Question: The following are the summary account balances
The following are the summary account balances from a recent balance sheet of Exxon Mobil Corporation. The accounts have normal debit or credit balances, but they are not necessarily listed in good order. The amounts are shown in millions of dollars. Assume the year-end is December 31, 2010.
The following is a list of hypothetical transactions for January 2011 (in millions of dollars):
a. Purchased on account $1,610 of new equipment.
b. Received $3,100 on accounts receivable.
c. Received and paid $3 for utility bills.
d. Earned $39,780 in sales on account with customers; cost of sales was $5,984.
e. Paid employees $1,238 for wages earned during the month.
f. Paid three-fourths of the income taxes payable.
g. Purchased $23 in supplies on account (include in Inventories).
h. Prepaid $82 to rent a warehouse next month.
i. Paid $10 of other long-term debt principal and $1 in interest expense on the debt.
j. Purchased a patent (an intangible asset) for $6 cash.
Required:
1. Prepare T-accounts for December 31, 2010, from the preceding list; enter the beginning balances. You will need additional T-accounts for income statement accounts; enter zero for beginning balances.
2. For each transaction, record the effects in the T-accounts. Label each using the letter of the transaction. Compute ending balances. ( Note: Record two transactions in ( d ), one for revenue recognition and one for the expense.)
3. Prepare an income statement, statement of stockholders’ equity, balance sheet, and statement of cash flows in good form for January 2011.
4. Compute the company’s total asset turnover ratio for the month ended January 31, 2011. What does it suggest to you about Exxon Mobil?
Transcribed Image Text:
Cash $ 31,437 Marketable securities Notes payable (long-term) Accounts receivable 7,025 (short-term investments) $ 570 24,702 Accounts payable Income tax payable Prepaid expenses 36,640 Inventories 9,331 10,060 Other long-term debt Property and equipment, net Contributed capital 58,962 2,315 121,346 Investments 28,556 5,314 Other assets and intangibles, net Notes payable (short-term) 5,884 Other current assets 3,911 2,400 Retained earmings 107,651
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