Preparing an Income Statement, Statement of Retained Earnings, and Balance Sheet The following… 1 answer below »

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Preparing an Income Statement, Statement of Retained Earnings, and Balance Sheet The following information was reported in the December 31, 2007, financial statements of Southwest Airlines, Inc. (listed alphabetically, amounts in millions).

Accounts Payable

$1,731

Other Assets

$ 2,581

Accounts Receivable

845

Other Liabilities

3,107

Aircraft Fuel Expense

2,536

Other Operating Expenses

2,145

Cash

2,213

Other Revenue

336

Contributed Capital

2,153

Property and Equipment

10,874

Dividends

14

Repairs and Maintenance Expense

616

Income Tax Expense

413

Retained Earnings (as of December 31, 2007)

4,788

Interest Expense

69

Salaries Expense

3,213

Landing Fees Expense

560

Supplies

259

Notes Payable

4,993

Ticket Revenues

9,861

1. Prepare an income statement for the year ended December 31, 2007.

2. Prepare a statement of retained earnings for the year ended December 31, 2007. TIP: Assume the balance in retained earnings was $4,157 (million) at January 1, 2007.

3. Prepare a balance sheet at December 31, 2007.

4. Using the balance sheet, indicate whether the total assets of Southwest Airlines at the end of the year were financed primarily by liabilities or stockholders’ equity.