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

978-0078025754 Chapter 2 Solution Manual Part 2

March 26, 2020
Exercise 2-14 (30 minutes)
a. Cash ........................................................................... 6,000
Equipment ................................................................. 7,600
Automobiles .............................................................. 12,000
Common Stock .................................................. 25,600
Owner investment in company for stock.
Purchased insurance coverage.
Purchased supplies with cash.
Purchased supplies and equipment on credit.
Received cash from customer for services
provided.
Made payment on payables.
Paid for gas and oil.
Exercise 2-15 (20 minutes)
Calculation of change in equity for part a through part d
Assets
-
Liabilities
=
Beginning of the year ..........
$ 60,000
-
$20,000
=
a. Net income ..........................................................
$ ?
Plus owner investments ....................................
0
b. Net income ..........................................................
$ ?
Plus owner investments ....................................
0
c. Net income ..........................................................
$ ?
Plus owner investment ......................................
55,000
d. Net income ..........................................................
$ ?
Plus owner investment ......................................
35,000
Exercise 2-16 (15 minutes)
HELP TODAY
Income Statement
For Month Ended August 31
Revenues
Consulting fees earned ......................... $ 27,000
Exercise 2-17 (15 minutes)
HELP TODAY
Statement of Retained Earnings
For Month Ended August 31
Retained earnings, July 31 ........................ $ 0
Exercise 2-18 (15 minutes)
HELP TODAY
Balance Sheet
August 31
Assets Liabilities
Cash ............................... $ 25,360 Accounts payable ................ $ 10,500
* Amount from Exercise 2-17.
Exercise 2-19 (15 minutes)
(a)
(b)
(c)
(d)
Answers
$(28,000)
$42,000
$73,000
$(45,000)
Exercise 2-20 (20 minutes)
Description
(1)
Difference
between
Debit and
Credit
Columns
(2)
Column
with the
Larger
Total
(3)
Identify
account(s)
incorrectly
stated
(4)
Amount that account(s)
is overstated or
understated
a.
$3,600 debit to Rent
Expense is posted as
a $1,340 debit.
$2,260
Credit
Rent Expense
Rent Expense is
understated by $2,260
b.
$6,500 credit to Cash
$6,500
Credit
Cash
Cash is understated by
debited to Common
Stock
Dividends
Dividends is
understated by $10,900
d.
$2,050 debit to
Prepaid
Prepaid Insurance is
$38,000 debit to
Machinery
Machinery is
Exercise 2-21 (15 minutes)
a. The debit column is correctly stated because the erroneous debit (to
Accounts Payable) is deducted from an account with a (larger assumed)
Exercise 2-22 (10 minutes)
HEINEKEN N.V.
Balance Sheet (in Euro millions)
December 31, 2013
Assets Equity and liabilities
Exercise 2-23 (15 minutes)
a.
Co.
Liabilities
/
Assets
=
Debt
Ratio
Net
Income
/
Average
Assets
=
ROA
1
$11,765
$ 90,500
0.13
$20,000
$100,000
0.200
PROBLEM SET A
Problem 2-1A (90 minutes)
Part 1
April 1 Cash............................................................. 101 80,000
Office Equipment ........................................ 163 26,000
Common Stock ................................... 307 106,000
Owner invested cash and equipment for stock.
Accounts Payable ............................... 201 11,600
Purchased equip. & supplies on credit.
6 Cash............................................................. 101 4,000
Services Revenue ............................... 403 4,000
Received cash for services.
Paid balance due on account.
19 Prepaid Insurance ...................................... 128 2,400
Cash ..................................................... 101 2,400
Paid premium for insurance.
22 Cash............................................................. 101 4,400
28 Dividends .................................................... 319 5,500
Cash ..................................................... 101 5,500
Paid cash dividends.
29 Office Supplies ........................................... 124 600
Accounts Payable ............................... 201 600
Problem 2-1A (Continued)
Part 2
Cash
Acct. No. 101
Date
Explanation
PR
Credit
April
1
G1
2
G1
9,000
6
G1
Accounts Receivable
Acct. No. 106
Date
Explanation
PR
Credit
April
9
G1
Office Supplies
Acct. No. 124
Date
Explanation
PR
Credit
Prepaid Insurance
Acct. No. 128
Date
Explanation
PR
Credit
Date
Explanation
PR
Credit
April
2
G1
Office Equipment
Acct. No. 163
Date
Explanation
PR
Credit
Problem 2-1A (Continued)
Accounts Payable
Acct. No. 201
Date
Explanation
PR
Credit
Common Stock
Acct. No. 307
Date
Explanation
PR
Credit
April
1
G1
106,000
Dividends
Acct. No. 319
Date
Explanation
PR
Credit
Services Revenue
Acct. No. 403
Date
Explanation
PR
Credit
Utilities Expense
Acct. No. 690
Date
Explanation
PR
Credit
Problem 2-1A (Continued)
Part 3
LINKWORKS
Trial Balance
April 30
Debit Credit
Problem 2-2A (90 minutes)
Part 1
a. Cash............................................................. 101 100,000
Office Equipment ........................................ 163 5,000
Drafting Equipment .................................... 164 60,000
Cash ..................................................... 101 9,500
Notes Payable ..................................... 250 10,500
Purchased equipment with cash and note
payable.
g. Accounts Receivable ................................. 106 14,000
Problem 2-2A (Part 1 Continued)
i. Accounts Receivable ................................. 106 22,000
Engineering Fees Earned .................. 402 22,000
Billed client for completed work.
Cash ..................................................... 101 9,480
Paid cash dividends.
p. Wages Expense .......................................... 601 1,200
Cash ..................................................... 101 1,200
Problem 2-2A (Continued)
Part 2
Cash No. 101
Accounts Payable No. 201
Date
PR
Debit
Credit
Balance
Date
PR
Debit
Credit
Balance
(d)
3,000
35,700
(e)
6,200
41,900
Notes Payable No. 250
(f)
9,500
32,400
Date
PR
Debit
Credit
Balance
(n)
925
36,125
(o)
9,480
26,645
Common Stock No. 307
(p)
1,200
25,445
Date
PR
Debit
Credit
Balance
Accounts Receivable No. 106
Dividends No. 319
Date
PR
Debit
Credit
Balance
Date
PR
Debit
Credit
Balance
(i)
22,000
36,000
(k)
7,000
29,000
Engineering Fees Earned No. 402
Date
PR
Debit
Credit
Balance
Office Equipment No. 163
Wages Expense No. 601
Date
PR
Debit
Credit
Balance
Date
PR
Debit
Credit
Balance
Drafting Equipment No. 164
Equipment Rental Expense No. 602
Date
PR
Debit
Credit
Balance
Date
PR
Debit
Credit
Balance
(f)
20,000
80,000
Building No. 170
Advertising Expense No. 603
Date
PR
Debit
Credit
Balance
Date
PR
Debit
Credit
Balance
Land No. 172
Repairs Expense No. 604
Date
PR
Debit
Credit
Balance
Date
PR
Debit
Credit
Balance
Problem 2-2A (Concluded)
Part 3
ARACEL ENGINEERING
Trial Balance
June 30
Debit Credit
Cash ............................................................. $ 22,945
Accounts receivable .................................. 29,000
Prepaid insurance ...................................... 3,000
Office equipment ........................................ 6,150

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