3.1 Finance - Deepwater Horizon Case Study On April 20th, 2010, BP's Deepwater Horizon offshore drilling rig experienced a blowout caused
by an explosion. The explosion ignited a fireball and killed 11 workers. The fires raged and were
inextinguishable causing the rig to sink two days later. This left a well gushing at the seabed
causing the largest marine
oil spill in history, leaking an estimated 210 million gallons of crude
oil into the Gulf of Mexico. It is one of the largest environmental disasters in American history,
The oil spill caused tens of billions of dollars worth of damage. The cost of the oil spill to BP was
around $40 billion. To partly pay for this, BP sold its stake in Pan American Energy in December
2010 for $7 billion.
1. What sources of finance did BP use to pay off the $40 billion?
a. They sold their stake in Pan American Energy for $7 billion.
2. Where these internal sources of finance or external?
a
3. What are at least two other possible costs associated with the BP disaster for the
company?
a
4. What are at least two other possible costs for people/areas/companies affected by the oil
spill?

Fred smithers, a recent college graduate decided to open his own portable juice bar, smithers smoothies, to wheel around newport beach. you, a trusted friend of fred, are a business major that has also recently graduated and agreed to handle the books for a while to get some practical experience and have a favor that you can ask of fred in the future. given the following five transactions concerning the new venture, prepare the necessary journal entries for the transactions, post the journal entries to appropriate t accounts and prepare a trial balance as of the end of the month in order to answer to the necessary may 2: fred invests $12,000 of his own money to start the new company. this money was obtained from a part-time job working at a legal firm while he was in school. may 3: fred spent $5,100 cash to purchase a refrigerated trailer that he can pull behind his car and set up at the beach. under your advice, fred agrees to place the new asset under an account called "equipment." may 6: fred bought $640 of supplies on account from the flav-o-rite confectioners company. because they will last longer than a single accounting period fred agrees to record them as, "supplies" as per your suggestion. may 13: fred sat on the beach for six hours without a single sale and was feeling very down. right before he left, however, a plumber escorting his family reunion along the beach stopped by his stand and bought $800 worth of smoothies for the entire family. under your advice, fred agrees to call this cash revenue, "sales." may 15: excited about his new venture, fred withdraws $350 from the company to take his girlfriend out to dinner. what would be the balance in the cash account at the end of the period following the posting of all the transactions?