Type
Solution Manual
Book Title
Financial Accounting Fundamentals 5th Edition
ISBN 13
978-0078025754

978-0078025754 Chapter 1 Solution Manual Part 2

March 26, 2020
Exercise 1-14 (10 minutes)
Return on assets
=
Net income / Average total assets
Exercise 1-15 (15 minutes)
ERNST CONSULTING
Income Statement
For Month Ended October 31
Revenues
Consulting fees earned ...................... $14,000
Exercise 1-16 (15 minutes)
ERNST CONSULTING
Statement of Retained Earnings
For Month Ended October 31
Retained earnings, October 1 ......................... $ 0
Exercise 1-17 (15 minutes)
ERNST CONSULTING
Balance Sheet
October 31
Assets Liabilities
Cash ............................... $11,360 Accounts payable ................. $ 8,500
* For the computation of this amount see Exercise 1-16.
Exercise 1-18 (15 minutes)
ERNST CONSULTING
Statement of Cash Flows
For Month Ended October 31
Exercise 1-19 (10 minutes)
I 1. Cash purchase of equipment O 5. Cash paid on an account payable
Exercise 1-20 (20 minutes)
BMW GROUP
Income Statement
For Year Ended December 31, 2013
(Euros in millions)
Revenues ...................................................................... 68,821
Expenses
Exercise 1-21B (10 minutes)
a. Financing*
b. Financing
PROBLEM SET A
Problem 1-1A (25 minutes)
Balance Sheet
Income
Statement
Statement of
Cash Flows
Transaction
Total
Liab.
Total
Equity
Net
Income
Operating
Activities
Investing
Activities
Financing
Activities
1
Owner invests
cash for its stock
+
+
Problem 1-2A (40 minutes)
Part 1
Company A
(a) Equity on December 31, 2014:
Assets .......................................................... $55,000
Liabilities ..................................................... (24,500)
Part 2
Company B
(a) and (b)
Equity: 12/31/2014 12/31/2015
(c) Net income for 2015:
Equity, December 31, 2014 ..................... $12,500
Problem 1-2A (Continued)
Part 3
Company C
First, calculate the beginning balance of equity:
Dec. 31, 2014
Next, find the ending balance of equity by completing this table:
Equity, December 31, 2014 ........................ $15,000
Finally, find the ending amount of assets by adding the ending balance of
equity to the ending balance of liabilities:
Dec. 31, 2015
Part 4
Company D
First, calculate the beginning and ending equity balances:
12/31/2014 12/31/2015
Then, find the amount of investment by owner during 2015:
Equity, December 31, 2014 .......................... $20,000
Plus stock issuances ................................... ?
Problem 1-2A (Concluded)
Part 5
Company E
First, compute the balance of equity as of December 31, 2015:
Assets .......................................................... $113,000
Problem 1-3A (15 minutes)
Armani Company
Balance Sheet
December 31, 2015
Problem 1-4A (15 minutes)
Edison Energy Company
Income Statement
For Year Ended December 31, 2015
Problem 1-5A (15 minutes)
Kojo Company
Statement of Retained Earnings
For Year Ended December 31, 2015
Problem 1-6A (15 minutes)
Kia Company
Statement of Cash Flows
For Year Ended December 31, 2015
Cash from operating activities ........................ $ 6,000
©2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,
duplicated, forwarded, distributed, or posted on a website, in whole or part.
Solutions Manual, Chapter 1
25
Problem 1-7A (60 minutes) Parts 1 and 2
Assets = Liabilities + Equity
Date
Cash
+
Accounts
Receivable
+
Office
Equipment
=
Accounts
Payable
+
Common
Stock
-
Dividends
+
Revenues
-
Expenses
May
1
+$40,000
=
+
$40,000
1
- 2,200
=
-
$2,200
Problem 1-7A (Continued)
Part 3
The Gram Co.
Income Statement
For Month Ended May 31
Revenues
Consulting services revenue ............ $11,100
Expenses
Rent expense ....................................... $2,200
Salaries expense ................................. 1,500
The Gram Co.
Statement of Retained Earnings
For Month Ended May 31
The Gram Co.
Balance Sheet
May 31
Assets Liabilities
Cash ...............................$42,780 Accounts payable ........................ $ 80
Office equipment .......... 1,890 Equity
Problem 1-7A (Concluded)
Part 3continued
The Gram Co.
Statement of Cash Flows
For Month Ended May 31
Cash flows from operating activities
Cash received from customers ................................
$11,100
Cash paid for rent ......................................................
(2,200)
©2015 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,
duplicated, forwarded, distributed, or posted on a website, in whole or part.
Financial Accounting Fundamentals, 5th Edition
28
Problem 1-8A (60 minutes) Parts 1 and 2
Assets
=
Liabilities
+
Equity
Cash
+
Accounts
Receivable
+
Office
Supplies
+
Office
Equipment
+
Building
=
Accounts
Payable
+
Notes
Payable
+
Common
Stock
-
Dividends
+
Reve-
nues
-
Expen-
ses
a.
+$70,000
+
$10,000
+
$80,000
b.
- 20,000
+
$150,000
+
$130,000
Bal.
50,000
+
10,000
+
150,000
=
+
130,000
+
80,000
c.
- 15,000
+
15,000
Bal.
35,000
+
25,000
+
150,000
=
+
130,000
+
80,000
d.
+
$1,200
+
1,700
+ $2,900
Bal.
35,000
+
1,200
+
26,700
+
150,000
=
2,900
+
130,000
+
80,000
Problem 1-8A (Concluded)
Part 3
Biz Consulting’s net income = $6,800 - $2,300 = $4,500
©2015 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,
duplicated, forwarded, distributed, or posted on a website, in whole or part.
Financial Accounting Fundamentals, 5th Edition
30
Problem 1-9A (60 minutes) Parts 1 and 2
Assets
=
Liabilities
+
Equity
Date
Cash
+
Accounts
Receivable
+
Office
Supplies
+
Office
Equipment
+
Electrical
Equipment
=
Accounts
Payable
+
Common
Stock
-
Dividends
+
Revenues
-
Expenses
Dec.
1
+$65,000
=
+
$65,000
2
- 1,000
-
$1,000
Bal.
64,000
=
65,000
-
1,000
3
- 4,800
+
$13,000
+ $8,200
Bal.
59,200
+
13,000
=
8,200
+
65,000
-
1,000
5
- 800
+
$ 800
Bal.
58,400
+
800
+
13,000
=
8,200
+
65,000
-
1,000
Bal.
59,600
+
5,000
+
800
+
2,530
+
13,000
=
10,730
+
65,000
+
6,200
-
1,000
18
+
350
+ 350
Bal.
59,600
+
5,000
+
1,150
+
2,530
+
13,000
=
11,080
+
65,000
+
6,200
-
1,000
20
- 2,530
- 2,530
29
- 1,400
-
1,400
Bal.
60,670
+
900
+
1,150
+
2,530
+
13,000
=
8,550
+
65,000
+
7,100
-
2,400
30
- 540
-
540

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