Chapter -3 Operating Decisions and the Income Statement
Wage Expense
Fuel Expense
Beg. 0
Beg. 0
P3–6. (continued)
Req. 3
FedEx
Income Statement (unadjusted)
For the Year Ended May 31, 2012
(in millions)
Fuel expense
Repair expense
Total expenses
Revenues:
Delivery service revenue
$ 22,167
FedEx
Statement of Stockholders’ Equity (unadjusted)
For the Year Ended May 31, 2012
(in millions)
Contributed
Capital
Retained
Earnings
Total
Stockholders’
Equity
Beginning, May 31, 2011
$ 492
$5,827
$6,319
Additional contributions
16
16
Net income
Dividends
Item k does not
Chapter 3 -Operating – Decisions – and -the – Income – Statement
3-42
P3–6. Req. 3 (continued)
FedEx
Balance Sheet (unadjusted)
At May 31, 2012
(in millions)
Assets
Current assets:
Cash
$ 673
Receivables
905
Total assets
$ 16,238
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$ 51
Accrued expenses payable
Other current liabilities
1,675
297
Total current liabilities
2,023
Total liabilities
Stockholders’ Equity:
Contributed capital
508
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity
$ 16,238
Prepaid expenses
1,613
Total current assets
Chapter -3 Operating Decisions and the Income Statement
P3–6. Req. 3 (continued)
FedEx
Statement of Cash Flows
For the Year Ended May 31, 2012
(in millions)
Cash Flows from Operating Activities
Cash received from customers
(=$17,600+$4,824)
$ 22,424
Cash paid to employees
Cash paid to suppliers
(=$4,598+$1,348+$5,348+$784)
Total cash provided by operating activities
315
Cash Flows from Investing Activities
None
0
0
Cash Flows from Financing Activities
Repayment of long-term debt
(18)
Proceeds from share issuance
Total cash used in financing activities
Increase in cash
Chapter 3 -Operating – Decisions – and -the – Income – Statement
3-44
P3–6. (continued)
Req. 4
Total Asset Turnover
=
Sales (or Operating
Revenues)
=
$22,167
=
1.50
Average Total Assets
$14,772*
P3–7.
Req. 1
(in thousands)
a.
Cash (+A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
566,266
Admissions revenue (+R, +SE). . . . . . . . . . . . . . . .
566,266
d.
Cash (+A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Food, merchandise, and games revenue (+R, + SE)
Property and equipment (+A). . . . . . . . . . . . . . . . . . . . .
Accounts receivable (+A). . . . . . . . . . . . . . . . . . . . . . . .
Accommodations revenue (+R, +SE). . . . . . . . . . . . .
Chapter -3 Operating Decisions and the Income Statement
3-45
P3–7. (continued)
g.
Interest expense (+E, −SE). . . . . . . . . . . . . . . . . . .
125,838
Cash (−A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125,838
Req. 2
Transaction
Operating, Investing, or
Financing Effect
Direction and Amount
of the Effect (in thousands)
(a)
O
+566,266
(b)
O
–412,200
(c)
F
–58,962
(d)
O
+335,917
(e)
–83,841
O
(g)
O
–125,838
(h)
O
–118,000
O
–125,500
O
131,882
Chapter 3 -Operating – Decisions – and -the – Income – Statement
3-46
ALTERNATE PROBLEMS
AP3-1.
Transactions
Debit
Credit
a.
Example: Issued stock to new investors.
1
11
b.
Incurred and recorded operating expenses on credit to
be paid next period.
14
7
f.
Purchased a building this period by making a 20 percent
cash down payment and signing a mortgage loan for the
balance.
5
1, 8
g.
Collected cash this year for services rendered and
recorded in the prior year.
1
2
Collected cash for services rendered this period.
1
Paid cash this period for wages earned and recorded
last period.
9
1
k.
Paid cash for operating expenses incurred in the current
period.
14
1
l.
Made a payment on the mortgage loan, which was part
principal repayment and part interest.
8, 14
1
This period a shareholder sold some shares of her stock
to another person for an amount above the original
issuance price.
Used supplies on hand to clean the offices.
3
o.
Recorded income taxes for this period to be paid at the
beginning of the next period.
Declared and paid a cash dividend this period.
12
1
e.
Prepaid a fire insurance policy this period to cover the
next 12 months.
Chapter -3 Operating Decisions and the Income Statement
AP3–2.
a.
Accounts receivable (+A) …………………………………………….
23,500
Service revenue (+R, +SE) ………………………………….
23,500
Accounts payable (−L) …………………………………………………
3,005
Cash (−A) …………………………………………………………
3,005
c.
Office supplies (+A) …………………………………………………….
Accounts payable (+L) ………………………………………..
d.
Equipment (+A) ……………………………………………………….…
3,800
Cash (−A) …………………………………………………………
3,800
e.
Advertising expense (+E, −SE) ……………………………………..
1,400
Cash (−A) …………………………………………………………
1,400
Cash (−A) …………………………………………………………
g.
Cash (+A) ………………………………………………………………….
Contributed capital (+SE) ……………………………………
h.
Cash (+A) ………………………………………………………………….
12,500
Accounts receivable (−A) …………………………………….
12,500
i.
Accounts receivable (+A) …………………………………………….
14,500
Service revenue (+R, +SE) ………………………………….
14,500
j.
10,000
7,000
Utilities expense (+E, −SE) …………………………………………..
Accounts payable (+L) ………………………………………..
Chapter 3 -Operating – Decisions – and -the – Income – Statement
3-48
AP3–3.
Req. 1
Req. 2
Balance Sheet
Income Statement
Stmt of
Cash Flows
Assets
Liabilities
Stockholders’
Equity
Revenues
Expenses
Net
Income
a.
–
+
–
NE
+
–
O
b.
–
NE
–
NE
+
–
O
g.
–
–
NE
NE
NE
NE
F
h.
+
NE
+
+
NE
+
O
–
–
NE
NE
NE
O
+
NE
+
NE
NE
F
–
NE
–
NE
+
–
O
e.
NE
NE
NE
NE
O
–
NE
–
NE
+
–
Chapter -3 Operating Decisions and the Income Statement
AP3–4.
Req. 1 and 2
Cash
Accounts Receivable
Supplies
(i) 10,000
Beg. 0
31,000 (b)
Beg. 0
10,000 (i)
Beg. 0
40,560
25,260
15,810
Prepaid Insurance
Land
Barns
Beg. 0
(k) 3,600
Beg. 0
(a) 90,000
Beg. 0
(a)100,000
(b) 62,000
3,600
90,000
162,000
Accounts Payable
Unearned Revenue
Long-term
Note Payable
2,400 (e)
0 Beg.
31,000 (b)
31,000
Contributed Capital
Retained Earnings
262,000
0 Beg.
(m) 500
0 Beg.
Animal Care
Service Revenue
Rental
Revenue
35,260 (c)
35,260
13,200
0 Beg.
0 Beg.
Utilities Expense
Wages Expense
3,040
6,000
Beg. 0
(g) 1,240
Beg. 0
(j) 6,000
Chapter 3 -Operating – Decisions – and -the – Income – Statement
3-50
AP3–4. (continued)
Req. 3
ALPINE STABLES, INC.
Income Statement (unadjusted)
For the Month Ended April 30, 2011
Revenues:
Animal care service revenue
Rental revenue
Total revenues
$ 35,260
13,200
48,460
ALPINE STABLES, INC.
Statement of Stockholders’ Equity (unadjusted)
For the Month Ended April 30, 2011
Contributed
Capital
Retained
Earnings
Total
Stockholders’
Equity
Beginning, April 1, 2011
$ 0
$ 0
$ 0
Ending, April 30, 2011
$262,000
$ 38,920
$300,920
Chapter -3 Operating Decisions and the Income Statement
AP3–4. (continued)
ALPINE STABLES, INC.
Balance Sheet (unadjusted)
At April 30, 2011
Assets
Current assets:
Cash
Liabilities
Current liabilities:
Accounts payable
Unearned revenue
Total current liabilities
$ 40,560
$ 2,910
2,400
5,310
Req. 4
Date: (today’s date)
To: Shareholders of Alpine Stables, Inc.
From: (your name)
After analyzing the effects of transactions for Alpine Stables, Inc., for April, the
company has realized a profit of $39,420. This is 81% of total revenues. However, this
is based on unadjusted amounts. There are several additional expenses that will
Chapter 3 -Operating – Decisions – and -the – Income – Statement
3-52
AP3–4. (continued)
Req. 5
2012:
Total
=
Sales (Operating)
Revenue
=
$400,000
=
$400,000
=
1.29
Asset
Turnover
Average
Total Assets
($300,000+$320,000)÷2
$310,000
AP3–5.
ALPINE STABLES, INC.
Statement of Cash Flows
For the Month Ended April 30, 2011
Operating Activities
Cash received from customers ($13,200 +$2,400 +$10,000)
$25,600
Cash paid to employees
(6,000)
Cash paid to suppliers ($1,240+$2,700+$3,600)
(7,540)
Total cash provided by operating activities
12,060
Investing Activities
Purchase of barns
Total cash used in investing activities
Financing Activities
Proceeds from share issuance
Dividends paid
Total cash provided by financing activities
Increase in cash
Ending cash balance
Total
Chapter -3 Operating Decisions and the Income Statement
AP3–6.
Req. 1 and 2 (in millions)
Cash
Marketable Securities
Accounts Receivable
Beg. 31,437
(b) 3,100
3 (c)
1,238 (e)
Beg. 570
Beg. 24,702
(d) 39,780
3,100 (b)
Inventories
Prepaid Expenses
Other Current Assets
Beg. 9,331
(g) 23
5,984 (d)
Beg. 2,315
(h) 82
Beg. 3,911
3,370
2,397
3,911
Investments
Property &
Equipment (net)
Other Assets and
Intangibles (net)
5,890
Accounts Payable
Income Tax Payable
Notes Payable (ST)
36,640 Beg.
1,610 (a)
23 (g)
(f) 7,545
10,060 Beg.
2,400 Beg.
38,273
2,515
2,400
Notes Payable (LT)
Other Long-Term Debt
Contributed Capital
7,025 Beg.
58,962 Beg.
5,314 Beg.
7,025
5,314
Retained Earnings
Sales Revenue
Cost of Sales
107,651 Beg.
0 Beg.
39,780 (d)
39,780
5,984
Utilities Expense
Interest Expense
Wages Expense
Beg. 0
Beg. 0
Beg. 0
(c) 3
(i) 1
(e) 1,238
3
1
1,238
Chapter 3 -Operating – Decisions – and -the – Income – Statement
3-54
AP3–6. (continued)
Req. 3
Exxon Mobil Corporation
Income Statement (unadjusted)
For the Month Ended January 31, 2011
(in millions)
Revenues:
Sales revenue
$39,780
Exxon Mobil Corporation
Statement of Stockholders’ Equity (unadjusted)
For the Month Ended January 31, 2011
(in millions)
Contributed
Capital
Retained
Earnings
Total
Stockholders’
Equity
Beginning, December 31, 2010
$ 5,314
$107,651
$112,965
32,554
Ending, January 31, 2011
$ 5,314
$140,205
$145,519
Chapter -3 Operating Decisions and the Income Statement
AP3–6. (continued)
Exxon Mobil Corporation
Balance Sheet (unadjusted)
At January 31, 2011
(in millions)
Assets
Current assets:
Cash
$ 25,652
Marketable securities
570
Accounts receivable
Inventories
3,370
Prepaid expenses
Other current assets
3,911
Total current assets
5,890
Total assets
$254,684
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$38,273
Income tax payable
Notes payable
2,515
2,400
Total current liabilities
43,188
7,025
Total liabilities
Shareholders’ Equity:
Contributed capital
Retained earnings
Total liabilities and shareholders’ equity
3-56
AP3–6. (continued)
Exxon Mobil Corporation
Statement of Cash Flows
For the Month Ended January 31, 2011
(in millions)
Cash Flows from Operating Activities
Cash received from customers
$ 3,100
Cash paid to employees
(1,238)
Cash paid to suppliers (= $3 + $82)
(85)
Cash paid to government for taxes
(7,545)
Interest paid
(1)
Cash Flows from Investing Activities
Purchase of intangible assets
(6)
(6)
Cash Flows from Financing Activities
Repayment of debt
Decrease in cash
(5,785)
Beginning cash balance
Ending cash balance
Req. 4
Total Asset
=
Sales
=
$39,780
=
0.165
Turnover
Average Total Assets
$241,368
* ($228,052 + $254,684) ÷ 2