Reading and Interpreting Carnival Corporation's Balance Sheet Carnival Corporation is the largest cruise company in the world. The following item appears in the current liabilities section of it's balance sheet included in the Form 10- K for the year ended November 30, 2014: Customer deposits $3,032 million In addition, Note 2 to the financial statements includes the following: Revenue and Expense Recognition Guest cruise deposits represent unearned revenues and are initially included in customer deposit liabilities when received. Customer deposits are subsequently recognized as cruise revenues, together with revenues from onboard and other activities, and all associated direct costs and expenses of a voyage are recognized as cruise costs and expenses, upon completion of voyages with durations of ten nights or less and on a pro rata basis for voyages in excess of ten nights.... Required: 1. What economic event caused Carnival to incur this liability - an external or internal event? 2. Indicate the effect on the accounting equation from the transaction to record the customer deposits. Indicate the effect on financial statement items by selecting "-" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect on the financial statement. Balance Sheet Income Statement Stockholders' Net Assets Liabilities Equity Revenues Expenses Income 3. Assume that one customer makes a deposit of $1,000 on a future cruise. Prepare the journal entry on Carnival's books to record this transaction. How does this entry affect the accounting equation? Indicate the effect on financial statement items by selecting "-" for decrease (or negative effect), "+" for increase (or positive effect) and "NE" for No Entry (or no effect) on the financial statement. Journal Balance Sheet Income Sta Stockholders' Description Debit Credit Assets Liabilities + Equity Revenues Expe dropdown 4. A large cruise company has customer deposits under the current liability section of its balance sheet. This deposit represents unearned revenue. What economic event will cause the company to reduce its customer deposit liability? Income Statement Net Revenues Expenses = Income