The following are the summary account balances from a recent balance sheet of Exxon Mobil Corporation. The
Question:
The following are the summary account balances from a recent balance sheet of Exxon Mobil Corporation. The accounts have normal debit or credit balances, but they are not necessarily listed in good order. The amounts are shown in millions of dollars. Assume the year-end is December 31, 2010.
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The following is a list of hypothetical transactions for January 2011.
a. Purchased on account $150,000,000 of new equipment.
b. Received $500,000,000 on accounts receivable.
c. Received and paid $1,000,000 for utility bills.
d. Earned $5,000,000 in sales on account with customers; cost of sales was $1,000,000.
e. Paid employees $1,000,000 for wages earned during the month.
f. Paid half of the income taxes payable.
g. Purchased $23,000,000 in supplies on account (include in Inventories).
h. Prepaid $12,000,000 to rent a warehouse next month.
i. Paid $10,000,000 of other debt and $1,000,000 in interest on the debt.
j. Purchased a patent (an intangible asset) for $8,000,000 cash.
Required:
1. Prepare T-accounts for December 31, 2010, from the preceding list; enter the beginning balances.
You will need additional T-accounts for income statement accounts; enter zero balances.
2. For each transaction, record the effects in the T-accounts. Label each using the letter of the transaction.
Compute ending balances. (Note: Record two transactions in (d), one for revenue recognition and one for the expense.)
3. Prepare an income statement, statement of stockholders' equity (since contributed capital and retained earnings are not separately reported), balance sheet, and statement of cash flows in good form.
4. Compute the company's total asset turnover ratio for the month ended January 31, 2011. What does it suggest to you about ExxonMobil?
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio. Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Req 1 and 2 in millions ASSETS Cash Marketable Securities Accounts Receivable 1157 b 500 1 c 1 e 1122 f 12 h 11 i 8 j 618 8073 d 5 500 b 502 618 7578 Inventories Prepaid Expenses Investments 5541 g 23 ...View the full answer
