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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 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): These accounts are not necessarly In good order and have normal deblt or credit balances. (Note: Because these are not all of UPS's accounts, these will not balance in a trlal 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 pald $2,390 in cash and owed $25,504 on account. b. Purchased new equipment costing $3,474; signed a long-term note. c. Pald $8,264 cash to rent equipment and alrcraft, with $3,436 for rent this year and the rest for rent next year (a prepald expense). d. Spent $904 cash to repair facillites and equipment during the year. e. Collected $25,485 from customers on account. f. Repald $170 on a long-term note (Ignore Interest). g. Issued 200 million additional shares of $0.01 par value stock for $18 (that's $18 million). h. Pald employees $9,776 for work during the year. I. Purchased spare parts, supplies, and fuel for the alrcraft and equipment for $7,164 cash. J. Used $6,550 in spare parts, supplies, and fuel for the alrcraft and equipment during the year. k. Pald $824 on accounts payable. I. Ordered $92 in spare parts and supplies. Requlred: 1. Prepare journal entrles for each transaction. 2. Enter the ending balances from December 31 as the respectlve beginning balances for January 1 of the current year. Record In the T-accounts the effects of each transaction. Label each using the letter of the transaction. 3. Prepare an unadjusted Income statement for the current year ended December 31. 4. Compute the company's net profit margin ratio for the current year ended December 31