Financial StatementsPresented by:

LeoAshleyTonyDavid

Sungtae

Account balances on June 30,2006 (in millions of dollars)

AccountFlight & ground equipmentRetained earningsAccounts payablePrepaid expensesAccrued expenses payableLong-term notes payableContributed capitalReceivablesOther assetsCashSpare parts, supplies & fuelOther noncurrent liabilities

Balance$3,476

970554

64761

2,016702923

1,011155164790

AssetStockholders’ equityLiabilityAssetLiabilityLiabilityStockholders’ equityAssetAssetAssetAssetLiability

T-Account

Assets

155 923 164

Bal. 155 Bal. 923 Bal. 164

Flights/ground equipment

64 1,011 3,476

Bal. 64 Bal. 1,011 Bal. 3,476

Liabilities

554 761 2,016

Bal. 554 Bal. 761 Bal. 2,016

Stockholders' equity

790 702 970

Bal. 790 Bal. 702 Bal. 970

Cash

Prepaid expense

Spare parts, supplies, and fuel

Other assets

Receivable

Accrued Expense payable

Other noncurrent liablilities

Long-term note payable

Contributed capital Retained earnings

Accounts payable

Transactions occurred the next year ending June 30, 2007(in millions of dollars)

Provided delivery service to customers, receiving $7,200 in accounts receivable and $600 in cash. (+A: cash +600; accounts receivable +7,200; +R: +7,800)

Purchased new equipment costing $816; signed a long-term note. (+L: long-term note payable +816; +A: equipment +816)

Paid $744 cash to rent equipment and aircraft, with $648 for rental this year and the rest for rent next year. (+A: Prepaid expenses +96; rental expenses: +648; -A: cash -744)

Spent $396 cash to maintain and repair facilities and equipment during the year. (+E, -SE: maintenance expense +396; -A: cash -396)

Collected $6,524 from customers on account. (+A: Cash +6,524; -A: account receivable -6,524)

Borrowed $900 by signing a long-term note. (+A: cash +900; +L: long-term note payable +900)

Issued additional stock for $240. (+A: cash +240; +L: contributed capital +240) Paid employees $3,804 during the year. (-A: cash -3,804; +E, -SE: wages expense: +3,804) Purchased for cash and used $492 in fuel for the aircraft and equipment during the year. (-A:

cash -492; +E, -SE: utilities expense: +492) Paid $384 on accounts payable. (-A: cash -384; -L: account payable -384) Ordered $72 in spare parts and supplies. (No transaction)

T-Account

Beg. 3,476 Beg. 155 ( c) 744 Beg. 923 (e) 6,524(b) 816 (a) 600 (d) 396 (a) 7,200

Bal. 4,292 (e) 6,524 (h) 3,804 Bal. 1,599(f) 900 (i) 492(g) 240 (j) 384

Beg. 64 Bal. 2,599 Beg. 1,011

( c) 96 Bal. 1,011

Bal. 160

Beg. 164

Bal. 164

Liabilities

(j) 384 Beg. 554 Beg. 2,016 Beg. 790

Bal. 170 (b) 816 Bal. 790(f) 900

Bal. 3,732

Beg. 761

Bal. 761

Accrued expense payable

Other noncurrent liablilitiesAccounts payable Long-term note payable

Receivables

Prepaid expense

Flight and ground equipment Cash

Other assets

Spare parts, supplies, and fuel

T-Account

Stockholders' equity

Beg. 702 Beg. 970

(g) 240 Bal. 970

Bal. 942

Revenues

Beg. 0(a) 7,800

Bal. 7,800

Expenses

Beg. 0 Beg. 0 Beg. 0( c) 648 (d) 396 (h) 3,804

Bal. 648 Bal. 396 Bal. 3,804

Beg. 0(i) 492

Bal. 492

Wages expense

Utilities expense

Contributed capital Retained earnings

Service revenues

Rental expense Maintainance expense

Income Statement

Federal Express Corporation

Income Statement

For the Month Ended J une 30, 2007

(dollars in millions)Revenue

Gross Sales 7800 Net Sales 7800

ExpensesRent 648Repairs and Maintenance 396Utilities 492Wages 3804 Total Expenses 5340

Net Operating Income 2460

Statement of Retained Earnings

Federal Express Corporation

Statement of Retained Earnings

Month Ended J une 30, 2007

(dollars in millions)Beginning balance, June 30, 2006 970

Net income 2460

Ending retained earnings 3430

Balance SheetFederal Express Corporation

Balance Sheet

at J une 30, 2007

(dollars in millions)

ASSETS LIABILITIES

Current Assets Current Liabilities

Cash $2,599 Accounts payable $170

Accounts receivable 1,599 Accrued expense payable 761

Pre-paid expenses 160 Total Current Liabilities $931

Total Current Assets $4,358 Long-term Liabilities 3,732Other noncurrent Liabilities 790

Fixed Assets

Flight and ground equipment $4,292 Shareholders' Equity

Spare parts, supplies and fuel 164 Contributed capital $942

Other assets 1,011 Retained earnings 3,430

Total Net Fixed Assets $5,467 Total Shareholders' Equity $4,372

TOTAL ASSETS $9,825 TOTAL LIABILITIES & EQUITY $9,825

Statement of Cash Flows

Federal Express Corporation

Statement Cash Flows

For the Month Ended J une 30, 2007

(dollars in millions)Operating Activities

Cash from:Customers 7124

Cash to: Suppliers (2016)

Employees (3804)

Net cash provided by operating activities 1304

Investing Activities

Net cash provided by investing activities 0

Financing ActivitiesIssued stock 240Borrowed from banks 900 Net cash provided by financing activities 1140

Net increase in cashCash at beginning of month 2444

155

Cash at end of month2599

Total Asset Turnover Ratio

Total Asset Turnover Ratio = Sales Revenues / Average Total Assets = 7800 / [(5793 + 9825) / 2] = 7800 / 7809 = 1.00

Conclusion: This ratio measures the sales generated per dollar of assets. It reflects how efficiently one company utilize its assets. Here, the ratio is 1.00, which means that Federal Express uses every 1 dollar of asset to generate 1 dollar of revenue.