (Note 20) 98 100 40 40 EQUITY Common Stock, par value $.01 per share (4,000 million shares issued of 6 billion authorized) Class B Stock, par value $.01 per share (71 million shares issued of 530 million authorized) Capital in excess of par value of stock Retained earnings Accumulated other comprehensive income/(loss) (Note 21) Treasury stock Total equity attributable to Ford Motor Company Equity attributable to noncontrolling interests Total equity Total liabilities and equity 21.843 21,906 (6.959) (1.253) 35,578 28 22,006 22,668 (7.366) (1,417) 35,932 34 35,966 256,540 35,606 258,496 $ $ The purpose of this case is to show our understanding of the Statement of Stockholders' Equity by re-creating the journal entries that would have occurred based upon the information from the financial statements. Let's start by looking at the heading of the Consolidated Statement of Equity for Ford Motor Company and its subsidiaries. 1. The heading of the statement is not quite clear. You may need to refer to the text. What is the date of the statement for the most current year? Is it for a period of time or at a point in time? Explain. 2. Each column heading represents a line item in the Equity section of the Balance Sheet. However, there are seven line items on the Balance Sheet and on columns. What items were combined on the Equity Statement? Why do you think Ford combined the two items? Let's journalize. Only prepare journal entries for the most current year. 3. Start with the Capital Stock and Capital in Excess of Par Value columns on the Consolidated Statement of Equity for Ford Motor Company. We see that Capital in Excess of Part increased $163 mill, but the par value account did not change. We can also see on the cash flow statement that no stock was issued. Since the line item says that the increase to the account includes share-based compensation impacts, we will assume that the entire amount is for share-based compensation. Show the journal entry here. Date Accounts Debit Credit 4. Move to the Retained Earnings Column. Show the journal entry to close out net income to Retained Earnings. (6 points) Date Accounts Debit Credit FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EQUITY (in millions) Equity Attributable to Ford Motor Company Cap. In Excess of Par Value of Stock $ 21,421 Capital Stock $ 41 Treasury Accumulated Other Comprehensive Income/(Loss) (Note 21) (6,257) Equity Attributable to Non- controlling Interests $ 15 Retained Earnings/(Accumulated Deficit) $ 14,980 4,589 Total Equity Stock $ (977) $ $ Balance at December 31, 2015 Net income ther comprehensive income/(loss), net of tax Common stock issued (including share-based compensation impacts) Total 29,208 4,589 (756) 29,223 4,600 (757) (756) (1) 209 209 (148) Treasury stock/other (145) (3) 209 (145) (3,376) 29,729 Cash dividends declared (a) Balance at December 31, 2016 (3,376) 16,193 (3,381) 29,746 $ 41 $ 21,630 $ $ (7,013) $ (1,122) $ $ 17 $ $ 41 $ 21,630 $ 16.193 $ (7,013) $ (1,122) $ $ 17 $ 566 29,729 572 7,731 29,746 572 7,757 52 7.731 26 (2) Balance at December 31, 2016 Adoption of accounting standards Net income Other comprehensive income/(loss), net of tax ommon stock issued (including share-based compensation impacts) Treasury stock/other Cash dividends declared (a) Balance at December 31, 2017 (131) 207 (131) (2,584) 35,578 207 (133) (2,595) 35,606 (11) 28 $ 41 (2,584) 21,906 $ 21,843 $ (6,959) $ (1,253) $ $ $ $ 41 $ 21,843 $ $ (6,959) $ (1,253) $ $ $ 21,906 3,677 35,578 3,677 28 18 - 35,606 3,695 (407) (407) (407) Balance at December 31, 2017 Net income 5ther comprehensive income/(loss), net of tax Common stock issued (including share-based compensation impacts) Treasury stock/other Dividend and dividend equivalents declared (a) Balance at December 31, 2018 163 - (164) 163 (164) (2,915) 35,932 163 (164) (2.927) 35,966 (2,915) 22.668 $ 41 $ 2006 men 22,006 1.0), nam, sou 2.0, (12) 34 (7.366) $ (1,417) $ $ $ (a) We declared dividends per share of common and Class B Stock of $0.85, $0.65, and $0.73 per share in 2016, 2017 and 2018, respectively. The accompanying notes are part of the consolidated financial statements. FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT (in millions, except per share amounts) For the years ended December 31, 2017 2016 2018 $ $ Revenues Automotive Ford Credit Mobility Total revenues (Note 4) 141,546 10,253 145,653 11,113 10 148,294 12,018 26 160,338 151,800 156,776 Costs and expenses Cost of sales Selling, administrative, and other expenses Ford Credit interest, operating, and other expenses Total costs and expenses 126,195 10,972 8,847 146,014 131,321 11,527 9,047 151,895 136,269 11,403 9,463 157,135 1,133 1,171 Interest expense on Automotive debt Interest expense on Other debt 894 57 2,247 123 Other income/loss), net (Note 5) Equity in net income of affiliated companies Income before income taxes Provision for (Benefit from) income taxes (Note 7) Net Income Less: Income (Loss) attributable to noncontrolling interests Net Income attributable to Ford Motor Company 169 1,780 6,784 2,184 3,267 1,201 8,159 402 7.757 26 7.731 4,345 650 3,695 4.600 4.589 $ 3.677 EARNINGS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 8) Basic income Diluted income $ $ $ 1.16 1.15 1.94 1.93 0.93 0.92 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (in millions) For the years ended December 31, 2016 2017 $ 4,600 $ 7.757 $ 2018 3,695 Net Income Other comprehensive income/loss), net of tax (Note 21) Foreign currency translation Marketable securities (1,024) (523) (11) Derivative Instruments 219 183 314 (34) (265) 37 52 7,809 56 Pension and other postretirement benefits Total other comprehensive income (loss), net of tax (757) 3,843 (56) (407) 3,288 Comprehensive Income ess: Comprehensive income/(loss) attributable to noncontrolling interests Comprehensive income attributable to Ford Motor Company 3,833 7.785 $ 3,270 The accompanying notes are part of the consolidated financial statements. FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (in millions) December 31, 2017 December 31, 2018 $ ASSETS Cash and cash equivalents (Note 9) Marketable securities (Note 9) Ford Credit finance receivables, net (Note 10) Trade and other receivables, less allowances of $412 and $94 Inventories (Note 12) Other assets Total current assets Ford Credit finance receivables, net (Note 10) Net investment in operating leases (Note 13) Net property (Note 14) Equity in net assets of affiliated companies (Note 15) Deferred income taxes (Note 7) 18,492 20,435 52.210 10,599 11,176 3,889 116.801 56,182 28.235 35,327 3,085 10,762 8,104 258,496 16,718 17,233 54.353 11,195 11,220 3.930 114,649 55,544 29,119 36,178 2,709 10,412 7,929 256,540 Other assets Total assets $ $ LIABILITIES $ 23,282 19,697 Payables Other liabilities and deferred revenue (Note 16) Automotive debt payable within one year (Note 18) Ford Credit debt payable within one year (Note 18) Total current liabilities 3,356 48,265 94,600 21,520 20,556 2,314 51,179 95,569 24.711 12.575 89.492 Other liabilities and deferred revenue (Note 16) Automotive long-term debt (Note 18) Ford Credit long-term debt (Note 18) Other long-term debt (Note 18) Deferred income taxes (Note 7) Total liabilities 23,588 11,233 88,887 600 599 597 815 222.792 220,474 Redeemable con controlling interest (Note 20) 98 100 40 40 EQUITY Common Stock, par value $.01 per share (4,000 million shares issued of 6 billion authorized) Class B Stock, par value $.01 per share (71 million shares issued of 530 million authorized) Capital in excess of par value of stock Retained earnings Accumulated other comprehensive income/(loss) (Note 21) Treasury stock Total equity attributable to Ford Motor Company Equity attributable to noncontrolling interests Total equity Total liabilities and equity 21.843 21,906 (6.959) (1.253) 35,578 28 22,006 22,668 (7.366) (1,417) 35,932 34 35,966 256,540 35,606 258,496 $ $