This case uses both the income statement (statement of operation


Question Description:

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This case uses both the income statement (statement of operations) and the balance sheet of Amazon.com in Appendix A at the end of the book. It will help you understand the closing process of a business. Requirements 1. Journalize Amazon.com’s closing entries for the revenues and expenses of 2009. Show all amounts in millions as in the Amazon financial statements. You may be unfamiliar with certain revenues and expenses, but treat each item on the income statement as either a revenue or an expense. For example, Net sales is the first revenue item. Other items you may be unfamiliar with are as follows: ?oOther operating expense (income), net?? is shown in parentheses, so it should be treated as revenue. ?oInterest Income?? should be treated as revenue. Although the amount shown for ?oInterest expense?? is in parentheses, you may ignore those parentheses for this purpose and treat it similar to other expenses. ?oOther income (expense), net?? is shown as a positive number, so it should be treated as revenue. The ?oprovision for income taxes?? should be treated as an expense. ?oEquity method investment activity, net of tax?? is shown in parentheses, so it should be shown as an expense. In your closing entries, ignore all subtotals such as Gross profit, Total operating expenses, Income from operations, Total non-operating income (expense), and Net income (loss). 2. Create a T-account for the Income summary, post to that account, and then close the Income summary. How much was closed to Retained earnings? How is the amount that was closed to Retained earnings labeled on the income statement?

Answer

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