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Coca Cola: temporary and permanent accounts

1) Find a recent annual report for Coca Cola company on the Internet. Include the date of the annual report you accessed and the website address for the 2007 annual report. Locate the audited financial statements. Review the audited balance sheet and income statement in the annual report to answer the following questions:

1. Identify the temporary accounts that are closed directly to the Income Summary Account. Identify any temporary accounts that are closed directly to Retained Earnings.

2. On which company financial statements do the identified temporary accounts appear?

3. Identify the permanent accounts that would appear on a post-closing trial balance.

4. Do permanent accounts appear on the income statement or balance sheet?

5. Review the income statement, retained earnings statement (or the statement of changes in stockholders' equity) and the balance sheet. Identify the amounts that are carried over from one financial statement to another. For example, what amount is carried over from the income statement to the retained earnings statement? What amount is carried over from the retained earnings statement to the balance sheet?

2) Refer to the income statement in the annual report used to respond to the first question to answer the following questions:

1. What type of operating revenue (e.g. service revenue, sales) is reported?

2. What types of operating expenses appear on the income statement?

3. Does the income statement list (1) other revenues and other gains and (2) other expenses and losses?

Solution Preview

The December 31, 2007 financial statements for Coca-Cola Company were accessed through Yahoo Finance. Use the following link:

Question 1:

1. The temporary accounts are all of the accounts showing on the Consolidated Statements of Income. Accounts that could be closed directly to retained earnings, such as dividends, are not reported on this income statement. (For some companies, dividends are shown on the income statement.) In the case of Coca-Cola, dividends are reported only on the Consolidated Statement of Shareowners' Equity and will be closed directly to retained earnings (called reinvested earnings).

2. All ...

Solution Summary

The 401+ word solution carefully explains each of the questions posed about the Coca Cola financial statements with definitions and location in the website. There is a link provided to review the statements