Chapter 3, Problem 6E

Determining Financial Statement Effects of Various Transactions

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. a. Issued common stock to investors for $14,083 cash (example).
2. b. Purchased $878,418 of additional inventory on account.
3. c. Borrowed $11,000.
4. d. Sold $1,409,068 of products to customers on account; cost of the products sold was $852,316.
5. e. Paid cash dividends of $22,737.
6. f. Purchased for cash $19,397 in additional property, plant, and equipment.
7. g. Incurred $386,540 in selling expenses, paying three-fourths in cash and owing the rest on account.
8. h. Earned $370 interest on investments, receiving 90 percent in cash.
9. i. Incurred $1,395 in interest expense to be paid at the beginning of next year.

Required:

For each of the transactions, complete the tabulation, indicating the effect (+ for increase and − for decrease) of each transaction. (Remember that A = L + SE; R − E = NI: and NI affects SE through Retained Earnings.) Write NE if there is no effect. The first transaction is provided as an example.

	BALANCE SHEET			INCOME STATEMENT
Transaction	Assets	Liabilities	Stockholders’ Equity	Revenues	Expenses	Net Income
(a) (example)	+14,083	NE	+14,083	NE	NE	NE