From the following list of balance sheet and income statement account balances for Carnival Corporation, prepare an income statement for the quarter ended May 31, 2019. (Amounts are reported in millions of U.S. dollars.) . Explain what the results suggest about the cruise ship companys operating performance. For the same period last year, net income was $561 (in millions of U.S. dollars) and net profit margin was 12.9 percent. Suggested Solution 1. Income Statement Carnival Corporation Transportation Expenses Passenger Ticket Revenue Onboard Revenue Food Expenses $ 613 3,257 1,581 269 Wage Expenses Fuel Expenses Accounts Payable Income Tax Expense $566 Selling Expenses 423 Prepaid Expenses 792 Ship Expenses 8 Deferred Revenue $ 621 727 1,887 5,815 CARNIVAL CORPORATION Income Statement For the Quarter Ended May 31, 2019 (amounts in millions of U.S. dollars) Revenues Passenger Ticket Revenue Onboard Revenue Total Revenues Expenses Ship Expenses Selling Expenses Transportation Expenses Wage Expenses Fuel Expenses Food Expenses Income Tax Expense Total Expenses Net Income $3,257 1,581 4,838 1,887 621 613 566 423 269 8 4,387 $ 451 2. The net income of $451 (million) indicates Carnival Corporation was profitable, mean- ing the revenues it earned were greater than the expenses it incurred. Its net profit margin was 9.3 percent of total revenues ($451 $4,838 = 0.093). These 2019 results are worse than the same period last year, when Carnival reported (higher) net income of $561 (million) and 12.9 percent net profit margin. COACHS TIP Prepaid Expenses of $727 includes Prepaid Rent and Prepaid Insurance, so it is an asset on the balance sheet and therefore is excluded from the income state- ment. Accounts Payable of $792 and Deferred Revenue of $5,815 are excluded from the income statement because they are liabili- ties on the balance sheet. phi71385_ch03_096-149.indd 119 10/10/20 07:01 PM