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): Balance $ 18,143 15,316 1,962 Balance $ 5,231 740 2,588 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) Account Receivables Other current assets Cash Spare parts, supplies, and fuel Other noncurrent liabilities Other current liabilities Additional Paid-in Capital 710 2,154 1,927 3,947 6,006 1,546 2,862 45 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

Prepare journal entries to simplify the transactions as follows:

Credit Event Accounts Cash Accounts receivable Delivery Service revenue Debit $22.800 $28,204 $51,004 $3,694 Equipment Long-term note payable $3,694 Prepaid Expense (S16464-$12086) Rental Expense Cash $4,378 $12,086 $16,464 d $4.124 Repair Expense Cash $4,124 Cash $32,085 Accounts receivable $32,085 Long term note payable Cash $480

$29 Cash Common stock (150 x $0.10) Additional paid-in capital $15 $14 $18,526 Salaries Expense Cash $18.526 $12.464 Spare parts, supplies and fuel Cash $12,464 $1.044 Accounts payable Cash $1,044 No entry required as only order take place

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Prepare T-accounts as follows:

Cash
Beg. Bal.	$2,588	c	$16,464
a	$22,800	d	$4,124
e	$32,085	f	$480
g	$29	h	$18,526
		i	$12,464
		j	$1,044
End. Balance	$4,400
Delivery Service Revenue
		Beg. Bal.	-
		a	$51,004
		End. Balance	$51,004
Accounts receivable
Beg. Bal.	$5,231	e	$32,085
a	$28,204
End. Balance	$1,350
Lomg-term notes payable
f	$480	Beg. Bal.	$1,927
		b	$3,694
		End. Balance	$5,141
Property and equipment, net
Beg. Bal.	$18,143
b	$3,694
End. Balance	$21,837
Prepaid Expenses
Beg. Bal.	$459
c	$4,378
End. Balance	$4,837
Rental Expense
Beg. Bal.	-
c	$12,086
End. Balance	$12,086
Repair Expense
Beg. Bal.	-
d	$4,124
End. Balance	$4,124
Common stock
		Beg. Bal.	$45
		g	$15
		End. Balance	$60
Salaries Expense
Beg. Bal.	-
h	$18,526
End. Balance	$18,526
Spare parts, supplies and fuel
Beg. Bal.	$710
i	$12,464
End. Balance	$13,174
Accounts payable
j	$1,044	Beg. Bal.	$1,962
		End. Balance	$918
Other Current Assets
Beg. Bal.	$740
End. Balance	$740
Other Non Current Assets
Beg. Bal.	$3,947
End. Balance	$3,947
Accrued Expense payable
		Beg. Bal.	$2,154
		End. Balance	$2,154
Other Current Liabilities
		Beg. Bal.	$1,546
		End. Balance	$1,546
Other Noncurrent Liabilities
		Beg. Bal.	$6,006
		End. Balance	$6,006
Additional paid-in capital
		Beg. Bal.	$2,862
		g	$14
		End. Balance	$2,876
Retained Earnings
		Beg. Bal.	$15,316
		Net income	$3,804
		End. Balance	$19,120

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Prepare Income statement as follows:

Income statement
Delivery service revenue		$51,004
Less Operating expense
Salaries expense	($18,526)
Rental expense	($12,086)
Repair expense	($4,124)
Spare parts, supplies and fuel expense	($12,464)	($47,200)
Net Income		$3,804