and Evaluating the Net Profit Margin Ratio LO3-4, 3-5, 3-6 Following are selected account balances (in millions of dollars) from a recent UPS annual report, followed by several typical transactions. Assume that the following are account balances on December 31 (end of the prior fiscal year): Account Balance Account Balance Property, plant, and equipment (net) $18,894 Receivables $2,799 Retained earnings 14,606 Accounts payable 1,757 Other current assets Cash 1,129 1,384 Prepaid expenses Accrued expenses payable Long-term notes payable Other non-current assets Common stock ($0.01 par value) 358 Spare parts, supplies, and fuel 2,570 Other non-current liabilities 1,990 Other current liabilities 3,302 Additional Paid-in Capital 1 894 4,040 2,439 1,357 These accounts are not necessarily in good order and have normal debit or credit balances. (Note: Because these are not all of UPS's accounts, these will not balance in a trial balance.) Assume the following transactions (in millions, except for par value) occurred the next fiscal year beginning January 1 (the current year): a. Provided delivery service to customers, who paid $13,890 in cash and owed $42,304 on account. b. Purchased new equipment costing $3,934; signed a long-term note. c. Paid $12,864 cash to rent equipment and aircraft, with $6,886 for rent this year and the rest for rent next year (a prepaid expense). d. Spent $1,364 cash to repair facilities and equipment during the year. e. Collected $39,285 from customers on account. f. Repaid $400 on a long-term note (ignore interest). g. Issued 200 million additional shares of $0.01 par value stock for $41 (that's $41 million). h. Paid employees $15,526 for work during the year. i. Purchased spare parts, supplies, and fuel for the aircraft and equipment for $14,064 cash. j. Used $7,700 in spare parts, supplies, and fuel for the aircraft and equipment during the year. k. Paid $1,284 on accounts payable. I. Ordered $138 in spare parts and supplies. < Prev 2 of 2 Next > Cash Receivables Debit Credit Debit Credit Beginning balance 1,384 Beginning balance 2,799 (a) (e) (g) 13,890 12,864 (c) (a) 42,304 39,285 400 (f) 39,285 (e) 41 15,526 (h) Ending balance 5,818 14,064 (i) 1,284 (k) Ending balance 10,462 Spare Parts, Supplies, and Fuel Prepaid Expenses Debit Credit Debit Credit Beginning balance 894 Beginning balance 358 (i) 7,700 (c) 6,886 7,700 (i) Ending balance 894 Ending balance 6,528 Other Current Assets Debit 3,302 Beginning balance Property, Plant, and Equipment (net) Credit Credit Debit Beginning balance 18,894 Debit Beginning balance Other Current Assets 3,302 Ending balance Debit Beginning balance 3,302 Other Non-current Assets 3,302 Ending balance 3,302 Debit Beginning balance Accrued Expenses Payable Property, Plant, and Equipment (net) Credit Debit Beginning balance Credit Credit 18,894 3,934 (b) Ending balance 14,960 Accounts Payable Debit Credit Beginning balance 1,757 (a) 42,304 Ending balance 40,547 Other Current Liabilities Credit Debit Credit Beginning balance 2,439 Ending balance 0 Ending balance 2,439 Debit Beginning balance Ending balance Long-Term Notes Payable Credit Debit 1,990 Beginning balance 1,990 Ending balance Other Non-current Liabilities Credit 4,040 4,040 Common Stock Additional Paid-in Capital Debit Credit Debit Credit Beginning balance 1.0 X Beginning balance 1,357 Ending balance 1.0 Retained Earnings Debit 14,606 Beginning balance Ending balance 14,606 Rent Expense Ending balance Credit Debit Beginning balance Ending balance 1,357 Delivery Service Revenue Ronair Expense 0 Credit Debit Beginning balance Rent Expense Ending balance 0 Debit Beginning balance Wages Expense Ending balance 0 Credit Repair Expense Debit Credit Beginning balance Ending balance 0 Spare Parts, Supplies, and Fuel Expense Credit Debit Credit Beginning balance 894 894 Ending balance < Required 1 Required 3 > 1,788