1. Financial Statements Presented by: Leo Ashley Tony David Sungtae

2. Account balances on June 30,2006 (in millions of dollars) Account Flight & ground equipment Retained earnings Accounts payable Prepaid expenses Accrued expenses payable Long-term notes payable Contributed capital Receivables Other assets Cash Spare parts, supplies & fuel Other noncurrent liabilities Balance $3,476 970 554 64 761 2,016 702 923 1,011 155 164 790 Asset Stockholders’ equity Liability Asset Liability Stockholders’ equity Asset Liability

3. T-Account

4. Transactions occurred the next year ending June 30, 2007(in millions of dollars)  Provided delivery service to customers, receiving $7,200 in accounts receivable and $600 in cash. (+A: cash +600; accounts receivable +7,200; +R: +7,800)  Purchased new equipment costing $816; signed a long-term note. (+L: long-term note payable +816; +A: equipment +816)  Paid $744 cash to rent equipment and aircraft, with $648 for rental this year and the rest for rent next year. (+A: Prepaid expenses +96; rental expenses: +648; -A: cash -744)  Spent $396 cash to maintain and repair facilities and equipment during the year. (+E, -SE: maintenance expense +396; -A: cash -396)  Collected $6,524 from customers on account. (+A: Cash +6,524; -A: account receivable - 6,524)  Borrowed $900 by signing a long-term note. (+A: cash +900; +L: long-term note payable +900)  Issued additional stock for $240. (+A: cash +240; +L: contributed capital +240)  Paid employees $3,804 during the year. (-A: cash -3,804; +E, -SE: wages expense: +3,804)  Purchased for cash and used $492 in fuel for the aircraft and equipment during the year. (-A: cash -492; +E, -SE: utilities expense: +492)  Paid $384 on accounts payable. (-A: cash -384; -L: account payable -384)  Ordered $72 in spare parts and supplies. (No transaction)

5. T-Account

7. Income Statement

8. Statement of Retained Earnings

9. Balance Sheet

10. Statement of Cash Flows

11. Total Asset Turnover Ratio Total Asset Turnover Ratio = Sales Revenues / Average Total Assets = 7800 / [(5793 + 9825) / 2] = 7800 / 7809 = 1.00 Conclusion: This ratio measures the sales generated per dollar of assets. It reflects how efficiently one company utilize its assets. Here, the ratio is 1.00, which means that Federal Express uses every 1 dollar of asset to generate 1 dollar of revenue.