Chapter 4, Problem 4.27P

Problem 4.27

LO 6. 7

Analyze several accounts using Campbell Soup Company annual report data Set up a horizontal model in the following format:

Beginning balance

Net sales

Cost of products sold

Marketing, selling, and administrative expanses

Purchases on account

Collection of accounts receivable

Payments to suppliers and other

Ending balance

Required:

1. Enter the beginning (July 23, 2013) and ending (August 3, 2014) account balances for Accounts Receivable, Inventories, and Payable to Suppliers and Others. Find these amounts on the balance sheet for Campbell Soup Company in the appendix.
2. From the income statement for Campbell Soup Company for the year ended August 3, 2014, in the appendix, record the following transactions in the model:
1. Net Sales, assuming that all sales were made on account.
2. Cost of Products Sold, assuming that all costs were transferred from inventories.
3. Marketing, Selling, and Administrative Expenses, assuming all of these expenses were accrued in the Payable to Suppliers and Others liability category as they were incurred.

(Hint: Campbell's General, Selling, and Administrative Expenses are contained m two separate captions. Note that Payable to Suppliers and Others is another term for Accounts Payable.)

Assuming that the only other transactions affecting these balance sheet accounts were those described next, calculate the amount of each transaction:

1. Purchases of inventories on account.
2. Collections of accounts receivable.

Payments to suppliers and others.