Building Bob’s Grocery’s Year 1 – Year 2 Financial Statements using Balance Sheet Equation
Bob’s Grocery is the largest retailer in the world. For fiscal year 2, Bob’s Grocery sales exceeded $244 billion of which over $40 billion was in international markets. Their business is built on offering customers quality merchandise at low prices. Bob’s Grocery’s balance sheet at the end of fiscal year 1 was:
Balance Sheet as of 1/31/Y1 ($ 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 Depr.
(13)
Retained Earnings
33
Property & Equipment (net)
45
Total Shareholders Equity
35
Investments/Other
10
Total Liab. + 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. Merchandise inventory for re-sale of $194B was purchased on credit Insert 194 in the Inventory cell and also on the Accounts Payable cell
2. Sales were $247B, all paid with cash or bank credit card Insert 247 in the revenue cell as well as in the cash cell
3. $193B of payments were made to merchandise vendors Decrease cash cell by 193 and decrease Accounts Payable at the same amount
4. SG&A expenses were $41B for 2003 of which $2B was for depreciation and amortization; $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 (i) insert 41 as an expense in the income statement and...