Financial Accounting 16th Edition

Chapter 01 Accounting: Information for Decision Making 1 ACCOUNTING: INFORMATION FOR DECISION MAKING Chapter Summary Our financial reporting system has changed greatly over the past 50 years and will continue to change. The financial world is experiencing unparalleled challenges, such as globalization, deregulation, and the widespread use of the World Wide Web. In the midst

Brief Learning Exercises Topic Objectives Skills B. Ex. 1.1 Users of accounting information 1-1, 1-3, 1-5 Analysis B. Ex. 1.2 Components of internal control 1-2, 1-5 Analysis B. Ex. 1.3 Inexact or approximate measures 1-3, 1-4 Analysis, judgment B. Ex. 1.4 Standards for the preparation of 1-5, 1-6 Analysis accounting information B. Ex. 1.5

Ex. 1.7 c. g . f.a.h.i.e.b.General-purpose assumptionIntegrityInternal controlPublic accountingFinancial reportingFinancial statements f.a.h.i.e.b.General-purpose assumptionIntegrityInternal controlPublic accountingFinancial reportingFinancial statements f. a. h. i. e. b. General-purpose assumption Integrity Internal control Public accounting Financial reporting Financial statements d.Ex. 1.8 d.h.b.BookkeepingInstitute of Internal AuditorsSecurities and Exchange Commissionand for evaluating and rewarding decision-making performance.The first is the most general and deals with managements responsibility in the broadest senseto achieve the enterprises goals,

Chapter 10 - Liabilities 10 LIABILITIES Chapter Summary At the outset, the chapter distinguishes between current and long- term liabilities before addressing the accounting issues surrounding each category. Among current liabilities, notes payable and payroll related costs are analyzed in detail. Journal entries are introduced to record the issuance of a note, the accrual of interest expense, and

Brief Learning Exercises Objectives B. Ex. 10.1 Cash effects of borrowing 10-2 B. Ex. 10.2 Effective interest rate 10-5 B. Ex. 10.3 Bonds issued at a discount 10-6 B. Ex. 10.4 Bonds issued a premium 10-6 Analysis B. Ex. 10.5 10-6 Analysis B. Ex. 10.6 10-6 Analysis B. Ex. 10.7 Debt ratio 10-9 B. Ex. 10.8 Early retirement of bonds 10-7 B.

Ex. 10.1 Annual Unpaid Payment Balance 10,000$ $1,4901,4901,4907,760 $6907458059,310 8,565 Year 1Year 2Year 3$800745685 10,000$ $1,4901,4901,4907,760 $6907458059,310 8,565 Year 1Year 2Year 3$800745685 10,000$ $1,490 1,490 1,490 7,760 $690 745 805 9,310 8,565 Year 1 Year 2 Year 3 $800 745 685 Ex. 10.2Trans- Net Current Ownersaction Revenue - Expenses= Income Assets = Liab. + Liab. + Equity a. NE I D NE

25 Minutes, Medium Aug 6 Cash 12,000 Notes Pa y able 12,000 Se p t 16 18,000 Notes Pa y able 18,000 Sept 20 12,000 Notes Payable Sept 20 12,000 Notes Payable Se p t 20 12,000 Notes Payable 180 Cash 12,180 Nov 1 Cash 250,000 Notes Payable 250,000 Paid note and interest

25 Minutes, Medium JENCO a. Nov 1 Interest Expense 1,000 1,633 Cash 2,633 Dec 1 Interest Expense 984 1,649 Cash 2,633 To record monthly payment on note payable toVicksburg State Bank. Note PayableTo record monthly payment on note payable to Dec 1 Interest Expense 984 1,649 Cash 2,633 To

Chapter 11 Stockholders' Equity: Paid-In Capital 11 STOCKHOLDERS EQUITY: PAID-IN CAPITAL Chapter Summary This, the first of two chapters on stockholders equity, treats topics concerned with the paid-in capital of a corporation. Consideration of issues relative to retained earnings is deferred to Chapter 12. The advantages and disadvantages of the corporate form are reviewed in detail,

$80,000 50,000 75,000 $205,000 B.Ex. 11.2 $100,000 250,000 10,00030,00080,000$470,000B.Ex. 11.3$2,100,000 Total stockholders' equity Preferred stock (1,000 shares @ $10)Dividends on arrears on preferred stock for three years are calculated as follows:100,000 shares x $100 par value x 7% dividend rate x 3 years = Common stock (10,000 shares @ $3)Retained earnings 10,00030,00080,000$470,000B.Ex. 11.3$2,100,000 Total stockholders' equity

20 Minutes, Easy a. Stockholders' equity authorized 100,000 shares, issued and outstanding 1,000,000$ 10,000 shares issued and outstanding 170,000 shares 170,000 issued and outstanding 170,000 shares 170,000 issued and outstanding 170,000 shares 170,000 2,380,000 Total paid-in capital 3,550,000$ 555, Additional paid-in capital: Common stock 2,380,000 Total paid-in capital

20 Minutes, Easy a. Stockholders' equity authorized 2,000 shares, issued and out- 50,000$ standing 500 shares Issued and outstanding 80,000 shares 80,000 Issued and outstanding 80,000 shares 80,000 Issued and outstanding 80,000 shares 80,000 1,120,000 Additional paid-in capital: Common stock 1,120,000 Additional paid-in capital: Common stock 1 , 120 , 000 Additional paid-in

30 Minutes, Strong Stockholders e q uit y : 6% p referred stock, $100 p ar, cumulative, authorized and issued and outstandin g 10,000 shares 1,000,000$ Common stock, $20 p ar, 150,000 shares authorized, 80,000 shares issued, of which 400 shares are held in treasur y 1,600,000 Additional p aid-in ca p ital: Common stoc k 1,200,000 Additional paid-in capital: Treasury

Chapter 12 - Income and Changes in Retained Earnings 12 INCOME AND CHANGES IN RETAINED EARNINGS Chapter Summary Chapter 12 continues the coverage of stockholders equity but shifts the focus from paid-in capital to retained earnings. The student is already aware that net income drives the changes in retained earnings. However, in any given period net income

Brief Learning Exercises Objectives Skills B. Ex. 12.1 Extraordinary loss 12-1 Analysis B. Ex. 12.2 Extraordinary gain 12-1 Analysis B. Ex. 12.3 Discontinued operations 12-1 Analysis B. Ex. 12.4 Cash and stock dividends 12-4 Analysis B. Ex. 12.5 Statement of retained earnings 12-5 Analysis B. Ex. 12.6 Statement of retained earnings 12-5, 12-6 Analysis B. Ex. 12.7 Cash

$590,000 88,000 $678,000 60,000$618,000 *$1.20 x 50,000 shares = $60,000Retained earnings, end of yearDeduct: Cash dividend on common stock* 60,000$618,000 *$1.20 x 50,000 shares = $60,000Retained earnings, end of yearDeduct: Cash dividend on common stock* 60,000 $618,000 *$1.20 x 50,000 shares = $60,000 Retained earnings, end of year Deduct: Cash dividend on

b . Retained earnin g s, December 31, 2014 As ori g inall y re p orted 7,285,000$ Less: p rior p eriod ad j ustment 3 5 0 , 000 As restated 6,935,000$ Net income1,640,000 As restated 6,935,000$ Net income1,640,000 As restated 6,935,000$ Net income 1 , 640 , 000 Subtotal 8,575,000$ Cash dividends(950,000) Subtotal 8,575,000$ Cash dividends(950,000) Subtotal 8,575,000$ Cash dividends (9 5 0 , 000) Retained earnings, December 31, 2015 7, 625,000$ Retained earnings,

30 Minutes, EasyPROBLEM 12.1B 30 Minutes, EasyPROBLEM 12.1B 30 Minutes, Easy PROBLEM 12.1B a. Net sales 61,440,000$ Costs and ex p enses ( includin g income taxes on continuin g o p erations ) 5 3 , 980 , 000 Income from continuin g o p erations 7,460,000$ Discontinued o p erations: O p eratin g income from car rental ( net of income tax ) 670,000$ Gain on sale of car rental business

50 Minutes, Strong a. Stockholders equit y : Capital stock: Common stock, $1 par, 100,000 shares authorized, 20,000 shares issued, 16,000 shares outstandin g 20,000$ Stock dividend to be distributed ( 1 ) 1,600 Additional paid-in capital: From issuance of common stock 480,000$ From stock dividend (2)48,000 528,000 Total paid-in capital 549,600$ Retained earnings (3)800,400 1,350,000$

Chapter 13 - Statement of Cash Flows 13 STATEMENT OF CASH FLOWS Chapter Summary The statement of cash ows was introduced in Chapter 1. This chapter begins by reviewing the purpose of the statement. Its usefulness to creditors and investors in evaluating solvency is emphasized from the outset. The classification of cash transactions into operating, investing,

CHAPTER 13 STATEMENT OF CASH FLOW S Brief Learning Exercises Objectives Skills B. Ex. 13.1 Cash flows from operations (direct) 13-3 Analysis B. Ex. 13.2 Cash flows from operations (indirect) 13-7 Analysis B. Ex. 13.3 Cash flows from operations (direct) 13-3 Analysis B. Ex. 13.4 Cash flows from operations (indirect) 13-7 Analysis B. Ex. 13.5 Cash flows from investing

Ex. 13.1 a. b. Ex. 13.2 a. 280$ (30) (140)110$ Free cash flow Dividends paid (140)110$ Free cash flow Dividends paid (140) 110$ Free cash flow Dividends paid b.none $ 140 $ 150 c.The gain on the sale of marketable securities represents a reclassification of this item from the operating activities

25 Minutes, Easy a. Cash flows from investin g activities: Purchases of marketable securities (78,000)$ Proceeds from sales of marketable securities ( 1 ) 46,000 Loans made to borrowers (55,000) Collections on loans 62,000 Cash p aid to ac q uire p lant assets ( see p art b ) (60,000) Proceeds from sales of p lant assets ( 2 ) 5 2 , 000 Net cash used in

60 Minutes, Strong a. Balance sheet effects: Beginning Ending B a l ance B a l ance Cash and cash e q uivalents 10,000 (x) 50,000 60,000 Marketable securities 20,000 (8) 15,000 5,000 Accounts receivable 40,000 (4) 17,000 23,000 Inventories 120,000 (5) 2,000 122,000 Plant and e q ui p ment ( net of accumulated de p reciation ) 300 , 000 (9) 20 , 000 (3) 3 5, 000 28 5, 000 Totals 490 , 000 49 5, 000 Liabilities & Owners' Equity Accounts payable50,000 (6)

( 3 ) Cash p aid to su pp liers and em p lo y ees: Cost of g oods sold 1,500,000$ Less: Decrease in inventor y 30 , 000 Net p urchases 1,470,000$ Add: Decrease in accounts payable to suppliers22,000 Cash paid for purchases of merchandise 1,492,000$ Cash paid for operating expenses: Operating expenses 900,000$ Less: Depreciation (a noncash expense)75,000 Subtotal 825,000$

(5) (6) (7) CASE 13.3 LOOKIN' GOOD? (concluded) Passing up cash discounts will delay many cash outlays by about 20 days. In the long run, the amount paid will be about 2% greater, but in the short run, the delay should more than offset these increased costs. (A 20-day delay in cash outlays

Chapter 14 - Financial Statement Analysis 14 FINANCIAL STATEMENT ANALYSIS Chapter Summary Although earlier chapters have touched on topics from financial statement analysis, we now present a comprehensive overview of the subject. The chapter is organized into three sections. We begin by introducing a number of analytical tools. Second, measures of liquidity, credit risk, and profitability

Brief Learning Exercises Objectives Skills B. Ex. 14.1 Dollar and percentage change 14-1 Analysis B. Ex. 14.2 Trend percentages 14-1 Analysis B. Ex. 14.3 Component percentages 14-1 Analysis B. Ex. 14.4 Working capital and current ratio 14-4 Analysis B. Ex. 14.5 Current and quick ratios 14-4 Analysis B. Ex. 14.6 Debt ratio 14-4 Analysis B. Ex. 14.7 Net

Ex. 14.5 4,395,253$ 2,821,455 1,573,798 1,004,396 569,402$ Interest revenue (189,023) Nonoperating items:Income tax expense (204,820) 15,797$ Operating income Gross profit Less: Operating expenses 1,573,798 1,004,396 569,402$ Interest revenue (189,023) Nonoperating items:Income tax expense (204,820) 15,797$ Operating income Gross profit Less: Operating expenses 1,573,798 1,004,396 569,402$ Interest revenue (189,023) Nonoperating items: Income tax

25 Minutes, Easy THE KROGER COMPANY, INC. (Dollars in Millions) a. Current assets: Cash 1,193$ Receivable s 1,051 Merchandise inventorie s 5,146 Other current assets 569 Total current assets 7,959 $ Quick assets: Cash 1,193$ Receivables1,051 Total current assets 7,959 $ Quick assets: Cash 1,193$ Receivables1,051

b. A supplier should prefer selling $25,000 in merchandise on a 30-day open account to Another World rather than to Imports, Inc. Another World clearly has a greater potential for paying off this account when it becomes due. PROBLEM 14.9 A ANOTHER WORLD AND IMPORTS, INC. (concluded) Although Imports, Inc., has a larger

25 Minutes, Medium (Dollar Amounts in Thousands) a. Current ratio: ( 1 ) Be g innin g of y ear ( $43,000 $54,000 ) 0.80 to 1 ( 2 ) End of y ear ( $82,000 $75,000 ) 1.09 to 1 b. Workin g ca p ital: ( 1 ) Be g innin g of y ear ( $43,000 $54,000 ) (11,000) $ (2)End of year ($82,000 - $75,000)7,000$ (2)End of year ($82,000 -

OVERVIEW OF BRIEF EXERCISES, EXERCISES, PROBLEMS, AND CRITICAL THINKING CASES Brief Exercises Topic Skills B. Ex. 15.1 Foreign currency translations Analysis B. Ex. 15.2 Purchases in a foreign currency Analysis, communication B. Ex. 15.3 Currency strength Analysis B. Ex. 15.4 Exchange rate fluctuations Analysis, communication B. Ex. 15.5 Currency choice Analysis, communication B. Ex. 15.6 Currency strength and gains

SOLUTIONS TO EXERCISES Ex. 15.1 Ex. 15.2 Ex. 15.3 Ex. 15.4 a. Indonesias primary exports are oil, natural gas, electrical appliances, plywood, textiles, and rubber. Imports include machinery and equipment, chemicals, fuels, and foodstuffs. b. The labor force numbers approximately 118 million with a high percentage being literate (over 90%). The labor force is engaged in

30 Minutes, Medium PROBLEM 15.7 A FCPA VIOLATION S Under the amended Foreign Corrupt Practices Act, only activity c would be considered illegal since it is intended to help the firm garner business it may not otherwise obtain. Activities a, b and d would be considered facilitating payments as these are intended to

20 Minutes, Medium PROBLEM 15.7B FCPA VIOLATIONS Under the amended FCPA, activities a and d are illegal because both payments are intended to help company P obtain business it may not otherwise have been awarded. Activities b and c would be considered facilitating payments to speed up governmental service b, or

Chapter 02 - Basic Financial Statements 2 BASIC FINANCIAL STATEMENTS Chapter Summary Financial statements are the primary means of communicating financial information to users. Chapter 2 covers the income statement, balance sheet, and statement of cash flows. Chapter 1 set forth the objectives of the financial reporting process, and offered the observation that these objectives are

Ex. 2.1 a. 1. 2. b. 1. 2.Liabilities:$79,000 $288,000 70,000 36,00014,000 $324,000 165,000 Owners equity:70,000 62,000 $478,000 $478,000 office furniture. (The balance sheet of a professional sports team may not include land or buildings, as they generally do not own the stadiums in which they play.)Liabilities & Owners' Equity Notes payable

15 Minutes, Medium Owners' Assets = Equity A ccounts Office Notes A ccounts Capital Cash + Receivable + Equipment + Trucks = Payable + Payable + Stock December 31 balances 9,500$ 13,900$ 3,800$ 68,000$ 20,000$ 10,200$ 65,000$ (1) (2,700) 2,700 Balances 6,800$ 13,900$ 6,500$ 68,000$ 20,000$ 10,200$ 65,000$ (2) 4,000 (4,000) Balances 10,800$ 9,900$ 6,500$

a. b.c.d.e.Purchased furniture at a cost of $5,000; paid $3,000 cash as down payment and incurred a liability (account payable) for the remaining $2,000.Paid $2,000 of accounts payable.Received $500 cash from collection of accounts receivable.$10,000 cash was received from the sale of capital stock. b.c.d.e.Purchased furniture at a cost of $5,000; paid

a. Liabilities & Owner's Equity Cash 3,200$ Liabilities: Notes receivable 3,400 Notes payable 72,500$ Accounts receivabl e 3,000 Accounts payabl e 30,000 Office furniture 16,300 Total liabilities 102,500$ Building 75,000 Owner's equity:15,000 Capital stock 10,000 Retained earnings* 3,400 Total 115,900$ Total 115,900$ Land Building 75,000 Owner's equity:15,000 Capital stock 10,000 Retained earnings* 3,400 Total 115,900$ Total 115,900$ Land Building

Chapter 03 - The Accounting Cycle: Capturing Economic Events 3 THE ACCOUNTING CYCLE: CAPTURING ECONOMIC EVENTS Chapter Summary Maintaining a set of accounting records is not optional for a business. The IRS requires businesses to maintain records that can be audited. In addition, a business that does not maintain adequate records will likely operate inefficiently. The

Brief Exercises B. Ex. 3.1 B. Ex. 3.2 B. Ex. 3.3 B. Ex. 3.4 Analysis B. Ex. 3.5 B. Ex. 3.6 B. Ex. 3.7 B. Ex. 3.8 B. Ex. 3.9 B. Ex. 3.10 Exercises 3.1 3.2 3.3 3.4 3.5 3.6 Analysis 3.7 3.8 Revenue , ex p enses , and dividends Anal y sis 3.9 Financial statement effects Analysis 3.10 Preparing a trial balance Analysis 3.11 Preparing a trial balance Analysis 3.12 3.13 3.14 Analysis 3.15 CHAPTER 3 THE ACCOUNTING CYCLE: CAPTURING ECONOMIC EVENTS Communication, analysis3-13-3, 3-7,

B. Ex. 3.8 a. b. c. d. e. B. Ex. 3.9 B. Ex. 3.10 Gasoline purchased is an expense because it is ordinarily used up in the current period. These purchases decrease the owners' equity and are for the purpose of period. These purchases decrease the owners' equity and are for the purpose of period. These purchases

c. Georgia Corporation Trial Balance September 30, 2015 Debit Credit Cash. 925,000$ Accounts receivable 70,000 Office supplies 500 Land. 200,000 Building. 700,000 Notes payable. 800,000$ Accounts payable. 500 Capital stock.. 975,000 Client revenue. 180,000 Salary expense. 60,000 Total. 1,955,500$ 1,955,500$ Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent

b. Se p t. 1 4,400 Cash 4,400 3 5,620 Surve y in g Revenue 5,620 9 2,830 Surve y in g Revenue 2,830 14 165 Accounts Payable 165 Advertising Expense 14 165 Accounts Payable 165 Advertising Expense 14 165 Accounts Pa y able 165 Advertising Expense 25 5,620

d. 144,200$ 200 5,000 130,000 50,000 70,000 180,000 150,000$ 30,400 400,000 0 2,200 400 2,800 582,600$ 582,600$ Salary expense Capital stock Retained earnings Advertising expense Accounts payable Veterinary service revenue 30,400 400,000 0 2,200 400 2,800 582,600$ 582,600$ Salary expense Capital stock Retained earnings Advertising expense Accounts payable Veterinary

30 Minutes, Medium a. (1) (a) (b) (2) (a) (b)(c)The asset Cash was decreased. Decreases in assets are recorded by credits. Credit Cash, $800.The liability Accounts Payable was increased. Increases in liabilities are recorded by (b)(c)The asset Cash was decreased. Decreases in assets are recorded by credits. Credit Cash, $800.The liability Accounts Payable

Revenue Expenses = Assets Liabilities = NE NE NE I NE I NE NE NE I I NE NE NE NE NE NE NE NE NE NE I I NENE NE NE NE NE NEINEII NEINE I D NE I DNE NE NE NE NE NENE I D D NE DAug.

Net Total Total Owners' Error Income Assets Liabilities Equity NE U NE U NE O O NE U U NE U UU O U OO O O UNE O U account payable by debiting Cash and crediting Service Revenue.Recorded the payment of salaries payable by debiting Salaries Expense and crediting

Chapter 04 - The Accounting Cycle: Accruals and Deferrals 4 THE ACCOUNTING CYCLE: ACCRUALS AND DEFERRALS Chapter Summary In order for revenues and expenses to be reported in which they are earned or incurred, adjusting entries must be made at the end of the accounting period. Adjusting entries are made so the revenue recognition and matching

Ex. 4.4 a. b. 2,000,000 2,000,000 c. 40,000,000 40,000,000 d.The adjusting entry that results in the most significant expense in theCruise Revenue To record revenue earned for voyages completed. d.The adjusting entry that results in the most significant expense in theCruise Revenue To record revenue earned for voyages completed. d. The adjusting entry that

30 Minutes, Medium Au g . 31 15,200 Pre p aid Film Rental 15,200 31 700 Accumulated De p reciation: Buildin g s 700 31 600 Accumulated Depreciation: Fixtures and Equip. 600 31 1,500 Interest Payable 1,500 31 500 Depreciation Expense: Fixtures and Equipment To record August depreciation ($36,000 60 months). Interest Expense (4) Interest

20 Minutes, Easy Dec. 31 13 , 600 Salaries Pa y able 13 , 600 31 3 , 200 Guest Fee Revenue 3 , 200 31 140,000 Membership Dues Earned 140,000 31 1,250 earned in December. (4) Unearned Membership Dues To record the portion of annual membership dues Depreciation Expense: Furniture and Fixtures 31 140,000 Membership Dues

c. The company is following the realization principle requiring that revenue not be recognized until it is earned. Clients pay the company in advance for services to be provided in the future. As members are provided services, the company converts the unearned member dues into client fees earned. recognized until it

Chapter 05 - The Accounting Cycle: Reporting Financial Results 5 THE ACCOUNTING CYCLE: REPORTING FINANCIAL RESULTS Chapter Summary Chapter 5 completes the treatment of the accounting cycle for service type businesses. It focuses on the year-end activities culminating in the annual report. These include the preparation of the financial statements, adequate disclosure, closing the accounts, and

Brief Exercises B. Ex. 5.1 B. Ex. 5.2 B. Ex. 5.3 B. Ex. 5.4 Analysis B. Ex. 5.5 B. Ex. 5.6 B. Ex. 5.7 B. Ex. 5.8 B. Ex. 5.9 B. Ex. *5.10 Learnin g Ob j ectives 5.1 5-1-5-7 5.2 5-1, 5-2, 5-6 5.3 5-1, 5-2, 5-6 5.4 5-2, 5-4, 5-5 5.5 5-2, 5-4, 5-5 5.6 5-3 5.7 2, 4 5.8 2, 4 5.9 2, 4 5.10 5-6 Analysis 5.11 5-6 Analysis 5.12 Interim results 5-1,

Ex 5.1 a. b.c.d.e.f.g.h.None (This is an example of a "correcting entry.")After-closing trial balanceClosing entriesDividendsLiquidityNominal accountsReal accounts b.c.d.e.f.g.h.None (This is an example of a "correcting entry.")After-closing trial balanceClosing entriesDividendsLiquidityNominal accountsReal accounts b. c. d. e. f. g. h. None (This is an example of a "correcting entry.") After-closing trial balance Closing entries Dividends Liquidity Nominal accounts Real accounts Ex. 5.2a. 192 ,000$ 90,000$ 4,000 145,800$ Less:

Ex. 5.10 a. Net Income ($12,750) Total Revenue ($51,000) 25% b. Net Income ($12,750) Average Equity ($34,000) 37.5%c. Current Assets ($32,000) - Current Liabilities ($8,000) 24,000$ d. Current Assets ($32,000) Current Liabilities ($8,000) 4-to-1percentage is a measure of management's ability to control these costs and use resources efficiently to generate revenue.Based

c. 117 , 050$ 9 , 600 16 , 000 6 , 000 2 , 150 300 , 000 240 , 000$ 40 , 000 24 , 000 3 ,000 100,000 1 Accounts payableNotes payable ,000 100,000 1 Accounts payableNotes payable , 000 100 , 000 1 Accounts p a y abl e Notes p a y able ,800 300 2,100 1 Interest payableIncome taxes payableSalaries payable ,800 300 2,100 1 Interest payableIncome taxes payableSalaries payable , 800 300 2 , 100

b. (cont'd) Asset s $ 42 , 835 3 , 500 110 900 180 $ 54,000 Office equipmentPrepaid rentUnexpired insurance 900 180 $ 54,000 Office equipmentPrepaid rentUnexpired insurance 900 180 $ 54 , 000 Office e q ui p ment Pre p aid rent Unex p ired insurance 36,000 18,000 $ 65,525 Total assetsLess: Accumulated Depreciation: office equipment 36,000 18,000 $ 65,525 Total

50 Minutes, Strong Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Balance sheet accounts: Cash 49 , 100 49 , 100 49 , 100 Consulting fees receivable 23 , 400 (7) 11 , 000 34 , 400 34 , 400 Prepaid office rent 6 , 300 (1) 2 , 100 4 , 200 4 , 200 Prepaid dues and subscriptions 300 (2) 50 250 250 Supplies 600 (3) 150 450 450 Equipment 36 , 000 36 , 000 36 , 000

b. Dec. 31 56 , 700 Income Summar y 56 , 700 31 88 , 300 Insurance Ex p ense 6 , 200 Office Rent Ex p ense 12 , 000 Su pp lies Ex p ense 300 Salary Expense 48,000 Salary Expense 48,000 Salar y Ex p ense 48 , 000 Depreciation Expense: furniture and fixtures 1,200 Depreciation Expense: furniture and fixtures 1,200 De p reciation Ex p ense: furniture and fixtures 1 , 200 Office & Telephone

Dec. 31 250 Accumulated De p reciation: Office E q ui p . 250 31 2 , 500 A g enc y Fees Earne d 2 , 500 31 1,360 in December.Salaries Expense (3) 31 1,360 in December.Salaries Expense (3) 31 1 , 360 in December. Salaries Ex p ense ( 3 ) Salaries Payable 1,360 Salaries Payable 1,360 Salaries Pa y able 1 , 360

15 Minutes, Medium 5.7% 24.1% $833 million $3.45 billion* 24.1% $833 million $3.45 billion* 24.1% $833 million $3.45 billion* $1.8 billion $2.2 billion1.86:12.05:1Current ratio: Current Assets/Current Liabilities End of year: $4.3 billion $2.1 billion Beginning of year: $3.9 billion $2.1 billion End of year: $4.3 billion - $2.1 billion $2.2 billion1.86:12.05:1Current ratio: Current Assets/Current Liabilities End of

Chapter 06 - Merchandising Activities 6 MERCHANDISING ACTIVITIES Chapter Summary The introduction of merchandising provides a rich set of challenges for the student. These range from the problem of how to best account for the acquisition and sale of inventory to the development of accounting information to support the operating decisions of owners and managers. The

Ex 6.1 a. b. c. Disadvantages : The bookstore earns a 6% sales commission, meaning the band receives only 94% of the total proceeds. The band must wait the entire year before the bookstore settles its account. Thus, the band may experience difficulty in paying for the inventory it purchases. Disadvantages : The bookstore

c. Claypool Industry Hardware Average Difference $1,024,900 $1,000,000 $24,900 327,968 250,000 (1) 77,968 32% (2) 25% 7% (1) $1,000,000 sales 25% = $250,000 (2) $327,968 gross profit $1,024,900 net sales = 32%Claypool earned a gross profit rate of 32%, which is significantly higher than the industry average. Claypools sales were

Jan 2 24,250 Accounts Pa y able ( Shar p) 24,250 6 10,000 Sales 10,000 6 6,100 Inventory6,100 Sale on account; terms, 5/10, n/90.Cost of Goods Sold Accounts Receivable (Pace Corporation)To record the cost of merchandise sold to Pace 6 10,000 Sales 10,000 6 6,100 Inventory6,100 Sale on account;

30 Minutes, Strong a. $ 100,000 (50,000) $ 50,000 Gross profitCost of goods sold (50,000) $ 50,000 Gross profitCost of goods sold (50,000) $ 50,000 Gross profit Cost of goods sold b. Cash collections $ - c.d. Inventory125,000 The difference between the $50,000 of gross profit under

Ex. 7.13 a. b.As of December 31, 2015, Wharton Inc. still owns the marketable securities. b.As of December 31, 2015, Wharton Inc. still owns the marketable securities. b. As of December 31, 2015, Wharton Inc. still owns the marketable securities. c. Jan. 4 520,000 Marketable Securities 180,000 Gain on Sale of Investments 340,000 Gain on

20 Minutes, Medium a. Dec 31 50 750 Office Su pp lies 468 Cash 332 b. 31 5,000 Unrealized Holding Gain on Investments 5,000 c. 31 500 Interest Revenue 500 d. 31 22,000 Allowance for Doubtful Accounts 22,000 Uncollectible Accounts Expensecurrent market value ($57,000 -

20 Minutes, Medium Nov 1 30,000 Accounts Receivable (Sampson Co.) 30,000 Dec 31 600 Interest Revenue 600 through December) on Sampson Co. note ($30,000 x 2/12 x 12% = $600).($30,000 x 9/12 x 12% = $2,700, of which $2,100

c. PROBLEM 8.1 A SPORTS WORLD (concluded) No. As shown in part a, the LIFO method resulted in the highest cost of goods sold figure, whereas the FIFO method resulted in the lowest. If the LIFO method is used for tax purposes, income tax regulations require that it also be used for financial

c. PROBLEM 8.1B DOBBINS SUPPLY, INC. (concluded) Yes. As shown in part a, the LIFO method resulted in the highest cost of goods sold figure, whereas the FIFO method resulted in the lowest. If the FIFO method is used for tax purposes, income tax regulations do not require that it also be

Chapter 09 - Plant and Intangible Assets 9 PLANT AND INTANGIBLE ASSETS Chapter Summary The material on plant assets is organized into sections for tangible assets, intangible assets, and natural resources. For all three categories of plant assets the chapter focuses on three accountable events: (1) acquisition, (2) allocation of the acquisition cost to expense over

12,000$ 520 780 2,700 16,000$ InstallationTotal cost to be depreciated 2,700 16,000$ InstallationTotal cost to be depreciated 2,700 16,000$ Installation Total cost to be depreciated Book Value $600 $600 $15,400 800 1,400 14,600 800 2,200 13,800 800 3,000 13,000 Accumulated Book Depreciation Value $800 $800 $15,200 1,520 2,320 13,6801,368 3,688 12,3121,231 4,919 11,081 Accumulated BookDepreciation Value20172018YearDepreciation ExpenseComputation13,680 x 10%(3) 150% Declining-Balance (half-year convention):$12,312

11,000$ 375 550 75 12,000$ Sales taxesInstallation of furnitureTotal cost to be depreciated 550 75 12,000$ Sales taxesInstallation of furnitureTotal cost to be depreciated 550 75 12,000$ Sales taxes Installation of furniture Total cost to be depreciated Book Value $800 $800 $11,200 1,200 2,000 10,0001,200 3,200 8,8001,200 4,400 7,600Accumulated BookDepreciation Value$1,200 $1,200 $10,8002,160 3,360 8,6401,728 5,088 6,912$12,000 x

SUSQUEHANNA EQUIPMENT RENTALS Worksheet December 31, 2015 a. Debit Credit Debit Credit Debit Credit Debit Credit Balance sheet accounts : C ash 65,000 $ 65,000 $ 65,000 $ Accounts receivable 8,400 (f) 1,500 $ 9,900 9,900 Prepaid rent 12,000 (a) 4,000 $ 8,000 8,000 Unexpired insurance 9,600 9,600 9,600 Off ice supplies 1,000 (d)

2 to 3 hours Strong COMPREHENSIVE PROBLEM 2 Music-Is-Us A mini-practice set illustrating numerous aspects of the accounting cycle for a merchandising business organized as a corporation. Students are expected to: (1) prepare a bank reconciliation, (2) make adjusting entriesincluding adjustments related to marketable securities, uncollectible accounts, inventory shrinkage, and depreciation, (3) prepare an

a. 226,000$ 2,500 223,500$ 100,575 122,925 88,095 6,100 4,120 2,750 900 520 102,485 20,440$ 8,190 12,250$ Income before income taxes Net income Depreciation expense: office equipment Insurance expense Office supplies expense Income tax expense Utilities expense 4,120 2,750 900 520 102,485 20,440$ 8,190 12,250$ Income before income taxes Net

COMPREHENSIVE PROBLEM 4 This Comprehensive Problem is to acquaint you with the content of the 2012 financial statements of Home Depot, Inc. , reproduced in Appendix A of this textbook. (The 2012 financial statements are for the fiscal year ended February 3, 2013.) The problem contains three major parts, which are independent of one