Chapter 3, Problem 23P

FedEx Corporation had the following revenue and expense account balances (in millions) for a recent year ending May 31: a.Prepare an income statement. b.Compare your income statement with the income statement that is available at the FedEx Corporation Web site, (http://investors.fedex.com). Click on Annual Report and Download Annual Report. What similarities and differences do you see?

Journal Entries Following is a list of transactions entered into during the first month of operations of Gardener Corporation, a new landscape service. Prepare in journal form the entry to record each transaction. April 1: Articles of incorporation are filed with the state, and 100,000 shares of common stock are issued for $100,000 in cash. April 4: A six-month promissory note is signed at the bank. Interest at 9% per annum will be repaid in six months along with the principal amount of the loan of $50,000. April 8: Land and a storage shed are acquired for a lump sum of $80,000. On the basis of an appraisal, 25% of the value is assigned to the land and the remainder to the building. April 10: Mowing equipment is purchased from a supplier at a total cost of $25,000. A down payment of $10,000 is made, with the remainder due by the end of the month. April 18: Customers are billed for services provided during the first half of the month. The total amount billed of $5,500 is due within ten days. April 27: The remaining balance due on the mowing equipment is paid to the supplier. April 28: The total amount of $5,500 due from customers is received. April 30: Customers are billed for services provided during the second half of the month. The total amount billed is $9,850. April 30: Salaries and wages of $4,650 for the month of April are paid.

Analyzing Transactions. Using the analytical framework, indicate the effect of the following related transactions of a firm. a. January 1: Issued 10,000 shares of common stock for 50,000. b. January 1: Acquired a building costing 35,000, paying 5,000 in cash and borrowing the remainder from a bank. c. During the year: Acquired inventory costing 40,000 on account from various suppliers. d. During the year: Sold inventory costing 30,000 for 65,000 on account. e. During the year: Paid employees 15,000 as compensation for services rendered during the year. f. During the year: Collected 45,000 from customers related to sales on account. g. During the year: Paid merchandise suppliers 28,000 related to purchases on account. h. December 31: Recognized depreciation on the building of 7,000 for financial reporting. Depreciation expense for income tax purposes was 10,000. i. December 31: Recognized compensation for services rendered during the last week in December but not paid by year-end of 4,000. j. December 31: Recognized and paid interest on the bank loan in Part b of 2,400 for the year. k. Recognized income taxes on the net effect of the preceding transactions at an income tax rate of 40%. Assume that the firm pays cash immediately for any taxes currently due to the government.