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Required information 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 State Ex annual report, followed by several typical transactions. Assume that the following are account balances on May 31 (end of the prior fiscal year): Account Property and equipment (net) Retained earnings Accounts payable Prepaid expenses Accrued expenses payable Long-term notes payable Other noncurrent assets Common stock ($0.10 par value) Balance $ 16,894 12,606 1,557 258 2, 370 1,790 3,002 1 Account Receivables Other current assets Cash Spare parts, supplies, and fuel Other noncurrent liabilities Other current liabilities Additional Paid-in Capital Balance $ 2,299 1,029 1,184 694 3,740 2,239 1,057 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): a. Provided delivery service to customers, who paid $8,890 in cash and owed $34,304 on account. b. Purchased new equipment costing $3,734; signed a long-term note. c. Paid $10,864 cash to rent equipment and aircraft, with $5,386 for rent this year and the rest for rent next year. d. Spent $1,164 cash to repair facilities and equipment during the year. e. Collected $33,285 from customers on account. f. Repaid $300 on a long-term note (ignore interest). g. Issued 170 million additional shares of $0.10 par value stock for $31 (that's $31 million). h. Paid employees $13,026 for work during the year. i. Purchased spare parts, supplies, and fuel for the aircraft and equipment for $11,064 cash. j. Used $7,200 in spare parts, supplies, and fuel for the aircraft and equipment during the year. k. Paid $1,084 on accounts payable. I. Ordered $118 in spare parts and supplies. Cash Receivables 1,184 2,299 Beg. bal. (a) Beg. bal. (a) 11,064 (i) > 34,304 8,890 10,864 X (c) x 33,285 (d) End. bal. 3,318 1,164 X 33,285 300 X 31 x (f) (g) (h) End. bal. (a) 13,026 X 57,680 Spare Parts, Supplies, and Fuel 694 Prepaid Expenses 258 Beg. bal. Beg. bal. (1) 6) O 11,064 5,478 x 7,200 End. bal. 4,558 End. bal. 5,736 Other Current Assets Beg. bal. 1,029 Beg. bal. (b) Property and Equipment (net) 16,894 3,734 End. bal. 1,029 End. bal. 20,628 Other Noncurrent Assets Beg. bal. 3,002 Beg. bal. (k) Accounts Payable 1,557 1,084 > End. bal. 3,002 End. bal. 473 Other Noncurrent Liabilities Long-Term Notes Payable 1,790 Beg. bal. 3,740 Beg. bal. (b) (f) x 3,734 300 End. bal. 5,224 End. bal. 3,740 Common Stock Additional Paid-in Capital Beg. bal. 1 1,057 Beg. bal. (g) (9) x 17 x 14 End. bal. 18 End. bal. 1,071 Delivery Service Revenue Retained Earnings 12,606 Beg. bal. Beg. bal. (a) X 43,194 End. bal. 12,606 End. bal. 43,194 Rent Expense Repair Expense Beg. bal. (c) Beg. bal. (d) 5,386 1,164 End. bal. 5,386 End. bal. 1,164 Wage Expense Spare Parts, Supplies, and Fuel Expense Beg. bal. Beg. bal. (h) 13,026 (0) x 7,200 End. bal. 13,026 End. bal. 7,200
