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Serial Problem — SP 5 (Continued)
S. Rey, Capital Acct. No. 301
Date Explanation PR Debit Credit Balance
105,360
S. Rey, Withdrawals Acct. No. 302
Date Explanation PR Debit Credit Balance
Feb. 15 4,800 4,800
Computer Services Revenue Acct. No. 403
Date Explanation PR Debit Credit Balance
Sales Acct. No. 413
Date Explanation PR Debit Credit Balance
Jan. 13 5,200 5,200
26 5,800 11,000
19,240
Sales Returns and Allowances Acct. No. 414
Date Explanation PR Debit Credit Balance
Jan. 20 500 500
Serial Problem — SP 5 (Continued)
Sales Discounts Acct. No. 415
5-1
Education.
Cost of Goods Sold Acct. No. 502
Date Explanation PR Debit Credit Balance
Jan. 13 3,560 3,560
Depreciation Expense—Office Equipment Acct. No. 612
Date Explanation PR Debit Credit Balance
Depreciation Expense—Computer Equipment Acct. No. 613
Date Explanation PR Debit Credit Balance
Wages Expense Acct. No. 623
Date Explanation PR Debit Credit Balance
Insurance Expense Acct. No. 637
Date Explanation PR Debit Credit Balance
Rent Expense Acct. No. 640
Date Explanation PR Debit Credit Balance
5-2
Serial Problem — SP 5 (Continued)
Computer Supplies Expense Acct. No. 652
Date Explanation PR Debit Credit Balance
Advertising Expense Acct. No. 655
Date Explanation PR Debit Credit Balance
Feb. 5 600 600
Mileage Expense Acct. No. 676
Serial Problem — SP 5 (Continued) Part 3
BUSINESS SOLUTIONS
Partial Work Sheet
March 31, 2016
Acct.
No. Account Title
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
101 Cash........................................
68,057 68,057
106.1 Alex’s Engineering Co............. 0 0
106.2 Wildcat Services.....................
2,800 2,800
106.3 Easy Leasing..........................
9,047 9,047
106.4 IMF Co.....................................
5,220 5,220
106.5 Liu Corporation...................... 0 0
106.6 Gomez Co............................... 0 0
163 Office equipment....................
8,000 8,000
5-3
164 Accumulated depreciation–
Office equipment.................
400 (f) 400 800
167 Computer equipment.............
20,000 20,000
413 Sales........................................ 19,240 19,240
414 Sales returns and allow.............
500 500
415 Sales discounts...................... 47 47
502 Cost of goods sold.................
13,910 (g) 142 14,052
612 Depreciation expense–
Office equipment................. 0(f) 400 400
613 Depreciation expense–
Computer equipment.......... 0(e) 1,250 1,250
5-4
Serial Problem — SP 5 (Continued)
Part 4
BUSINESS SOLUTIONS
Income Statement
For Three Months Ended March 31, 2016
Revenues
Wages expense........................................................... 3,250
Insurance expense..................................................... 555
Rent expense.............................................................. 2,475
Computer supplies expense...................................... 1,305
Advertising expense.................................................. 600
Mileage expense......................................................... 320
* Net sales = $19,240 - $500 - $47 = $18,693
Part 5
BUSINESS SOLUTIONS
Statement of Owner’s Equity
For Three Months Ended March 31, 2016
124,193
Less: Withdrawals by owner..................................... 4 ,800
5-5
Education.
Serial Problem — SP 5 (Concluded)
Part 6
BUSINESS SOLUTIONS
Balance Sheet
March 31, 2016
Assets
Current assets
Prepaid insurance....................................................... 1,110
Prepaid rent................................................................. 825
Total current assets.................................................... 95,568
Plant assets
Office equipment......................................................... $8,000
Accumulated depreciation—Office equipment........ (800) 7,200
Computer equipment.................................................. 20,000
Liabilities
Current liabilities
Wages payable............................................................ $ 875
Equity
5-6
Reporting in Action — BTN 5-1
1. Compute cost of sales for 2013 as follows ($ millions)
September 29, 2012 inventory.............................. $ 791
Plus cost of goods purchased.............................. ?
2.
2013 2012
($ millions)
Current
Ratio
Acid-Test
Ratio
Current
Ratio
Acid-Test
Ratio
Current assets
Cash and equivalents.......... $14,259 $14,259 $10,746 $10,746
Short-term marketable sec...... 26,287 26,287 18,383 18,383
Accounts receivables, net...... 13,102 13,102 10,930 10,930
Inventories, net..................... 1,764 791
Deferred tax assets.............. 3,453 2,583
Ratio........................................ 1.68 1.23 1.50 1.04
Interpretation: The current ratio increased from 1.50 in 2012 to 1.68 in
2013. The acid-test ratio increased from 1.04 in 2012 to 1.23 in 2013. The
year-to-year comparison shows that Apple’s liquidity position has
3. Solution depends on the financial statement data obtained.
5-7
Comparative Analysis — BTN 5-2
1.
Apple Google
($ millions) Current Prior Current Prior
Net sales................... $170,910 $156,508 $59,825 $50,175
2. In both years, Google’s gross margin ratio was higher than that for
3. Apple’s gross margin ratio declined from 43.9% to 37.6% and Google’s
gross margin ratio declined from 58.9% to 56.8%.
Ethics Challenge — BTN 5-3
1. A few students sometimes feel that Amy has devised a clever way to
beat the system. She appears to be succeeding in getting something for
free. However, most students fortunately feel that Amy is abusing the
5-8
