bob grocery accounting problem

bob grocery accounting problem

Building Bob’s Grocery Store Year 1 – Year 2 Financial Statements using Balance Sheet Equation

Bob’s Grocery Store is the largest retailer in the world. For fiscal year 2, Bob’s Grocery sales exceeded $244 billion of which over $40 billion was in international markets. Their business is built on offering customers quality merchandise at low prices. The balance sheet at the end of fiscal year 1 was:


Balance Sheet as of 1/31/Y1 ($ Billion)

Cash/ST Investments
2

Accounts Payable
16
Accounts Receivable
2

Other Current Liabilities
12
Inventories
23

Total Current Liabilities
28
Other Current Assets
1

Long Term Liabilities
20
Total Current Assets
28

Total Liabilities
48
Property & Equipment (at cost)
58

Capital Stock
2
less: Accumulated Depreciation.
(13)

Retained Earnings
33
Property & Equipment (net)
45

Total Shareholders Equity
35
Investments/Other
10

Total Liabilities + Equity
83
Total Assets
83




The following are a set of hypothetical transactions that could have taken place at Bob’s Grocery during fiscal year 2:

1. The company purchased inventory totaling $194B. All inventory was purchased on credit.
2. Sales were $247B, all paid with cash or bank credit card.
3. $193B of payments were made to merchandise vendors.
4. SG&A expenses were $41B for 2003 of which $2B was for depreciation; $23B of these were paid during the year with the remainder accrued as Other Current Liabilities; the opening $12B balance of Other Current Liabilities was also paid in full during the year.
5. Interest expense of $1B was paid during the year.
6. Income tax expense of $5B was incurred and paid during the year.
7. Property & equipment was purchased for $9B of which $8B was paid in cash and $1B was financed with long term...

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