Refer to WorldComs statement of operations. What did the company report as line costs for the year ended December 31, 2001? Prepare the journal entry to record these transactions for the year. Explain in your own words, what these line costs are.

WORLDCOM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions, Except Per Share Data) For the Years Ended December 31 1999 2000 2001 Operating expenses: Line costs 8,935 10,597 11,046 4,3544,878 5,880 Oiher income (expense): 385 Income before income taxes, minority interests and cumulative effect of accounting change 7,164 7,568 2,393 Income before minority interests and cumulative effect of accounting change . . . ......4,99 4,543 1,466 Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income tax of $50 in 2000) . . . . . . . . . . . . . . Distributions on mandatorily redeemable preferred securities and other preferred dividend Net income applicable to common shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . S 3,941 S4,088 1,384 Net income attributed to WorldCom group before cumulative effect of accounting change . .. S 2,294 S 2,608 1,407 Cumulative effect of accounting change .. . . . . . .. . . . . . .. . . . . . . . . . . . . . . .. $ Net income attributed to WorldCom group . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .. 2,294 S 2,533 S 1,407 Net income (loss) attributed to MCI group before cumulative effect of accounting change S 1,647 S 1,565 S (23) Cumulative effect of accounting change .. . . . . .. . . . . . . . . . . . .. .. . . . . .. . . . . . . S Net income (loss) attributed to MCI group . . . . . .. . . . . .._ . . . . . . . . . . . . . . .. S1,647 S 1,555 S (23) S (75) S S 10) S Earnings (loss) per common share Pro Forma