Amazon.com—like all other businesses—makes adjusting entries prior to year-end in order to measure assets, liabilities, revenues, and expenses properly. Examine Amazon’s balance sheet and Note 3. Pay particular attention to Accumulated depreciation.
Requirements
1. Open T-accounts for the following accounts with the balances shown on the annual reports at December 31, 2008 (amounts in millions, as in the Amazon.com financial statements):
Accumulated depreciation.................................. $ 555
Accounts payable................................................ 3,594
Other assets......................................................... 720
2. Assume that during 2009 Amazon.com completed the following transactions (amounts in millions). Journalize each transaction (explanations are not required).
a. Recorded depreciation expense, $70. (In order to simplify this exercise, the amount shown here is not the same as the actual amount disclosed in Note 3 of the annual report.)
b. Paid the December 31, 2008, balance of accounts payable.
c. Purchased inventory on account, $5,605.
d. Purchased other assets for cash of $754.
3. Post to the three T-accounts. Then the balance of each account should agree with the corresponding amount reported in Amazon’s December 31, 2009, balance sheet. Check to make sure they do agree with Amazon’s actual balances. You can find Accumulated depreciation in Note 3.