Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

P3-6 (Algo) Analyzing the Effects of Transactions Using T-Accounts, Preparing an Income Statement, and Evaluating the Net Profit Margin Ratio LO3-4, 3-5, 3-6 [The following

P3-6 (Algo) Analyzing the Effects of Transactions Using T-Accounts, Preparing an Income Statement, and Evaluating the Net Profit Margin Ratio LO3-4, 3-5, 3-6

[The following information applies to the questions displayed below.]

Following are account balances (in millions of dollars) from a recent StateEx annual report, followed by several typical transactions. Assume that the following are account balances on May 31 (end of the prior fiscal year):

Account Balance Account Balance
Property and equipment (net) $ 18,694 Receivables $ 2,749
Retained earnings 14,406 Other current assets 1,119
Accounts payable 1,737 Cash 1,364
Prepaid expenses 348 Spare parts, supplies, and fuel 878
Accrued expenses payable 2,550 Other noncurrent liabilities 4,010
Long-term notes payable 1,970 Other current liabilities 2,419
Other noncurrent assets 3,272 Additional Paid-in Capital 1,327
Common stock ($0.10 par value) 5

These accounts are not necessarily in good order and have normal debit or credit balances. Assume the following transactions (in millions, except for par value) occurred the next fiscal year beginning June 1 (the current year):

  1. Provided delivery service to customers, who paid $13,390 in cash and owed $41,504 on account.
  2. Purchased new equipment costing $3,914; signed a long-term note.
  3. Paid $12,664 cash to rent equipment and aircraft, with $6,736 for rent this year and the rest for rent next year.
  4. Spent $1,344 cash to repair facilities and equipment during the year.
  5. Collected $38,685 from customers on account.
  6. Repaid $390 on a long-term note (ignore interest).
  7. Issued 260 million additional shares of $0.10 par value stock for $40 (thats $40 million).
  8. Paid employees $15,276 for work during the year.
  9. Purchased spare parts, supplies, and fuel for the aircraft and equipment for $13,764 cash.
  10. Used $7,650 in spare parts, supplies, and fuel for the aircraft and equipment during the year.
  11. Paid $1,264 on accounts payable.
  12. Ordered $136 in spare parts and supplies.

P3-6 Part 2

2. Prepare T-accounts for the current year from the preceding list; enter the ending balances from May 31 as the respective beginning balances for June 1 of the current year. For each transaction, record the current year's transaction effects in the T-accounts. Label each using the letter of the transaction. (Enter your answers in millions, not in dollars.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Blockchain Technology In Accounting And Auditing

Authors: Prof Oleksandr Melnychenko

1st Edition

1976900328, 978-1976900327

More Books

Students also viewed these Accounting questions