Question

ollowing 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	Balance			Account	Balance
Property and equipment (net)	$	19,343		Receivables	$	5,531
Retained earnings		16,516		Other current assets		800
Accounts payable		2,082		Cash		2,708
Prepaid expenses		519		Spare parts, supplies, and fuel		836
Accrued expenses payable		2,274		Other noncurrent liabilities		6,186
Long-term notes payable		2,047		Other current liabilities		1,666
Other noncurrent assets		4,127		Additional Paid-in Capital		3,042
Common stock ($0.10 par value)		51

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 $31,204 in accounts receivable and $25,200 in cash.

b. Purchased new equipment costing $3,814; signed a long-term note.

c. Paid $17,664 cash to rent equipment and aircraft, with $12,986 for rental this year and the rest for rental next year.

d. Spent $4,244 cash to maintain and repair facilities and equipment during the year.

e. Collected $35,685 from customers on account.

f. Repaid $540 on a long-term note (ignore interest).

g. Issued 210 shares of additional stock for $35.

h. Paid employees $20,026 during the year.

i. Purchased for cash and used $14,264 in fuel for the aircraft and equipment during the year.

j. Paid $1,164 on accounts payable.

k. Ordered $126 in spare parts and supplies.

1. & 2. Prepare T-accounts for May 31 of the current year from the preceding list; enter the respective beginning balances. For each transaction, record the current year's transaction effects in the T-accounts. Label each using the letter of the transaction. Compute ending balances. (Enter your answers in millions, not in dollars.)

Answer 1

Equipment					Cash
Beg. Bal.	$ 19,343				Beg. Bal.	$   2,708	$       540	f
b	$   3,814				a	$ 25,200	$ 17,664	c
					e	$ 35,685	$   4,244	d
End. Bal.	$ 23,157				g	$   7,350	$ 20,026	h
							$ 14,264	i
							$   1,164	j
					End. Bal.	$ 13,041
Receivables					Prepaid expense
Beg. Bal.	$   5,531	$ 35,685	e		Beg. Bal.	$       519
a	$ 31,204				c	$   4,678
End. Bal.	$   1,050				End. Bal.	$   5,197
Spare parts, Supplies and fuels					Accounts payable
Beg. Bal.	$       836				j	$   1,164	$   2,082	Beg. Bal.
End. Bal.	$       836						$       918	End. Bal.
Long term Notes Payable					Other Non current Liabilities
f	$       540	$   2,047	Beg. Bal.				$   6,186	Beg. Bal.
		$   3,814	b
		$   5,321	End. Bal.				$   6,186	End. Bal.
Accrued Expense Payable
		$   2,274	Beg. Bal.
		$   2,274	End. Bal.