Chapter Two - Wiley

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80 CHAPTER 2 A Further Look at Financial Statements
Action Plan
• In preparing the income
statement, list revenues, then
expenses.
• In preparing a classified balance
sheet, list items in order of
magnitude.
Solution to Demonstration Problem
CIRCUIT CITY STORES, INC.
Income Statement
For the Year Ended February 28, 2001
(in thousands)
Net sales and operating revenues $12,959,028
Cost of goods sold $10,163,706
Selling, general, and
administrative expenses 2,516,582
Interest expense 19,383
Income tax expense 98,555
Total expenses 12,798,226
Net income $ 160,802
CIRCUIT CITY STORES, INC.
Balance Sheet
February 28, 2001
(in thousands)
Assets
Current assets
Cash and cash equivalents $ 446,131
Accounts and notes receivable, net 585,761
Merchandise inventory 1,757,664
Prepaid expenses and other current
assets 57,623
Total current assets $2,847,179
Property and equipment, net 988,947
Other assets 35,207
Total assets $3,871,333
■✓
THE
NAVIGATOR
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable $ 1,200
Current portion of long-term debt 132,388
Accounts payable 902,560
Accrued expenses and other current
liabilities 162,972
Income taxes payable 92,479
Total current liabilities $1,291,599
Long-term liabilities
Long-term debt, excluding current
installments 116,137
Deferred revenue and other long-term
liabilities 107,114 223,251
Total liabilities 1,514,850
Stockholders’ equity
Common stock 759,168
Retained earnings 1,597,315
Total stockholders’ equity 2,356,483
Total liabilities and stockholders’ equity $3,871,333