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Tutorial 2 Question P3-6. T-accounts for May 31, 2011.

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Presentation on theme: "Tutorial 2 Question P3-6. T-accounts for May 31, 2011."— Presentation transcript:

1 Tutorial 2 Question P3-6

2 T-accounts for May 31, 2011

3 Property and Equipment (net) (BB) $8,362 Retained Earnings $5,827 (BB) Accounts Payable $835 (BB) Prepaid Expenses (BB) $82 Accrued Expenses Payable $1,675 (BB) Long-term Notes Payable $667 (BB) Other Noncurrent Assets (BB) $1,850 Contributed Capital $492 (BB) Receivables (BB) $1,162 Other current assets (BB) $1,196 Cash (BB) $360 Spare parts, supplies and Fuel (BB) $294 Other noncurrent liabilities $3,513 (BB) Other current liabilities $297 (BB)

4 Revenue $0 (BB) Rent Expense (BB) $0 Wages Expense (BB) $0 Temporary T-accounts Cost of Sales (BB) $0

5 Transactions A) Provided delivery service to customers, receiving $4,567 in accounts receivable and $17,600 in cash DR. Accounts Receivable$4,567 DR. Cash$17,600 CR. Revenue$22,167

6 Transactions B) Purchased new equipment costing $1,345; signed a long-term note DR. Property and Equipment$1,345 CR. Long-term notes payable$1,345

7 Transactions C) Paid $4,598 cash to rent equipment and aircraft, with $3,067 for rental this year and the rest for rent next year. ? DR. Prepaid Expenses$4,598 CR. Cash$4,598 DR. Rent Expense$3,067 CR. Prepaid Expenses$3,067

8 Transactions D) Spent $1,348 in cash to maintain and repair facilities and equipment during the year. DR. Property and Equipment$1,348 CR. Cash$1,348

9 Transactions E) Collected $4,824 from customers on account DR. Cash$4,824 CR. Accounts Receivable$4,824

10 Transactions F) Repaid $18 on a long term note DR. Long-term notes payable$18 CR. Cash$18

11 Transactions G) Issued additional stock for $16 DR. Cash$16 CR. Contributed Capital$16

12 Transactions H) Paid employees $10,031 during the year DR. Wage Expense$10,031 CR. Cash$10,031

13 Transactions I) Purchased in cash and used $5,348 in fuel for the aircraft and equipment during the year. DR. Spare parts, supplies and fuel$5,348 CR. Cash$5,348 DR. Cost of Sales$5,348 CR. Spare parts, supplies and fuel$5,348

14 Transactions J) Paid $784 on accounts payable DR. Accounts payable$784 CR. Cash$784

15 Transactions K) Ordered $72 in spare parts and supplies – Only ordered, no goods received yet – Not a transaction

16 2012 Effects

17 Property and Equipment (net) (BB) $8,362 (B) 1,345 (D) 1,348 (EB) 11,055 Prepaid Expenses (BB) $82 (C) 4,598 $ 3,067 (C) (EB) $1,613 Other Noncurrent Assets (BB) $1,850 (EB) $1,850 Receivables (BB) $1,162 (A) 4,567 4,824 (E) (EB) $ 905 Other current assets (BB) $1,196 (EB) $1,196 Cash (BB) $360 (A)17,600 (E) 4,824 (G) 16 $4,598 (C) 1,348 (D) 18 (F) 10,031 (H) 5,348 (I) 784 (J) (EB) $673 Spare parts, supplies and Fuel (BB) $294 (I) 5,348 (EB) $294 Current AssetsNoncurrent Assets

18 Accounts Payable (J) $784$835 (BB) $51 (EB) Accrued Expenses Payable $1,675 (BB) $1,675 (EB) Long-term Notes Payable (F) $18$ 667 (BB) 1,345 (B) $1,994 (EB) Other noncurrent liabilities $3,513 (BB) $3,513 (EB) Other current liabilities $297 (BB) $297 (EB) Current Liabilities Noncurrent Liabilities Retained Earnings $5,827 (BB) ? Contributed Capital $492 (BB) 16 (G) $508 (EB) Stockholders Equity

19 Revenue $0 (BB) 22,167 (A) 22,167 (EB) Rent Expense (BB) $0 (C) 3,067 (EB) $3,067 Wages Expense (BB) $0 (H) 10,031 (EB) 10,031 Temporary T-accounts Cost of Sales (BB) $0 (I) 5,348 (EB) 5,348

20 Income Statement FedEx, Inc. Income Statement For Year Ended May 31, 2012 (in millions of dollars) Revenues$ 22,167 Cost of Sales5,348 Gross Margin16,819 Operating Expenses Rent3,067 Wages10,031 Total Expenses13,098 Net Income3,721

21 Statement of SE FedEx, Inc. Statement of Stockholders Equity For Year Ended May 31, 2012 (in millions of dollars) Retained Earnings, May 31, 2011$ 5,827 Add: Net Income for the year3,721 Retained Earnings, May 31, 2012$ 9,548

22 Balance Sheet FedEx, Inc. Balance Sheet As of May 31, 2012 (in millions of dollars) AssetsLiabilities Current Assets:Current Liabilities: Cash$ 673 Accounts Payable$ 51 Receivables905 Accrued Expenses Payable1,675 Prepaid Expenses1,613 Other current liabilities297 Spare parts, supplies & fuel294 Total current liabilities2,023 Other current Assets1,196Long-term Notes Payable1,994 Total Current Assets:4,681Other noncurrent liabilities3,513 Property and equipment, net11,055Stockholders Equity Other noncurrent assets1,850Contributed Capital$ 508 Total Assets:17,586Retained Earnings9,548 Total Liabilities and SE17,586

23 Statement of Cash Flows? FedEx, Inc. Statement of Cash Flows For Year Ended May 31, 2012 (in millions of dollars) Cash flows from operating activities Collected from customersA) 17,600 + E) 4824 Paid to suppliers and employeesC) 4,598? + H) 10031 + I) 5348 + J) 784 Cash paid for interest Cash flows from investing activities Cash paid to purchase equipment Cash paid to maintain and repair facilities and equipmentD) 1348 Cash flows from financial activities Cash received from stock issueG) 16 Cash paid to repay long-term notesF) 18 Draft slide

24 Statement of Cash Flows FedEx, Inc. Statement of Cash Flows For Year Ended May 31, 2012 (in millions of dollars) Cash flows from operating activities Collected from customers$ 22,424 Paid to suppliers and employees(20,761) Net cash flow from operating activities$ 1,663 Cash flows from investing activities Cash paid to maintain and repair facilities and equipment(1,348) Net cash flow from investing activities$ (1,348) Cash flows from financial activities Cash received from stock issue16 Cash paid to repay long-term notes(18) Net cash flow from financial activities$ (2) Total Change in Cash313 Cash at beginning of year360 Cash at end of year673

25 Total Asset Turnover Ratio Measures sales generated per dollar of assets. Higher = more efficient at managing assets. Total Asset Turnover Ratio Sales (or Operating) Revenues Average Total Assets = (Beginning total assets + ending total assets) / 2

26 Total Asset Turnover Ratio 1.44 22,167 15,446 = (13,306 + 17,586) / 2

27 Total Asset Turnover Ratio 1.44 Very hard to tell anything without comparing to close competitors


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