P$3-6($Static$)$ Analyzing the Effects of Transactions Using T$-$Accounts, Preparing an Income Statement, and Evaluating the Net Profit Margin Ratio LO$3-4,3-5,3-6$

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$)$:

AccountBalanceAccountBalanceProperty, plant, and equipment $($net$)$$$30,482$Receivables$$9,552$Retained earnings$9,105$Other current assets$809$Accounts payable$5,555$Cash$5,238$Prepaid expenses$108$Spare parts, supplies, and fuel$511$Accrued expenses payable$2,552$Other non$-$current liabilities$1,437$Long$-$term notes payable$21,320$Other current liabilities$1,641$Other non$-$current assets$1,082$Additional Paid$-$in Capital$150$Common stock $($$$0\mathrm{.}01$ par value$)9$

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$)$:

Provided delivery service to customers, who paid $$1,390$ in cash and owed $$24,704$ on account.

Purchased new equipment costing $$3,434$; signed a long$-$term note.

Paid $$7,864$ cash to rent equipment and aircraft, with $$3,136$ for rent this year and the rest for rent next year $($a prepaid expense$).$

Spent $$864$ cash to repair facilities and equipment during the year.

Collected $$24,285$ from customers on account.

Repaid $$150$ on a long$-$term note $($ignore interest$).$

Issued $200$ million additional shares of $$0\mathrm{.}01$ par value stock for $$16($that$$s $$16$ million$).$

Paid employees $$9,276$ for work during the year.

Purchased spare parts, supplies, and fuel for the aircraft and equipment for$$$$6,564$cash$.$

Used $$6,450$ in spare parts, supplies, and fuel for the aircraft and equipment during the year.

Paid $$784$ on accounts payable.

Ordered $$88$ in spare parts and supplies.

Required:

Prepare journal entries for each transaction.

Enter the ending balances from December $31$ as the respective beginning balances for January $1$ of the current year. Record in the T$-$accounts the effects of each transaction. Label each using the letter of the transaction.

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

Compute the company's net profit margin ratio for the current year ended December $31.$