Problem \begin{tabular}{|l|l|l} IS \& RE & BS & computations \\ \hline \end{tabular} Southeret A Arines is based in Dallas, Texas, asd cmploys apposainalely 55,000 pevple. Wh has carribd as maty as 130 milloe major airline to offer bichtlese travel. Duritg its peak travel unawes, Southwest aperated more that 4, 600 flights - day. Please mefer to the Decender 31. 202L L0.k for Severre est Airfines. You will be uning portioa of the consolidated atalentin of sockhelders equiny (page 83). Con the followieg weekhects in thia werkhock I have pecpaced the inceme ataternern. staterwent of retained camiegs, and balance shece, but have not seiered balances. Enter the balances. with cocel fonmulas foe all tocals and whtoesls, thes creake transactise colsmes for cach of the tnasactions belew. Create a "Beviscd" columin showing the ireviacd totals affer entering the updale appropeiately for each transactiun recurded. Remcmber to use a formala waich taptarti all of the rovenaes and expenves showing the eflect of the change of thoue iterna foe each tranustion, in "Net income" on the stasemene of retaind samings. Also be sere bo link nambers froen the stakcenert of retained eamings to cetained careings on the belasce sheet sach that ary chasge in evtained carnings will update apgruprincly on previous cuse as a gride. Lastly, formal your work properly, no page breaks ranatiog througdu the A thip. On the balance shect, be careful with Allewance foe depresiation and armortization. This is a negative aset and coerpenies urally show it as a negative mimber. However, Sontrwest Airlines has elecied to store property, efc. You sill inctease the Allawance by recortiag it as a potitive turnber, lealing one be believe Bonmalas eomecthy: (tratsactions afe ot fickt pape) a "Cumulative effect of adoption of acceutting 1eandard" seflecta the change in nett income ariting if the coctpaty adopts a new accoenting standard whach changca how sometting is accocrend foe Auseme aboption of this standard increased "Prepaid evpetses and odher current asscts" by 514 , ind record the coetirraca to balance. b. Recond depreciatioe on theits equipmest and ground property and equpment. Acmeme accumulated deprociation anosiated with fieght equipinent is 54,000 and that acctimalated depresiation associaled with ground property asd equipenen is 54,732. Assume Southwar Airtines life. Avurne they depreciase ground property ased cquipmenil uaing dosble dectiting balance and an th year lide. was wold for 5000 , cash. Apain. be capeful with the Allowasce for depecciation poetion of this entry, ass yos shorld ectiove the S300 fruen titis sccount. it is "Air trative liabiligy " Recoed thas in the Air traftic liability in cureve liabelities. e. Assume in is some time later, and 55,009 ef the Air trafic liakility is earmed, these paisefgers lave Mown to their destisations. Adsuene these ace foe maieline fighes. Adjust the Air trafic lialility (curreat liab) and reciord the revcuac If Aditional revenae foe flying freight and carpo wai 51.240, received as cash. 8 Acqaired a compectisg airtine. Asuts and labilniws of the airline parchased, at their fair nurket zalues, ace: short 1 erm imeestrents 562 , flight equptiem 5570 , ground asuigment 5290 . and long-feeta detet of 5340 . Cash of 52,000 was paid so accuire this airlac. 51 ta iest the equipment, 12 so install the quipment, and 53 to semove the old equigmeni that was roplased. This was paid in cadh. i. Lefs tuke a bock a "Operatieg lease right-of-tese assess" in the balance shoet. In the "good eld drys." when a cempany rested soenctking, it would simply bocond the rent payments as rent expense. Pelucincly recently the accounting standard setting follas decided that, for all leakes tat have a darabiot of one yeat or loeper, an asset be socoeded for the pecsert value of the vem of the lease paymenta. That asct is than amorincd to depreciahion as are ofher plast and equipment aseds. esually over the life of the lease. Asseme Souttrwed Nirline leased orveral now Nintaft with five-year leases, and that the present value of the lease payments is 3620 . Ficase rocord this by incteasize "Operatizg leanc figly-af-use assets" and increlaing "Nossurreat operatife leake liablities." j) Dher office facilities were reapsated, adding lundicapieg. roplacieg benches and tables, ele. Theie were contideres significant in pewements over what was already is place. Coet was 364 . oe accoune. \begin{tabular}{|c|} \hline Southwest Airlines Co \\ \hline Statement of Income \\ \hline Year ended December 31, 2021 \\ \hline (In millions) \\ \hline \end{tabular} OPERATING REVENUES: Passenger Freight Other Total operating revenues OPERATING EXPENSES, NET: Salaries, wages and benefits \begin{tabular}{l} Payroll support and voluntary En \\ \hline Fuel and oil \\ \hline Maintenance materials and repain \\ \hline Landinf fees and airport rentals \\ \hline Depreciation and amortization \\ Other operating expenses \\ \hline Total operating expenses, net \\ \hline \\ \hline OPERATING INCOME \\ \hline OTHER EXPENESES (INCO \\ \hline Interest expense \\ \hline Capitalized interest \\ \hline Interest income \\ Other (gains) losses, net \\ \hline Total other expenses (income) \\ \hline \end{tabular} INCOME (LOSS) BEFORE INCOME TAXES PROVISION FOR INCOME TAXES NET INCOME Southwest Airlines Co. Statement of Retained Earnings Balance, December 31, 2020 Cumulative effect of adopting accounting standard Net income Balance, December 31, 2021 \begin{tabular}{l} \multicolumn{1}{|c|}{ Southwest Airlines Co } \\ \multicolumn{1}{|c|}{ Balance Sheet } \\ \hline December 31, 2021 \\ \hline (In millions, except share data) \\ \hline ASSETS \\ \hline Current assets: \\ \hline Cash and cash equivalents \\ \hline Short term investments \\ \hline Accounts and other receivables \\ \hline Inventories of parts and supplies,at cost \\ \hline Prepaid expenses and other current assets \\ \hline Total current assets \\ \hline \end{tabular} Property and equipment, at cost: Flight equipment Ground property and equipment Assets constructed for others Less allowance for depreciation and amortization \begin{tabular}{|l} Goodwill \\ Operating lease right-of-use assets \end{tabular} Other assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued liabilities Current operating lease liabilities Air traffic liability Current maturities of long-term debt Total current liabilities Long-term debt less current maturities Air traffic liability - noncurrent Deferred incomne taxes Noncurrent operating lease liabilities Other noneurrent liabilities Stockholders' equity: Common stock, $1.00 par value; issued 888,111,634 million shares Capital in excess of par value Retained carnings Accumulated other comprehensive income Treasury stock Total stockholders' equity \begin{tabular}{l|l|l|l|l} Problem & IS \& RE & BS & computations \end{tabular} s Seuthwest Airlines Co Consolidated \$tatement of Income (L.oss) Southwest Airlines Co. Consolidated Statement of Stockholders" Equity (in millions, exeept per share amounts) Problem \begin{tabular}{|l|l|l} IS \& RE & BS & computations \\ \hline \end{tabular} Southeret A Arines is based in Dallas, Texas, asd cmploys apposainalely 55,000 pevple. Wh has carribd as maty as 130 milloe major airline to offer bichtlese travel. Duritg its peak travel unawes, Southwest aperated more that 4, 600 flights - day. Please mefer to the Decender 31. 202L L0.k for Severre est Airfines. You will be uning portioa of the consolidated atalentin of sockhelders equiny (page 83). Con the followieg weekhects in thia werkhock I have pecpaced the inceme ataternern. staterwent of retained camiegs, and balance shece, but have not seiered balances. Enter the balances. with cocel fonmulas foe all tocals and whtoesls, thes creake transactise colsmes for cach of the tnasactions belew. Create a "Beviscd" columin showing the ireviacd totals affer entering the updale appropeiately for each transactiun recurded. Remcmber to use a formala waich taptarti all of the rovenaes and expenves showing the eflect of the change of thoue iterna foe each tranustion, in "Net income" on the stasemene of retaind samings. Also be sere bo link nambers froen the stakcenert of retained eamings to cetained careings on the belasce sheet sach that ary chasge in evtained carnings will update apgruprincly on previous cuse as a gride. Lastly, formal your work properly, no page breaks ranatiog througdu the A thip. On the balance shect, be careful with Allewance foe depresiation and armortization. This is a negative aset and coerpenies urally show it as a negative mimber. However, Sontrwest Airlines has elecied to store property, efc. You sill inctease the Allawance by recortiag it as a potitive turnber, lealing one be believe Bonmalas eomecthy: (tratsactions afe ot fickt pape) a "Cumulative effect of adoption of acceutting 1eandard" seflecta the change in nett income ariting if the coctpaty adopts a new accoenting standard whach changca how sometting is accocrend foe Auseme aboption of this standard increased "Prepaid evpetses and odher current asscts" by 514 , ind record the coetirraca to balance. b. Recond depreciatioe on theits equipmest and ground property and equpment. Acmeme accumulated deprociation anosiated with fieght equipinent is 54,000 and that acctimalated depresiation associaled with ground property asd equipenen is 54,732. Assume Southwar Airtines life. Avurne they depreciase ground property ased cquipmenil uaing dosble dectiting balance and an th year lide. was wold for 5000 , cash. Apain. be capeful with the Allowasce for depecciation poetion of this entry, ass yos shorld ectiove the S300 fruen titis sccount. it is "Air trative liabiligy " Recoed thas in the Air traftic liability in cureve liabelities. e. Assume in is some time later, and 55,009 ef the Air trafic liakility is earmed, these paisefgers lave Mown to their destisations. Adsuene these ace foe maieline fighes. Adjust the Air trafic lialility (curreat liab) and reciord the revcuac If Aditional revenae foe flying freight and carpo wai 51.240, received as cash. 8 Acqaired a compectisg airtine. Asuts and labilniws of the airline parchased, at their fair nurket zalues, ace: short 1 erm imeestrents 562 , flight equptiem 5570 , ground asuigment 5290 . and long-feeta detet of 5340 . Cash of 52,000 was paid so accuire this airlac. 51 ta iest the equipment, 12 so install the quipment, and 53 to semove the old equigmeni that was roplased. This was paid in cadh. i. Lefs tuke a bock a "Operatieg lease right-of-tese assess" in the balance shoet. In the "good eld drys." when a cempany rested soenctking, it would simply bocond the rent payments as rent expense. Pelucincly recently the accounting standard setting follas decided that, for all leakes tat have a darabiot of one yeat or loeper, an asset be socoeded for the pecsert value of the vem of the lease paymenta. That asct is than amorincd to depreciahion as are ofher plast and equipment aseds. esually over the life of the lease. Asseme Souttrwed Nirline leased orveral now Nintaft with five-year leases, and that the present value of the lease payments is 3620 . Ficase rocord this by incteasize "Operatizg leanc figly-af-use assets" and increlaing "Nossurreat operatife leake liablities." j) Dher office facilities were reapsated, adding lundicapieg. roplacieg benches and tables, ele. Theie were contideres significant in pewements over what was already is place. Coet was 364 . oe accoune. \begin{tabular}{|c|} \hline Southwest Airlines Co \\ \hline Statement of Income \\ \hline Year ended December 31, 2021 \\ \hline (In millions) \\ \hline \end{tabular} OPERATING REVENUES: Passenger Freight Other Total operating revenues OPERATING EXPENSES, NET: Salaries, wages and benefits \begin{tabular}{l} Payroll support and voluntary En \\ \hline Fuel and oil \\ \hline Maintenance materials and repain \\ \hline Landinf fees and airport rentals \\ \hline Depreciation and amortization \\ Other operating expenses \\ \hline Total operating expenses, net \\ \hline \\ \hline OPERATING INCOME \\ \hline OTHER EXPENESES (INCO \\ \hline Interest expense \\ \hline Capitalized interest \\ \hline Interest income \\ Other (gains) losses, net \\ \hline Total other expenses (income) \\ \hline \end{tabular} INCOME (LOSS) BEFORE INCOME TAXES PROVISION FOR INCOME TAXES NET INCOME Southwest Airlines Co. Statement of Retained Earnings Balance, December 31, 2020 Cumulative effect of adopting accounting standard Net income Balance, December 31, 2021 \begin{tabular}{l} \multicolumn{1}{|c|}{ Southwest Airlines Co } \\ \multicolumn{1}{|c|}{ Balance Sheet } \\ \hline December 31, 2021 \\ \hline (In millions, except share data) \\ \hline ASSETS \\ \hline Current assets: \\ \hline Cash and cash equivalents \\ \hline Short term investments \\ \hline Accounts and other receivables \\ \hline Inventories of parts and supplies,at cost \\ \hline Prepaid expenses and other current assets \\ \hline Total current assets \\ \hline \end{tabular} Property and equipment, at cost: Flight equipment Ground property and equipment Assets constructed for others Less allowance for depreciation and amortization \begin{tabular}{|l} Goodwill \\ Operating lease right-of-use assets \end{tabular} Other assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued liabilities Current operating lease liabilities Air traffic liability Current maturities of long-term debt Total current liabilities Long-term debt less current maturities Air traffic liability - noncurrent Deferred incomne taxes Noncurrent operating lease liabilities Other noneurrent liabilities Stockholders' equity: Common stock, $1.00 par value; issued 888,111,634 million shares Capital in excess of par value Retained carnings Accumulated other comprehensive income Treasury stock Total stockholders' equity \begin{tabular}{l|l|l|l|l} Problem & IS \& RE & BS & computations \end{tabular} s Seuthwest Airlines Co Consolidated \$tatement of Income (L.oss) Southwest Airlines Co. Consolidated Statement of Stockholders" Equity (in millions, exeept per share amounts)