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

978-0078025754 Chapter 2 Solution Manual Part 5

March 26, 2020
Serial Problem, Business Solutions (Continued)
28 Accounts Receivable ............................. 106 5,208
Computer Services Revenue ......... 403 5,208
Billed customer for services.
31 Wages Expense ....................................... 623 875
Nov. 1 Mileage Expense ..................................... 676 320
Cash ................................................. 101 320
Reimbursed Rey for mileage.
2 Cash .......................................................... 101 4,633
Computer Services Revenue .......... 403 4,633
Computer Services Revenue ......... 403 5,668
Billed customer for services.
13 No entry necessary. (No revenue recognized until work performed.)
18 Cash .......................................................... 101 2,208
Accounts Receivable ....................... 106 2,208
Computer Services Revenue .......... 403 3,950
Billed customer for services.
25 No entry necessary.
28 Mileage Expense ..................................... 676 384
Cash .................................................. 101 384
Cash .................................................. 101 2,000
Paid cash for dividends.
Serial Problem, Business Solutions (Continued)
Part 2
General Ledger accounts
Cash Acct. No. 101
15 4,800 42,860
17 805 42,055
20 1,728 40,327
22 1,400 41,727
31 875 40,852
Accounts Receivable Acct. No.106
28 5,208 5,208
Nov. 8 5,668 10,876
18 2,208 8,668
24 3,950 12,618
Computer Supplies Acct. No. 126
Serial Problem, Business Solutions (Continued)
Prepaid Insurance Acct. No. 128
Date
Explanation
PR
Debit
Balance
Oct. 5 2,220 2,220
Prepaid Rent Acct. No. 131
Date
Explanation
PR
Debit
Balance
Office Equipment Acct. No. 163
Date
Explanation
PR
Debit
Balance
Computer Equipment Acct. No. 167
Date
Explanation
PR
Debit
Balance
Accounts Payable Acct. No. 201
Date
Explanation
PR
Debit
Balance
Common Stock Acct. No. 307
Date
Explanation
PR
Debit
Balance
Dividends Acct. No. 319
Date
Explanation
PR
Debit
Balance
Serial Problem, Business Solutions (Concluded)
Computer Services Revenue Acct. No. 403
Date
Explanation
PR
Debit
Balance
Oct. 6 4,800 4,800
Wages Expense Acct. No. 623
Date
Explanation
PR
Debit
Balance
Advertising Expense Acct. No. 655
Date
Explanation
PR
Debit
Balance
Mileage Expense Acct. No. 676
Date
Explanation
PR
Debit
Balance
Miscellaneous Expenses Acct. No. 677
Date
Explanation
PR
Debit
Balance
Repairs ExpenseComputer Acct. No. 684
Date
Explanation
PR
Debit
Balance
Serial Problem, Business Solutions (Continued)
Part 3
BUSINESS SOLUTIONS
Trial Balance
November 30
Debit Credit
Cash .................................................................. $38,264
Accounts receivable ....................................... 12,618
Accounts payable ............................................ $ 0
Common stock ................................................ 73,000
Dividends ......................................................... 5,600
Computer services revenue ........................... 25,659
Wages expense ............................................... 2,625
Reporting in Action BTN 2-1
1. Apple reports ($ millions):
2. Apple reports ($ millions):
3. ($ millions):
4. Apple employed more financial leverage as of September 28, 2013, when
40.3% of its assets were financed by debt, relative to September 29,
5. Solution depends on the financial statements accessed.
Comparative Analysis BTN 2-2
1. Apple ($ millions)
2. Google ($ millions)
3. Apple has the higher degree of financial leverage. Apple’s debt ratio is
markedly higher for the current year than that of Google (40.3% vs.
Ethics Challenge BTN 2-3
This case involves a conflict between the need for efficiency and the need
for control. While it makes sense to take and process lunch orders quickly,
deciding whether to accept the assistant manager’s instructions, suggest
and the assistant manager is such that you feel you can do so, you should
explain your understanding of how the shortcut could lead to the problems
of inaccurate records for tax purposes, gathering inaccurate marketing
information, and abuse by other employees who might not be as honest as
you and the assistant manager.
manager is committing fraud, you should report the situation to the head
manager as quickly as possible.
Communicating in Practice BTN 2-4
MEMORANDUM
To: Lila Corentine
From:
Subject: Financial statements explanation
Date:
The four major financial statements and their purposes are:
Income statement describes a company’s revenues and expenses along
on the balance sheet changed from the beginning to the end of a period.
statement of cash flows report on performance over a period of time. These
three statements link balance sheets from the beginning to the end of a
Taking It to the Net BTN 2-5
1. The prior three years’ net income or (loss) for Amazon are ($ millions):
3. In 2013, Amazon had net income of $274 million and operating cash
flows of $5,475 million; and, in that same year, total net cash increased
Teamwork in Action BTN 2-6
<Instructor note: There is no specific solution to this activity.>
The following sample solution gives a summary outline of what a minimum report
needs to include. Assume a team member selects assets:
Category: Assets
a. Increases (decreases) in assets are debits (credits) to asset accounts.
Entrepreneurial Decision BTN 2-7
There are several issues that this entrepreneurial owner should consider.
Those considerations include the following three issues (among others):
If she chooses to contribute her own funds for the expansion, she will be
risking her own money, but she will not have the expense of interest
Entrepreneurial Decision BTN 2-8
1.
MARTIN MUSIC SERVICES
Balance Sheet
December 31, 2015
*Ending balance is used per instructions.
3. The prospects of a bank loan are likely to be good. (i) The debt ratio
indicates that 78% of the company’s funding is from equity. Also, there
are no debt obligations requiring periodic payments. This implies low
Hitting the Road BTN 2-9
Findings will vary. It is advisable that the instructor obtain a few classified
sections from newspapers that were published over the period of the
assignment. If student reports lack responses for question 2, it is
informative and motivating to bring these (accounting-related job
opportunities) sections to class when discussing or returning student
reports as many students are not accounting majors.
Global Decision BTN 2-10
1. An analysis of return on assets suggests that Apple (19.3%) yields the
2. An analysis of the debt ratio suggests that Apple (at 40.3%) presents the
greatest risk, followed by Samsung (29.9%) and then Google (21.3%)
3. In this case, there is no clear answer based on these two ratios alone.
Apple has a relatively higher return on assets but also the highest debt
ratio. Google has the lowest return (slightly lower return on assets

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