P3-6 (Algo) Analyzing the Effects of Transactions Using T-Accounts, Preparing an Income Statement, and Evaluating the Net Profit Margin Ratio LO3-4, 3-5, 3-6

Following are selected account balances (in millions of dollars) from a recent UPS annual report, followed by several typical transactions. Assume that the following are account balances on December 31 (end of the prior fiscal year):

Account	Balance	Account	Balance
Property, plant, and equipment (net)	$18,094	Receivables	$2,599
Retained earnings	13,806	Other current assets	1,089
Accounts payable	1,677	Cash	1,304
Prepaid expenses	318	Spare parts, supplies, and fuel	815
Accrued expenses payable	2,490	Other non-current liabilities	3,920
Long-term notes payable	1,910	Other current liabilities	2,359
Other non-current assets	3,182	Additional Paid-in Capital	1,237
Common stock ($0.01 par value)	2

These accounts are not necessarily in good order and have normal debit or credit balances. (Note: Because these are not all of UPS's accounts, these will not balance in a trial balance.) Assume the following transactions (in millions, except for par value) occurred the next fiscal year beginning January 1 (the current year):

1. Provided delivery service to customers, who paid $11,890 in cash and owed $39,104 on account.
2. Purchased new equipment costing $3,854; signed a long-term note.
3. Paid $12,064 cash to rent equipment and aircraft, with $6,286 for rent this year and the rest for rent next year (a prepaid expense).
4. Spent $1,284 cash to repair facilities and equipment during the year.
5. Collected $36,885 from customers on account.
6. Repaid $360 on a long-term note (ignore interest).
7. Issued 200 million additional shares of $0.01 par value stock for $37 (thats $37 million).
8. Paid employees $14,526 for work during the year.
9. Purchased spare parts, supplies, and fuel for the aircraft and equipment for $12,864 cash.
10. Used $7,500 in spare parts, supplies, and fuel for the aircraft and equipment during the year.
11. Paid $1,204 on accounts payable.
12. Ordered $130 in spare parts and supplies.

Prepare an unadjusted income statement for the current year ended December 31.