Chapter 02 – Accounting System and Financial Statements
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 (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
2
46,720
64,000
0.73
3,800
40,000
0.095
3
26,650
32,500
0.82
650
50,000
0.013
4
55,860
147,000
0.38
21,000
200,000
0.105
5
31,280
92,000
0.34
7,520
40,000
0.188
6
52,250
104,500
0.50
12,000
80,000
0.150
Exercise 2-23 (10 minutes)
BMW
Balance Sheet (in Euro millions)
December 31, 2011
Chapter 02 – Accounting System and Financial Statements
PROBLEM SET A
Problem 2-1A (90 minutes)
Part 1
a. Cash……………………………………………………. 101 100,000
Office Equipment …………………………………. 163 5,000
Drafting Equipment ……………………………… 164 60,000
Common Stock …………………………….. 307 165,000
Purchased 18-month insurance policy.
e. Cash……………………………………………………. 101 6,200
Engineering Fees Earned ……………… 402 6,200
Collected cash for completed work.
f. Drafting Equipment ……………………………… 164 20,000
Problem 2-1A (Part 1 Continued)
i. Accounts Receivable …………………………... 106 22,000
Engineering Fees Earned ……………… 402 22,000
Billed client for completed work.
j. Equipment Rental Expense ………………….. 602 1,333
Problem 2-1A (Concluded)
Part 3
ARACEL ENGINEERING
Trial Balance
June 30
Debit Credit
Cash ……………………………………………………. $ 22,945
Problem 2-2A (Continued)
Part 2
Cash
Acct. No. 101
Date
Explanation
PR
Debit
Credit
Balance
Mar.
1
G1
150,000
150,000
2
G1
6,000
144,000
6
G1
4,000
148,000
12
G1
4,200
143,800
19
G1
5,000
138,800
22
G1
3,500
142,300
29
G1
5,100
137,200
31
G1
500
136,700
Accounts Receivable
Acct. No. 106
Date
Explanation
PR
Debit
Credit
Balance
Mar.
9
G1
7,500
7,500
22
G1
3,500
4,000
25
G1
3,820
7,820
Office Supplies
Acct. No. 124
Date
Explanation
PR
Debit
Credit
Balance
Mar.
3
G1
1,200
1,200
30
G1
600
1,800
Prepaid Insurance
Acct. No. 128
Date
Explanation
PR
Debit
Credit
Balance
Mar.
19
G1
5,000
5,000
Prepaid Rent
Acct. No. 131
Date
Explanation
PR
Debit
Credit
Balance
Mar.
2
G1
6,000
6,000
Office Equipment
Acct. No. 163
Date
Explanation
PR
Debit
Credit
Balance
Mar.
1
G1
22,000
22,000
3
G1
3,000
25,000
Problem 2-2A (Concluded)
Part 3
VENTURE CONSULTANTS
Trial Balance
March 31
Debit Credit