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(B) 3,100 9,545 (F) 82 (H) 11 (I) 6 (J) (D) 39,780

1) Exxon Mobil Corporation's unadjusted income statement for January shows sales revenue of $39.78 billion and net income of $32.554 billion, resulting in an unusually high net profit margin of 81.84%. 2) The high profit margin is because many normal operating expenses like depreciation were not recorded yet, making the accounts unadjusted. 3) In reality, Exxon Mobil's typical net profit margin based on its annual report is around 8.5%, not the unusually high 81.84% calculated from the unadjusted January income statement.

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81 views3 pages

(B) 3,100 9,545 (F) 82 (H) 11 (I) 6 (J) (D) 39,780

1) Exxon Mobil Corporation's unadjusted income statement for January shows sales revenue of $39.78 billion and net income of $32.554 billion, resulting in an unusually high net profit margin of 81.84%. 2) The high profit margin is because many normal operating expenses like depreciation were not recorded yet, making the accounts unadjusted. 3) In reality, Exxon Mobil's typical net profit margin based on its annual report is around 8.5%, not the unusually high 81.84% calculated from the unadjusted January income statement.

Uploaded by

Kavya Gopakumar
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AP3–6.

Req. 1 and 2 (in millions)


Cash Short-term Investments Accounts Receivable
Beg. 12,664 3 (c) Beg. 404 Beg. 38,642
(b) 3,100 1,238 (e) (d) 39,780 3,100 (b)
9,545 (f)
82 (h)
11 (i)
6 (j)
4,879 404 75,322

Inventories Prepaid Expenses Other Current Assets


Beg. 11,665 Beg. 3,359 Beg. 6,229
(g) 23 5,984 (d) (h) 82
5,704 3,441 6,229

Property & Other Assets and


Long-term Investments Equipment (net) Intangibles
Beg. 34,333 Beg.214,664 Beg. 9,092
(a) 1,610 (j) 6
34,333 216,274 9,098

Accounts Income Taxes Short-term


Payable Payable Notes Payable
57,067 Beg. (f) 9,545 12,727 Beg. 9,322 Beg.
1,610
(a)
23
(g)
58,700 3,812 9,322

Long-term Other Common


Notes Payable Long-Term Debt Stock
7,711 (i) 83,481 Beg. 9,512 Beg.
Beg. 10

7,711 83,471 9,512

Retained Earnings Sales Revenue Cost of Sales


151,232 Beg. 0 Beg. Beg. 0
39,780 (d) (d) 5,984
151,232 39,780 5,984

Utilities Expense Interest Expense Wages Expense


Beg. 0 Beg. 0 Beg. 0
(c) 3 (i) (e) 1,238
1
3 1 1,238
AP3–6. (continued)

Req. 3

Exxon Mobil Corporation


Income Statement (unadjusted)
For the Month Ended January 31
(in millions)

Revenues:
Sales revenue $39,780

Costs and expenses:


Cost of sales 5,984
Wage expense 1,238
Utilities expense _ 3
Total costs and expenses _7,225
Operating income 32,555

Other revenues (expenses):


Interest expense _ 1
Net Income (pretax) $32,554

Req. 4

Net Income $32,554 = 0.8184 or 81.84%


Net Sales (or Operating) $39,780
Revenue

The net profit margin ratio suggests that the company had nearly $0.82 in net income
for each $1 of sales revenue. This is high, primarily because the accounts are
unadjusted. Many additional expenses have yet to be recorded, such as the using of
property, plant, and equipment. The actual net profit margin for ExxonMobil based on
information reported in its recent annual report was 8.5%, not nearly 82% as determined
above.

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