Refer to Amazon.com, Inc.’s financial statements in Appendix A at the end of the book. Assume that Amazon.com completed the following selected transactions during 2008.
a. Made company sales (revenue) of $19,166 million, all on account (debit accounts receivable).
b. Collected cash on accounts receivable $19,044.
c. Purchased inventories, paying cash of $15,095 million.
d. Incurred cost of sales in the amount of $14,896 million. Debit the Cost of sales (expense) account. Credit the Inventories account.
e. Paid operating expenses of $3,428 million.
f. Collected non-operating income (net) in cash, $59 million.
g. Paid income taxes $247 million (debit provision for income taxes).
h. Accounted for other investment activity net of taxes in the amount of $9 million.
Debit equity method investment activity, net of taxes. Credit other assets.
i. Paid cash for other assets, $103 million.

Requirements
1. Set up T-accounts for: Cash (beginning debit balance of $2,539 million); Accounts Receivable, net and other (debit balance of $705 million); Inventories (debit balance $1,200 million); Other Assets ($0 balance); Net Sales ($0 balance); Cost of Sales ($0 balance); Operating expenses ($0 balance); Non-operating income (expense), net ($0 balance); Provision for income taxes ($0 balance); Equity method investment activity, net of tax ($0 balance).
2. Journalize Amazon.com transactions a i. Explanations are not required.
3. Post to the T-accounts, and compute the balance for each account. Key postings by transaction letters a-i.
4. For each of the following accounts, compare your computed balance to Amazon.com, Inc.’s actual balance as shown on its 2008 Consolidated Statement of Operations or Consolidated Balance Sheet in Appendix A. Your amounts should agree to the actual figures.
a. Cash
b. Accounts Receivable, net and other
c. Inventories
d. Net Sales
e. Cost of sales
f. Operating expenses
g. Non-operating income (expenses), net
h. Provision for income taxes
i. Equity method investment activity, net of tax
5. Use the relevant accounts from requirement 4 to prepare a summary income statement for Amazon.com, Inc., for 2008. Compare the net income you computed to Amazon.com, Inc.’s actual net income. The two amounts should be equal.