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Analyzing Temporary T-Accounts: Transactions for May 31, 2011

This tutorial explores various transactions for a company as of May 31, 2011, with a focus on the impact on temporary T-accounts. Transactions include delivery services, equipment purchases, cash payments for rent and repairs, customer collections, stock issuance, and employee salaries. Each transaction affects current and noncurrent assets, liabilities, and stockholders’ equity, providing valuable insights into the company's financial position. Additionally, it covers the Total Asset Turnover Ratio, which measures sales efficiency relative to asset management.

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Analyzing Temporary T-Accounts: Transactions for May 31, 2011

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  1. Tutorial 2 Question P3-6

  2. T-accounts for May 31, 2011

  3. Temporary T-accounts

  4. Transactions • A) Provided delivery service to customers, receiving $4,567 in accounts receivable and $17,600 in cash

  5. Transactions • B) Purchased new equipment costing $1,345; signed a long-term note

  6. 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. ?

  7. Transactions • D) Spent $1,348 in cash to maintain and repair facilities and equipment during the year.

  8. Transactions • E) Collected $4,824 from customers on account

  9. Transactions • F) Repaid $18 on a long term note

  10. Transactions • G) Issued additional stock for $16

  11. Transactions • H) Paid employees $10,031 during the year

  12. Transactions • I) Purchased in cash and used $5,348 in fuel for the aircraft and equipment during the year.

  13. Transactions • J) Paid $784 on accounts payable

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

  15. 2012 Effects

  16. Current Assets Noncurrent Assets

  17. Noncurrent Liabilities Stockholder’s Equity Current Liabilities

  18. Temporary T-accounts

  19. Income Statement

  20. Statement of SE

  21. Balance Sheet

  22. Statement of Cash Flows

  23. 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

  24. Total Asset Turnover Ratio 1.44 22,167 15,446 = (13,306 + 17,586) / 2

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

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