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

978-0078025754 Chapter 4 Solution Manual Part 5

March 26, 2020
Serial Problem SP 4 (Continued)
Common Stock Acct. No. 307
Date Explanation PR Debit Credit Balance
Retained Earnings Acct. No. 318
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 7,360
Dividends Acct. No. 319
Date Explanation PR Debit Credit Balance
Computer Services Revenue Acct. No. 403
Date Explanation PR Debit Credit Balance
Jan. 11 7,000 7,000
Sales Acct. No. 413
Date Explanation PR Debit Credit Balance
Jan. 13 5,200 5,200
Sales Returns and Allowances Acct. No. 414
Date Explanation PR Debit Credit Balance
Jan. 22 47 47
Cost of Goods Sold Acct. No. 502
Date Explanation PR Debit Credit Balance
Jan. 13 3,560 3,560
Depreciation ExpenseOffice Equipment Acct. No. 612
Date Explanation PR Debit Credit Balance
Depreciation ExpenseComputer 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
Serial Problem SP 4 (Continued)
Computer Supplies Expense Acct. No. 652
Date Explanation PR Debit Credit Balance
Advertising Expense Acct. No. 655
Date Explanation PR Debit Credit Balance
Mileage Expense Acct. No. 676
Date Explanation PR Debit Credit Balance
Miscellaneous Expenses Acct. No. 677
Date Explanation PR Debit Credit Balance
Repairs ExpenseComputer Acct. No. 684
Date Explanation PR Debit Credit Balance
Serial Problem SP 4 (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
106.1
Alexs Engineering Co. ...........
0
106.5
Liu Corporation ......................
0
106.6
Gomez Co. ..............................
0
106.7
Delta Co. ................................
0
Office equipment .................
167
Computer equipment .............
20,000
services revenue .................
307
Common stock .......................
98,000
98,000
318
Retained earnings ..................
7,360
7,360
319
Dividends ...............................
4,800
403
Computer services revenue ..........
25,307
25,307
413
Sales ................................
19,240
19,240
414
Sales returns and allow. ............
500
415
Sales discounts .....................
47
Serial Problem SP 4 (Continued)
Part 4
BUSINESS SOLUTIONS
Income Statement
For Three Months Ended March 31, 2016
Revenues
Computer services revenue ...................................... $25,307
Net sales* .................................................................... 18,693
Total revenues ............................................................ 44,000
Expenses
Cost of goods sold ..................................................... $14,052
Depreciation expenseOffice equipment ............... 400
Part 5
BUSINESS SOLUTIONS
Statement of Retained Earnings
For Three Months Ended March 31, 2016
Retained earnings, Dec. 31, 2015.............................. $ 7,360
Serial Problem SP 4 (Concluded)
Part 6
BUSINESS SOLUTIONS
Balance Sheet
March 31, 2016
Assets
Current assets
Cash ............................................................................. $ 68,057
Accounts receivable* .................................................. 22,867
Plant assets
Office equipment ......................................................... $8,000
Accumulated depreciationOffice equipment ........ (800) 7,200
Liabilities
Reporting in Action BTN 4-1
1. Compute cost of sales for 2013 as follows ($ millions)
September 29, 2012 inventory.............................. $ 791
Plus cost of goods purchased ............................. ?
*($106,606 - $791 + $1,764)
2.
2013
2012
($ millions)
Current
Ratio
Acid-Test
Ratio
Current
Ratio
Acid-Test
Ratio
Current assets
Cash and equivalents ..........
$14,259
$14,259
$10,746
$10,746
Short-term marketable sec ......
26,287
26,287
18,383
18,383
Accounts receivables, net .....
13,102
13,102
10,930
10,930
Interpretation: The current ratio increased from 1.50 in 2012 to 1.68 in
2013. The acid-test ratio increased from 1.04 in 2012 to 1.23 in 2013. The
year-to-year comparison shows that Apple’s liquidity position has
3. Solution depends on the financial statement data obtained.
Comparative Analysis BTN 4-2
1.
Apple
Google
($ millions)
Current
Prior
Current
Prior
Ethics Challenge BTN 4-3
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
system and that her ethical conduct needs an overhaul. The instructor
Ethics Challenge, BTN 4-3 (Concluded)
2. The merchandising company accounts for sales returns using a contra
revenue account called Sales Returns and Allowances. A dress
returned with a sales bill of $200 would be accounted for as follows:
Also, if the item is returned to inventory (and it had cost $160), the
Communicating in Practice BTN 4-4
Note: While responses will vary, the essence of its content follows:
TO: Mr. V. Velakturi
FROM:
DATE:
SUBJECT: Reply to inventory shrinkage question
You are correct in noting that Music Plus has lost inventory as a result of
shoplifting and other forms of shrinkage. However, you will be pleased to
procedures for verifying inventory available have disclosed that the
amount of inventory loss is not abnormally large. Accounting procedures
allow this immaterial shrinkage to be directly charged to cost of goods
sold. This is why you do not see a specific deduction for shrinkage on the
income statement. Instead, the deduction has been taken in the form of
Taking It to the Net BTN 4-5
Fiscal Year ($ thousands)
2012
2013
2014
Net sales ................................
$1,721,750
$2,227,717
$2,428,257
Teamwork in Action BTN 4-6
1.
a. Net sales computation
Sales ............................................................................ $600,000
Less: Sales discounts ............................................. $ 13,000
Sales returns and allowances ...................... 20,000 33,000
Net sales ..................................................................... $567,000
Teamwork in Action (Concluded)
e. Net income computation
Gross profit from sales (from d) ............................... $191,000
3. The inventory account balance is $84,000. If actual (physical) inventory
is $76,000, an $8,000 loss from inventory shrinkage occurred. This
Entrepreneurial Decision BTN 4-7
1.
Sseko Designs
Forecasted Income Statement
For Year Ended January 31, 2015
Net sales ($1,000,000 x 1.09) .............................................. $1,090,000
2. The proposal yields a forecasted net income of $213,100. This compares
3. There are many issues that should be considered. Among them are:
First, there is the issue of the prediction itself. That is, are estimates
reasonable or could reality be markedly different from these estimates?
Second, and related to the first, there is a need to consider “ranges” of
before payments are overdue. This may motivate customers to pay
Hitting the Road BTN 4-8
1.
(in millions)
Samsung*
Apple
Google
Net sales ................................
228,692,667
$170,910
$59,825
Gross Margin %
Rank
Google .....................................
56.8%
1
2. Samsung, Apple and Google each use the multiple-step format for their
income statements. Google’s income statement is a mix between

Subscribe Now

Sign up to view full document

View Document