WALMART INC

Consolidated Balance Sheets

Walmart’s Statement of Financial Position on January 31, 2012 is given below together with some transactions reported during the fiscal year 2012.

(Amounts in millions) / January 31, 2012
Assets
Current assets:
Cash and cash equivalents / $6,550
Receivables / 5,937
Inventories / 40,714
Prepaid expenses and other / 1,774
Total current assets / 54,975
Property and equipment, at cost:
Land / 25,612
Buildings and improvements / 90,686
Fixtures and equipment / 40,903
Transportation equipment / 2,796
Construction in progress / 5,828
Property and equipment, at cost / 155,002
Less accumulated depreciation / (45,399)
Property and equipment, net / 109,603
Property under capital lease:
Property under capital lease, Goodwill & Other assets / 28,828
Total assets / $193,406
Liabilities and Shareholders’ Equity
Current liabilities:
Commercial paper / $4,047
Accounts payable / 36,608
Accrued liabilities / 18,180
Accrued income taxes / 1,164
Long-term debt due within one year / 1,975
Other current / 326
Total current liabilities / 62,300
Long-term debt / 44,070
Deferred income taxes / 7,862
Other Noncurrent Liabilities (including nonredeemable noncontrolling interest) / 7,859
Commitments and contingencies
Shareholders’ equity:
Common stock ($0.10 par value; 11,000 shares authorized 3,516issued
and outstanding at January 31, 2011, respectively / 342
Capital in excess of par value / 3,692
Retained earnings / 67,281
Total shareholders’ equity / 71,315
Total liabilities and shareholders’ equity / $193,406

Walmart was involved in the following transactions in fiscal 2012. All figures are in millions.

  1. The company purchased $355,577 of inventory on account.
  2. The company sold gift cards for which $2,365 is collected in cash. The cards expire in one year. The company does not recognize this as revenue until customers actually use (redeem) the cards.
  3. The company had $463,497 in sales to customers. Of this, $39,195was on account.
  4. Customers also purchased merchandise worth $2,617using Walmart gift cards.
  5. The company sold Sam’s Club memberships worth $1,133. (Hint: Memberships sold are not classified revenues on day of sale but earned over time).
  6. The cost of inventory sold (#2 above) was $333,558.
  7. The company paid cash for employees’ wages and other labor expenses totaling $61,331.
  8. The company paid cash for other operating expenses totaling $13,040.
  9. The company collected$38,364 of accounts receivable.
  10. The company paid cash of $12,898 to purchase new equipment.
  11. Walmart issued new long term debt for $211
  12. Walmart’s management signed a new labor agreement with its employees. The two-year agreement takes effect on July 1, 2013, and calls for total wage and benefit increases of $3,126 per year starting 2014.
  13. Walmart disposed of equipment that had a net book value for $71 for cash proceeds of $532. The difference is considered an operating gain on the statement of earnings and is included in “Selling, general and administrative” expense. The equipment had an original cost of $2,075.
  14. The company paid $354,105 to settle accounts payable.
  15. During the year, the company paid bondholders $2,262 of interest.
  16. On November 15, 2012, Walmart paid $3,373 for casualty and property insurance policies. Coverage on these one-year policies begins February 1, 2013.
  17. In May, 2013, a consulting firm hired by Walmart issued a report stating that the “Walmart” brand name is worth $19,925.
  18. The company issued $2,754short-term commercial paper and get cash.
  19. The company repurchased its own stock for $7,600, and retired them by reducing contributed capital by $368with the rest to retained earnings.(Hint: Treasury stock is a contra-equity account).
  20. The company repaid long-term debt due in the current period amounting to $1,478.
  21. The company paid income taxes of $7,304.
  22. The company declared and paid $5,361 of dividends.
  23. The company purchased certain property under long term contracts reported as other long term assets for $245.
  24. The company paid $498 to reduce other non-current liabilities.
  25. During the year, Walmart closed and soldseveral low performing locations.These transactions resulted in an increase in cash of $745, decrease in prepaid expense of $170, and an increase of other long term assets of $122. In addition, Walmart recognized an increase of short-term commercial paper of 4, decrease in accrued liabilities of $208, an increase in accrued income taxes of $352, anincrease of other current liabilities of $1, a decrease in long-term debt of 291,decrease of deferred income taxes of $231, decrease of other noncurrent liabilities of 12, increase of other income of $1521and an impairment loss of $439.
  26. The managers of Walmart exercised some of their stock options giving Walmart cash of $320.The contributed capital increased by $286 with the difference being charged to retained earnings.

Adjustments

  1. $975 and $312of the gift cards sold during the year has not been redeemed by January31, 2012 and 2013, respectively. See #2 and #7 above. Recognize any breakage fee.
  2. The last payday for the company was January 22, 2013. Walmart employees had earned, but the company had not paid, $1,726 of additional wages through January 31, 2013.Walmart senior executives earned performance bonuses of $954, which the company will not pay until after 2014. Walmart included all compensation in “Selling, general and administrative” expense.
  3. On November 15, 2011, Walmart paid the casualty and property insurance premium of $3,389and recorded the amount as a prepaid expense (a current asset). Coverage on these one-year policies began February 1, 2012. Adjust for this expired insurance premium at January 31, 2013 by recording the insurance expense in “Selling, general and administrative” expense.
  4. Depreciation and amortization expense was $8,501 for the fiscal year.
  5. A review of the company’s records revealed that $46 of previously deferred (unearned) rent had been earned during the year. Walmart includes rent revenue as a reduction to “Selling, general and administrative” expense.
  6. On January 31, 2013, Walmart employees took a physical count of inventory. The cost of inventory at all continuing locations on that date was $43,803.
  7. Walmart reported a balance on membership fees of $542 and $559 on January 31, 2012 and 2013, respectively (see #5 above).
  8. Walmart reclassified $5,090 of long term debt to short term.
  9. A review of the company’s long term debt indicated that $2,064 of interest had accrued but had not yet been paid.
  10. The company also recorded some comprehensive income effects. The transactions involved an increaseof Property under leases, goodwill and other assets by $41, an increase in other non-current liabilities of $634 and a decrease in retained earnings of $593.
  11. The company recorded income taxes expense of $7,981and recognized accrued income taxes of $7,999. The difference is accounted for in the deferred tax account.

1