The financial statements provide income statement, balance sheet, and cash flow statement information for The Hershey Company for the years 2011, 2010, and 2009. Key details include net sales increasing from $5.3 billion in 2009 to $6.1 billion in 2011, net income increasing from $436 million in 2009 to $629 million in 2011, and total assets increasing from $4.3 billion in 2010 to $4.4 billion in 2011. Cash flow from operating activities was $581 million in 2011.

1. Exercise 12-1
Putnam Corporation had these transactions during 2014.
Analyze the transactions and indicate whether each transaction
resulted in a cash flow from operating activities, investing
activities, financing activities, or noncash investing and
financing activities.
(a)
Purchased a machine for $30,000, giving a long-term note in
exchange.
(b)
Issued $50,000 par value common stock for cash.
(c)
Issued $200,000 par value common stock upon conversion of
bonds having a face value of $200,000.

2. (d)
Declared and paid a cash dividend of $13,000.
(e)
Sold a long-term investment with a cost of $15,000 for $15,000
cash.
(f)
Collected $16,000 of accounts receivable.

3. (g)
Paid $18,000 on accounts payable.
IFRS 13-1
Ling Company reports the following information for the year
ended December 31, 2014: sales revenue $1,000,000, cost of
goods sold $700,000, operating expenses $200,000, and an
unrealized gain on non-trading securities of $75,000. Prepare a
statement of comprehensive income using the one-statement
approach.
LING COMPANY
Statement of Comprehensive Income
For the Year Ended December 31, 2014
$

4. $
Problem 12-9A
Condensed financial data of Odgers Inc. follow.
ODGERS INC.Comparative Balance Sheets
December 31
Assets
2014
2013
Cash
$ 127,664
$ 76,472

5. Accounts receivable
138,724
60,040
Inventory
177,750
162,503
Prepaid expenses
44,872
41,080
Long-term investments
218,040
172,220
Plant assets
450,300
383,150

6. Accumulated depreciation
(79,000
)
(82,160
)
Total
$1,078,350
$813,305
Liabilities and Stockholders’ Equity
Accounts payable
$ 161,160
$ 106,334
Accrued expenses payable

7. 26,070
33,180
Bonds payable
173,800
230,680
Common stock
347,600
276,500
Retained earnings
369,720
166,611
Total
$1,078,350
$813,305
ODGERS INC.Income Statement Data

8. For the Year Ended December 31, 2014
Sales revenue
$613,767
Less:
Cost of goods sold
$214,027
Operating expenses, excluding depreciation
19,608
Depreciation expense
73,470
Income tax expense
43,102
Interest expense
7,473

9. Loss on disposal of plant assets
11,850
369,530
Net income
$ 244,237
Additional information:
1.
New plant assets costing $158,000 were purchased for cash
during the year.
2.
Old plant assets having an original cost of $90,850 and
accumulated depreciation of $76,630 were sold for $2,370 cash.
3.
Bonds payable matured and were paid off at face value for cash.
4.
A cash dividend of $41,128 was declared and paid during the
year.
Prepare a statement of cash flows using the indirect
method. (Show amounts that decrease cash flow with either a -
sign e.g. -15,000 or in parenthesis e.g. (15,000).)
ODGERS INC.Statement of Cash Flows
For the Year Ended December 31, 2014

10. $
Adjustments to reconcile net income to
$

12. $
Problem 12-10A
Condensed financial data of Odgers Inc. follow.
ODGERS INC.Comparative Balance Sheets
December 31
Assets
2014
2013
Cash
$ 151,904
$ 90,992
Accounts receivable
165,064

13. 71,440
Inventory
211,500
193,358
Prepaid expenses
53,392
48,880
Long-term investments
259,440
204,920
Plant assets
535,800
455,900
Accumulated depreciation
(94,000
)

14. (97,760
)
Total
$1,283,100
$967,730
Liabilities and Stockholders’ Equity
Accounts payable
$ 191,760
$ 126,524
Accrued expenses payable
31,020

15. 39,480
Bonds payable
206,800
274,480
Common stock
413,600
329,000
Retained earnings
439,920
198,246
Total
$1,283,100
$967,730
ODGERS INC.Income Statement Data
For the Year Ended December 31, 2014
Sales revenue

16. $730,305
Less:
Cost of goods sold
$254,665
Operating expenses, excluding depreciation
23,331
Depreciation expense
87,420
Income taxes
51,286
Interest expense
8,892
Loss on disposal of plant assets
14,100

17. 439,694
Net income
$ 290,611
Additional information:
1.
New plant assets costing $188,000 were purchased for cash
during the year.
2.
Old plant assets having an original cost of $108,100 and
accumulated depreciation of $91,180 were sold for $2,820 cash.
3.
Bonds payable matured and were paid off at face value for cash.
4.
A cash dividend of $48,937 was declared and paid during the
year.
Further analysis reveals that accounts payable pertain to
merchandise creditors.
Prepare a statement of cash flows for Odgers Inc. using the
direct method. (Show amounts that decrease cash flow with
either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
ODGERS INC.Statement of Cash Flows
For the Year Ended December 31, 2014

18. $
:
$

19. $

20. Problem 13-2A
The comparative statements of Osborne Company are presented
here.
OSBORNE COMPANY
Income Statements
For the Years Ended December 31
2014
2013
Net sales
$1,895,805
$1,755,765
Cost of goods sold
1,063,805
1,011,265
Gross profit
832,000
744,500
Selling and administrative expenses
505,265
484,265
Income from operations
326,735
260,235

21. Other expenses and losses
Interest expense
23,104
21,104
Income before income taxes
303,631
239,131
Income tax expense
93,104
74,104
Net income
$ 210,527
$ 165,027
OSBORNE COMPANY
Balance Sheets
December 31
Assets
2014
2013
Current assets

22. Cash
$ 60,100
$ 64,200
Debt investments (short-term)
74,000
50,000
Accounts receivable
123,065
108,065
Inventory
127,104
116,604
Total current assets
384,269
338,869
Plant assets (net)
662,473
533,773
Total assets
$1,046,742

23. $872,642
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
$ 165,265
$150,665
Income taxes payable
44,604
43,104
Total current liabilities
209,869
193,769
Bonds payable
233,473
213,473
Total liabilities
443,342

24. 407,242
Stockholders’ equity
Common stock ($5 par)
290,000
300,000
Retained earnings
313,400
165,400
Total stockholders’ equity
603,400
465,400
Total liabilities and stockholders’ equity
$1,046,742
$872,642
All sales were on account. Net cash provided by operating
activities for 2014 was $233,480. Capital expenditures were
$135,410, and cash dividends were $62,527.
Compute the following ratios for 2014. (Round all answers to 2
decimal places, e.g. 1.83 or 12.61%.)
(a)
Earnings per share

25. $
(b)
Return on common stockholders’ equity
%
(c)
Return on assets
%
(d)
Current ratio
:1
(e)
Accounts receivable turnover
times
(f)
Average collection period
days
(g)
Inventory turnover

26. times
(h)
Days in inventory
days
(i)
Times interest earned
times
(j)
Asset turnover
times
(k)
Debt to assets
%
(l)
Current cash debt coverage
times
(m)
Cash debt coverage

27. times
(n)
Free cash flow
$
Exercise 7-3
The following control procedures are used in Kelton Company
for over-the-counter cash receipts.
(a) For each procedure, explain the weakness in internal control
and identify the control principle that is violated.
Procedure
Weakness
Principle Violated
1.
Each store manager is responsible for interviewing applicants
for cashier jobs. They are hired if they seem honest and
trustworthy.

28. 2.
All over-the-counter receipts are registered by three clerks who
share a cash register with a single cash drawer.
3.
To minimize the risk of robbery, cash in excess of $100 is
stored in an unlocked attaché case in the stock room until it is
deposited in the bank.
4.

29. At the end of each day the total receipts are counted by the
cashier on duty and reconciled to the cash register total.
5.
The company accountant makes the bank deposit and then
records the day’s receipts.
Broadening Your Perspective 13-2
The financial statements of The Hershey Company and Tootsie
Roll are presented below.
THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31,
2011
2010
2009

30. In thousands of dollars except per share amounts
Net Sales
$6,080,788
$5,671,009
$5,298,668
Costs and Expenses:
Cost of sales
3,548,896

31. 3,255,801
3,245,531
Selling, marketing and administrative
1,477,750
1,426,477
1,208,672
Business realignment and impairment (credits) charges, net
(886
)
83,433
82,875
Total costs and expenses
5,025,760
4,765,711
4,537,078

32. Income before Interest and Income Taxes
1,055,028
905,298
761,590
Interest expense, net
92,183
96,434
90,459
Income before Income Taxes
962,845
808,864
671,131
Provision for income taxes
333,883
299,065

33. 235,137
Net Income
$628,962
$509,799
$435,994
Net Income Per Share—Basic—Class B Common Stock
$2.58
$2.08
$1.77
Net Income Per Share—Diluted—Class B Common Stock
$2.56
$2.07
$1.77
Net Income Per Share—Basic—Common Stock

34. $2.85
$2.29
$1.97
Net Income Per Share—Diluted—Common Stock
$2.74
$2.21
$1.90
Cash Dividends Paid Per Share:
Common Stock
$1.3800
$1.2800
$1.1900

35. Class B Common Stock
1.2500
1.1600
1.0712
The notes to consolidated financial statements are an integral
part of these statements and are included in the Hershey's 2011
Annual Report, available at www.thehersheycompany.com.
THE HERSHEY COMPANY
CONSOLIDATED BALANCE SHEETS
December 31,
2011
2010
In thousands of dollars

36. ASSETS
Current Assets:
Cash and cash equivalents
$693,686
$884,642
Accounts receivable—trade
399,499
390,061

37. Inventories
648,953
533,622
Deferred income taxes
136,861
55,760
Prepaid expenses and other
167,559
141,132
Total current assets
2,046,558
2,005,217

38. Property, Plant and Equipment, Net
1,559,717
1,437,702
Goodwill
516,745
524,134
Other Intangibles
111,913
123,080
Deferred Income Taxes
38,544
21,387

39. Other Assets
138,722
161,212
Total assets
$4,412,199
$4,272,732
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:

40. Accounts payable
$420,017
$410,655
Accrued liabilities
612,186
593,308
Accrued income taxes
1,899
9,402
Short-term debt
42,080
24,088

41. Current portion of long-term debt
97,593
261,392
Total current liabilities
1,173,775
1,298,845
Long-term Debt
1,748,500
1,541,825
Other Long-term Liabilities
617,276
494,461

42. Total liabilities
3,539,551
3,335,131
Commitments and Contingencies
—
—
Stockholders’ Equity:
The Hershey Company Stockholders’ Equity

43. Preferred Stock, shares issued: none in 2011 and 2010
—
—
Common Stock, shares issued: 299,269,702 in 2011 and
299,195,325 in 2010
299,269
299,195
Class B Common Stock, shares issued: 60,632,042 in 2011
and 60,706,419 in 2010
60,632
60,706
Additional paid-in capital
490,817

44. 434,865
Retained earnings
4,699,597
4,374,718
Treasury—Common Stock shares, at cost: 134,695,826 in
2011 and 132,871,512 in 2010
(4,258,962
)
(4,052,101
)
Accumulated other comprehensive loss
(442,331
)
(215,067
)
The Hershey Company stockholders’ equity
849,022

45. 902,316
Noncontrolling interests in subsidiaries
23,626
35,285
Total stockholders’ equity
872,648
937,601
Total liabilities and stockholders’equity
$4,412,199
$4,272,732
THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS

46. For the years ended December 31,
2011
2010
2009
In thousands of dollars
Cash Flows Provided from (Used by) Operating Activities
Net income

47. $628,962
$509,799
$435,994
Adjustments to reconcile net income to net cash provided from
operations:
Depreciation and amortization
215,763
197,116
182,411

48. Stock-based compensation expense, net of tax of $15,127,
$17,413 and $19,223, respectively
28,341
32,055
34,927
Excess tax benefits from stock-based compensation
(13,997
)
(1,385
)
(4,455
)
Deferred income taxes
33,611
(18,654

49. )
(40,578
)
Gain on sale of trademark licensing rights, net of tax of $5,962
(11,072
)
—
—
Business realignment and impairment charges, net of tax of
$18,333, $20,635 and $38,308, respectively
30,838
77,935
60,823
Contributions to pension plans

50. (8,861
)
(6,073
)
(54,457
)
Changes in assets and liabilities, net of effects from business
acquisitions and divestitures:
Accounts receivable—trade
(9,438
)
20,329
46,584

51. Inventories
(115,331
)
(13,910
)
74,000
Accounts payable
7,860
90,434
37,228
Other assets and liabilities
(205,809
)
13,777

52. 293,272
Net Cash Provided from Operating Activities
580,867
901,423
1,065,749
Cash Flows Provided from (Used by) Investing Activities
Capital additions
(323,961
)
(179,538
)

53. (126,324
)
Capitalized software additions
(23,606
)
(21,949
)
(19,146
)
Proceeds from sales of property, plant and equipment
312
2,201
10,364
Proceeds from sales of trademark licensing rights
20,000

54. —
—
Business acquisitions
(5,750
)
—
(15,220
)
Net Cash (Used by) Investing Activities
(333,005
)
(199,286
)
(150,326
)
Cash Flows Provided from (Used by) Financing Activities

55. Net change in short-term borrowings
10,834
1,156
(458,047
)
Long-term borrowings
249,126
348,208
—

56. Repayment of long-term debt
(256,189
)
(71,548
)
(8,252
)
Proceeds from lease financing agreement
47,601
—
—
Cash dividends paid
(304,083
)
(283,434
)
(263,403
)

57. Exercise of stock options
184,411
92,033
28,318
Excess tax benefits from stock-based compensation
13,997
1,385
4,455
Contributions from noncontrolling interests in subsidiaries
—
10,199

58. 7,322
Repurchase of Common Stock
(384,515
)
(169,099
)
(9,314
)
Net Cash (Used by) Financing Activities
(438,818
)
(71,100
)
(698,921
)
(Decrease) Increase in Cash and Cash Equivalents
(190,956
)
631,037

59. 216,502
Cash and Cash Equivalents as of January 1
884,642
253,605
37,103
Cash and Cash Equivalents as of December 31
$693,686
$884,642
$253,605
Interest Paid
$97,892
$97,932

60. $91,623
Income Taxes Paid
292,315
350,948
252,230
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Earnings, Comprehensive Earnings and Retained Earnings (in
thousands except per share data)
For the year ended December 31,
2011
2010
2009

61. Net product sales
$528,369
$517,149
$495,592
Rental and royalty revenue
4,136
4,299
3,739
Total revenue
532,505
521,448
499,331

62. Product cost of goods sold
365,225
349,334
319,775
Rental and royalty cost
1,038
1,088
852
Total costs
366,263
350,422
320,627

63. Product gross margin
163,144
167,815
175,817
Rental and royalty gross margin
3,098
3,211
2,887
Total gross margin
166,242
171,026
178,704

64. Selling, marketing and administrative expenses
108,276
106,316
103,755
Impairment charges
—
—
14,000
Earnings from operations
57,966
64,710
60,949

65. Other income (expense), net
2,946
8,358
2,100
Earnings before income taxes
60,912
73,068
63,049
Provision for income taxes
16,974
20,005
9,892

66. Net earnings
$43,938
$53,063
$53,157
Net earnings
$43,938
$53,063
$53,157

67. Other comprehensive earnings (loss)
(8,740
)
1,183
2,845
Comprehensive earnings
$35,198
$54,246
$56,002

68. Retained earnings at beginning of year.
$135,866
$147,687
$144,949
Net earnings
43,938
53,063
53,157
Cash dividends
(18,360
)
(18,078
)
(17,790
)

69. Stock dividends
(47,175
)
(46,806
)
(32,629
)
Retained earnings at end of year
$114,269
$135,866
$147,687

70. Earnings per share
$0.76
$0.90
$0.89
Average Common and Class B Common shares outstanding
57,892
58,685
59,425
(The accompanying notes are an integral part of these

71. statements.)
CONSOLIDATED STATEMENTS OF
Financial Position
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in
thousands except per share data)
Assets
December 31,
2011
2010
CURRENT ASSETS:
Cash and cash equivalents
$78,612

72. $115,976
Investments
10,895
7,996
Accounts receivable trade, less allowances of $1,731 and $1,531
41,895
37,394
Other receivables
3,391
9,961

73. Inventories:
Finished goods and work-in-process
42,676
35,416
Raw materials and supplies
29,084
21,236
Prepaid expenses
5,070
6,499

74. Deferred income taxes
578
689
Total current assets
212,201
235,167
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land
21,939

75. 21,696
Buildings
107,567
102,934
Machinery and equipment
322,993
307,178
Construction in progress
2,598
9,243

76. 455,097
440,974
Less—Accumulated depreciation
242,935
225,482
Net property, plant and equipment
212,162
215,492
OTHER ASSETS:

77. Goodwill
73,237
73,237
Trademarks
175,024
175,024
Investments
96,161
64,461
Split dollar officer life insurance

78. 74,209
74,441
Prepaid expenses
3,212
6,680
Equity method investment
3,935
4,254
Deferred income taxes
7,715
9,203

79. Total other assets
433,493
407,300
Total assets
$857,856
$857,959
Liabilities and Shareholders’ Equity
December 31,
2011
2010
CURRENT LIABILITIES:

80. Accounts payable
$10,683
$9,791
Dividends payable
4,603
4,529
Accrued liabilities
43,069
44,185

81. Total current liabilities
58,355
58,505
NONCURRENT LIABILITES:
Deferred income taxes
43,521
47,865
Postretirement health care and life insurance benefits
26,108

82. 20,689
Industrial development bonds
7,500
7,500
Liability for uncertain tax positions
8,345
9,835
Deferred compensation and other liabilities
48,092
46,157
Total noncurrent liabilities

83. 133,566
132,046
SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value—120,000 shares
authorized—36,479 and 36,057 respectively, issued
25,333
25,040
Class B common stock, $.69-4/9 par value—40,000 shares
authorized—21,025 and 20,466 respectively, issued
14,601
14,212

84. Capital in excess of par value
533,677
505,495
Retained earnings, per accompanying statement
114,269
135,866
Accumulated other comprehensive loss
(19,953
)
(11,213
)
Treasury stock (at cost)—71 shares and 69 shares, respectively

85. (1,992
)
(1,992
)
Total shareholders’ equity
665,935
667,408
Total liabilities and shareholders’ equity
$857,856
$857,959
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Cash Flows (in thousands)
For the year ended December 31,

86. 2011
2010
2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings
$43,938
$53,063

87. $53,157
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation
19,229
18,279
17,862

88. Impairment charges
—
—
14,000
Impairment of equity method investment
—
—
4,400
Loss from equity method investment
194

89. 342
233
Amortization of marketable security premiums
1,267
522
320
Changes in operating assets and liabilities:

90. Accounts receivable
(5,448
)
717
(5,899
)
Other receivables
3,963
(2,373
)
(2,088
)
Inventories

91. (15,631
)
(1,447
)
455
Prepaid expenses and other assets
5,106
4,936
5,203
Accounts payable and accrued liabilities
84
2,180

92. (2,755
)
Income taxes payable and deferred
(5,772
)
2,322
(12,543
)
Postretirement health care and life insurance benefits
2,022
1,429
1,384

93. Deferred compensation and other liabilities
2,146
2,525
2,960
Others
(708
)
310
305
Net cash provided by operating activities
50,390

94. 82,805
76,994
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(16,351
)
(12,813
)
(20,831
)

95. Net purchase of trading securities
(3,234
)
(2,902
)
(1,713
)
Purchase of available for sale securities
(39,252
)
(9,301
)
(11,331
)
Sale and maturity of available for sale securities
7,680

96. 8,208
17,511
Net cash used in investing activities
(51,157
)
(16,808
)
(16,364
)
CASH FLOWS FROM FINANCING ACTIVITIES:

97. Shares repurchased and retired
(18,190
)
(22,881
)
(20,723
)
Dividends paid in cash
(18,407
)
(18,130
)
(17,825
)
Net cash used in financing activities
(36,597

98. )
(41,011
)
(38,548
)
Increase (decrease) in cash and cash equivalents
(37,364
)
24,986
22,082
Cash and cash equivalents at beginning of year
115,976
90,990
68,908

99. Cash and cash equivalents at end of year
$78,612
$115,976
$90,990
Supplemental cash flow information
Income taxes paid
$16,906
$20,586

100. $22,364
Interest paid
$38
$49
$182
Stock dividend issued
$47,053
$46,683
$32,538
(The accompanying notes are an integral part of these
statements.)

101. Based on the information in the financial statements, determine
each of the following for each company:
The percentage increase (i) in net sales and (ii) in net income
from 2010 to 2011. (Round answers to 1 decimal places, e.g.
15.2%. Enter negative amounts using either a negative sign
preceding the number e.g. -15.2% or parentheses e.g. (15.2)%.)
Hershey
Tootsie Roll
Percentage increase (decrease) in net sales
%
%
Percentage increase (decrease) in net income
%

102. %
SHOW SOLUTION
The percentage increase (i) in total assets and (ii) in total
stockholders’ equity from 2010 to 2011. (Round answers to 1
decimal place, e.g. 15.2%. Enter negative amounts using either
a negative sign preceding the number e.g. -15.2% or parentheses
e.g. (15.2)%.)
Hershey
Tootsie Roll
Percentage increase (decrease) in total assets
%
%
Percentage increase (decrease) in total stockholders’ equity

103. %
%
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The earnings per share for 2011. (Round answers to 2 decimal
places, e.g. 15.25.)
Hershey
Tootsie Roll
Earnings per share