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)
Accrued Expenses Payable
$1,675 (BB)
Long-term Notes Payable
$667 (BB)
Prepaid Expenses
(BB) $82
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. Temporary T-accounts Revenue $0 (BB) Rent Expense (BB) $0
Wages Expense
(BB) $0
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

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
DR. Rent Expense
$3,067
CR. Prepaid Expenses

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

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

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

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

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

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
DR. Cost of Sales
$5,348
CR. Spare parts, supplies and fuel

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

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

16. 2012 Effects

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

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

19. Temporary T-accounts 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
Cost of Sales
(BB) $0
(I) 5,348
(EB) 5,348

20. (in millions of dollars)
Income Statement
FedEx, Inc.
Income Statement
For Year Ended May 31, 2012
(in millions of dollars)
Revenues
$ 22,167
Cost of Sales
5,348
Gross Margin
16,819
Operating Expenses
Rent
3,067
Wages
10,031
Total Expenses
13,098
Net Income
3,721

21. Statement of Stockholder’s Equity (in millions of dollars)
Statement of SE
FedEx, Inc.
Statement of Stockholder’s Equity
For Year Ended May 31, 2012
(in millions of dollars)
Retained Earnings, May 31, 2011
$ 5,827
Add: Net Income for the year
3,721
Retained Earnings, May 31, 2012
$ 9,548

22. (in millions of dollars)
Balance Sheet
FedEx, Inc.
Balance Sheet
As of May 31, 2012
(in millions of dollars)
Assets
Liabilities
Current Assets:
Current Liabilities:
Cash $
Accounts Payable $
Receivables
905
Accrued Expenses Payable
1,675
Prepaid Expenses
1,613
Other current liabilities
297
Spare parts, supplies & fuel
294
Total current liabilities
2,023
Other current Assets
1,196
Long-term Notes Payable
1,994
Total Current Assets:
4,681
Other noncurrent liabilities
3,513
Property and equipment, net
11,055
Stockholder’s Equity
Other noncurrent assets
1,850
Contributed Capital $
Total Assets:
17,586
Retained Earnings
9,548
Total Liabilities and SE

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 customers
A) 17,600 + E) 4824
Paid to suppliers and employees
C) 4,598? + H) I) J) 784
Cash paid for interest
Cash flows from investing activities
Cash paid to purchase equipment
Cash paid to maintain and repair facilities and equipment
D) 1348
Cash flows from financial activities
Cash received from stock issue
G) 16
Cash paid to repay long-term notes
F) 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
$ ,424
Paid to suppliers and employees
(20,761)
Net cash flow from operating activities
$ ,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 issue 16
Cash paid to repay long-term notes
(18)
Net cash flow from financial activities
$ (2)
Total Change in Cash
313
Cash at beginning of year
360
Cash at end of year
673
Statement of Cash Flows

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, ,586) / 2

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