Question

Required information [The following information applies to the questions displayed below.) Following are account balances (in millions of dollars) from a recent FedEx 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 $ 18,143 15,316 1,962 459 2,154 1,927 3,947 45 Account Receivables Other current assets Cash Spare parts, supplies, and fuel Other noncurrent liabilities Other current liabilities Additional Paid-in Capital Balance $ 5,231 740 2,588 710 6,006 1,546 2,862 These accounts are not necessarily in good order and have normal debit or credit balances. Assume the following transactions (in millions) occurred the next fiscal year beginning June 1 (the current year): a. Provided delivery service to customers, receiving $28,204 in accounts receivable and $22,800 in cash. b. Purchased new equipment costing $3,694; signed a long-term note. c. Paid $16,464 cash to rent equipment and aircraft, with $12,086 for rental this year and the rest for rental next year. d. Spent $4,124 cash to maintain and repair facilities and equipment during the year. e. Collected $32,085 from customers on account. f. Repaid $480 on a long-term note (ignore interest). g. Issued 150 shares of additional stock for $29. h. Paid employees $18,526 during the year. i. Purchased for cash and used $12,464 in fuel for the aircraft and equipment during the year. j. Paid $1,044 on accounts payable. k. Ordered $114 in spare parts and supplies.

Answer 1

Requirement 3:

FEDEX
Income Statement (unadjusted)
For the year ended May 31 current year
(in millions)
Revenues:
Service revenue		$51,004
Expenses:
Rent expense	$12,086
Maintain and repair expense	$4,124
Salaries expense	$18,526
Fuel Expense	$12,464
Total Expenses		$47,200
Net income		$3,804

Explanation:

Only current year revenues and expenses should be recorded in income Statement