Southwest Airlines

The accounting records of Southwest Airlines reveal the following for

the last years (amounts in thousands)

December 31

Balance Sheet Items Year 8 Year 9

Accounts Payable $157,415 $156,755

Accounts Receivable 88,799 73,448
Cash 378,511 418,819
Common Stock 352,943 449,934
Current Maturities of Long-Term Debt 11,996 7,873
Inventories 50,035 65,152
Long-term Debt 623,309 871,717
Other Current Assets 56,810 73,586
Other Current Liabilities 681,242 795,838
Other Noncurrent Assets 4,231 12,942
Other Noncurrent Liabilities 844,116 984,142
Property, Plant and Equipment 4,137,610 5,008,166
Retained Earnings 2,044,975 2,385,854

For the year ended

Income Statement Items December 31, Year 9

Fuel Expense $492,415

Income Tax Expense 299,233
Interest Expense 22,883
Interest Revenue 14,918
Maintenance Expense 367,606
Other operating expenses 1,638,753
Sales Revenue 4,735,587
Salaries and Benefits Expense 1,455,237

Request:
a) Prepare a comparative Balance Sheet for Southwest Airlines as of December
31, Year 8 and Year 9. Classify each balance sheet item into categories
b) Prepare an income statement for the year ended December 31 Year 9.
c) Prepare a schedule explaining the change in retained earnings between
December 31, year 8 and December 31, year 9
d) Compare the amounts on balance sheet on December 31 year 8 and year 9.
Identify the major changes and suggest possible explanations for the changes