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, 2012Assets
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.
- The company purchased $355,577 of inventory on account.
- 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.
- The company had $463,497 in sales to customers. Of this, $39,195was on account.
- Customers also purchased merchandise worth $2,617using Walmart gift cards.
- 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).
- The cost of inventory sold (#2 above) was $333,558.
- The company paid cash for employees’ wages and other labor expenses totaling $61,331.
- The company paid cash for other operating expenses totaling $13,040.
- The company collected$38,364 of accounts receivable.
- The company paid cash of $12,898 to purchase new equipment.
- Walmart issued new long term debt for $211
- 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.
- 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.
- The company paid $354,105 to settle accounts payable.
- During the year, the company paid bondholders $2,262 of interest.
- On November 15, 2012, Walmart paid $3,373 for casualty and property insurance policies. Coverage on these one-year policies begins February 1, 2013.
- In May, 2013, a consulting firm hired by Walmart issued a report stating that the “Walmart” brand name is worth $19,925.
- The company issued $2,754short-term commercial paper and get cash.
- 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).
- The company repaid long-term debt due in the current period amounting to $1,478.
- The company paid income taxes of $7,304.
- The company declared and paid $5,361 of dividends.
- The company purchased certain property under long term contracts reported as other long term assets for $245.
- The company paid $498 to reduce other non-current liabilities.
- 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.
- 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
- $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.
- 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.
- 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.
- Depreciation and amortization expense was $8,501 for the fiscal year.
- 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.
- 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.
- Walmart reported a balance on membership fees of $542 and $559 on January 31, 2012 and 2013, respectively (see #5 above).
- Walmart reclassified $5,090 of long term debt to short term.
- A review of the company’s long term debt indicated that $2,064 of interest had accrued but had not yet been paid.
- 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.
- 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.
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