978-0078025907 Chapter 7 Solution Manual Part 4

subject Type Homework Help
subject Pages 14
subject Words 1350
subject Textbook Fundamental Financial Accounting Concepts 9th Edition
subject Authors Christopher Edmonds, Frances Mcnair, Philip Olds, Thomas Edmonds
search this document

Unlock document.

This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
page-pf1
7-66
PROBLEM 7-20A b. (cont.)
Roth, Inc.
Statement of Cash Flows
For the Year Ended 2016
Cash Flows From Operating Activities:
Inflow from Customers
$236,000
Outflow for Inventory
(118,000)
Outflow for Expenses1
(78,000)
Net Cash Flow from Operating Activities
$40,000
Cash Flows From Investing Activities
-0-
Cash Flows From Financing Activities:
Inflow from Stock Issued
$ 50,000
Net Cash Flow from Financing Activities
50,000
Net Change in Cash
90,000
Plus: Beginning Cash Balance
-0-
Ending Cash Balance
$90,000
1Salaries Paid $50,000
Other Operating Expenses 28,000
Outflow for Expenses $78,000
c. Net Realizable Value:
Accounts Receivable $14,000
Less: Allowance for Doubtful Accounts (570)
Net Realizable Value $13,430
page-pf2
7-67
PROBLEM 7-21A
a.
No.
Assets
=
Liabilities
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
2016
1.
+
NA
+
NA
NA
NA
+ FA
2.
+−
NA
NA
NA
NA
NA
− OA
3a.
+
NA
+
+
NA
+
+ OA
3b.
+
NA
+
+
+
+
NA
3c.
+
NA
+
+
NA
+
NA
3d.
−
NA
−
NA
+
−
NA
4.
+−
NA
NA
NA
NA
NA
+ OA
5.
+−
NA
NA
NA
NA
NA
+ OA
6.
−
NA
−
NA
+
−
− OA
7.
−
NA
−
NA
+
−
NA
Legend:
3a. Cash Sales
page-pf3
7-68
PROBLEM 7-21A (cont.)
b.
Northwest Sales
General Journal, 2016
Date
Account Titles
Debit
Credit
1.
Cash
200,000
Common Stock
200,000
2.
Merchandise Inventory
900,000
Cash
900,000
3a.
Cash
520,000
Sales Revenue
520,000
3b.
Accounts Receivable - Credit Card Co.
364,800
Credit Card Expense ($380,000 x 4%)
15,200
Sales Revenue
380,000
3c.
Accounts Receivable
300,000
Sales Revenue
300,000
3d.
Cost of Goods Sold
710,000
Merchandise Inventory
710,000
4.
Cash
364,800
Accts Receivable - Credit Card Co.
364,800
5.
Cash
210,000
Accounts Receivable
210,000
6.
Selling and Administrative Expense
190,000
Cash
190,000
7.
Uncollectible Accounts Expense*
4,500
Allowance for Doubtful Accounts
4,500
page-pf4
7-69
PROBLEM 7-21A b. (cont.)
Northwest Sales
T-Accounts
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Common Stock
1. 200,000
2. 900,000
1. 200,000
3a. 520,000
6. 190,000
Bal. 200,000
4. 364,800
5. 210,000
Sales Revenue
Bal. 204,800
3a. 520,000
3b. 380,000
Accounts Receivable
3c. 300,000
3c. 300,000
5. 210,000
Bal. 1,200,000
Bal. 90,000
Cost of Goods Sold
Accts Rec. Credit Card
3d. 710,000
3b. 364,800
4. 364,800
Bal. 710,000
Bal. -0-
Credit Card Expense
Allow. for Doubt. Accts.
3b. 15,200
7. 4,500
Bal. 15,200
Bal. 4,500
Selling & Adm. Expenses
Merchandise Inventory
6. 190,000
2. 900,000
3d. 710,000
Bal. 190,000
Bal. 190,000
Uncoll. Accts. Expense
7. 4,500
Bal. 4,500
page-pf5
7-70
PROBLEM 7-21A (cont.)
c.
Northwest Sales
Financial Statements
For the Year Ended 2016
Income Statement
Sales Revenue
$1,200,000
Cost of Goods Sold
(710,000)
Gross Margin
490,000
Operating Expenses
Credit Card Expense
$ 15,200
Selling & Adm. Expenses
190,000
Uncoll. Accts. Expense
4,500
Total Operating Expenses
(209,700)
Net Income
$ 280,300
Statement of Changes in Stockholders’ Equity
Beginning Common Stock
$ -0-
Plus: Stock Issued
200,000
Ending Common Stock
$ 200,000
Beginning Retained Earnings
$ -0-
Plus: Net Income
280,300
Ending Retained Earnings
280,300
Total Stockholders’ Equity
$480,300
page-pf6
7-71
PROBLEM 7-21A c. (cont.)
Northwest Sales
Balance Sheet
As of December 31, 2016
Assets
Cash
$204,800
Accounts Receivable
$90,000
Less: Allowance for Doubtful Accts.
(4,500)
85,500
Merchandise Inventory
190,000
Total Assets
$480,300
Liabilities
$ -0-
Stockholders’ Equity
Common Stock
$200,000
Retained Earnings
280,300
Total Stockholders’ Equity
480,300
Total Liabilities and Stockholders’ Equity
$480,300
page-pf7
7-72
PROBLEM 7-21A c. (cont.)
Northwest Sales
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash Flows From Operating Activities:
Inflow from Customers1
$1,094,800
Outflow for Inventory
(900,000)
Outflow for Expenses
(190,000)
Net Cash Flow from Operating Activities
$ 4,800
Cash Flows From Investing Activities
-0-
Cash Flows From Financing Activities:
Inflow from Stock Issue
$ 200,000
Net Cash Flow from Financing Activities
200,000
Net Change in Cash
204,800
Plus: Beginning Cash Balance
-0-
Ending Cash Balance
$204,800
page-pf8
7-73
PROBLEM 7-22A
a.
Hooper Company
General Journal, 2016
Date
Account Titles
Debit
Credit
1.
Cash
60,000
Common Stock
60,000
2.
Accounts Receivable
90,000
Service Revenue
90,000
3.
Cash
78,000
Accounts Receivable
78,000
4.
Notes Receivable
20,000
Cash
20,000
5.
Salaries Expense
26,000
Cash
26,000
6.
Dividends
2,000
Cash
2,000
7.
Interest Receivable
100
Interest Revenue
100
8.
Uncollectible Accounts Expense
920
Accounts Receivable
920
page-pf9
7-74
PROBLEM 7-22A (cont.)
b.
Hooper Co.
T-Accounts
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Common Stock
1. 60,000
1. 60,000
3. 78,000
4. 20,000
Bal. 60,000
5. 26,000
6. 2,000
Dividends
Bal. 90,000
6. 2,000
Bal. 2,000
Accounts Receivable
2. 90,000
3. 78,000
Service Revenue
8. 920
2. 90,000
Bal. 11,080
Bal. 90,000
Notes Receivable
Salaries Expense
4. 20,000
5. 26,000
Bal. 20,000
Bal. 26,000
Interest Receivable
Uncollectible Accts. Expense
7. 100
8. 920
Bal. 100
Bal. 920
Interest Revenue
7. 100
Bal. 100
page-pfa
7-75
PROBLEM 7-22A (cont.)
c.
Hooper Co.
Financial Statements
For the Year Ended 2016
Income Statement
Service Revenue
$90,000
Operating Expenses
Salaries Expense
$26,000
Uncoll. Accounts Expense
920
Total Operating Expenses
(26,920)
Net Operating Income
63,080
Non-Operating Items
Interest Revenue
100
Net Income
$63,180
page-pfb
7-76
PROBLEM 7-22A c. (cont.)
Hooper Co.
Balance Sheet
As of the End of the Year 2016
Assets
Cash
$ 90,000
Accounts Receivable
11,080
Notes Receivable
20,000
Interest Receivable
100
Total Assets
$121,180
Liabilities
$ -0-
Stockholders’ Equity
Common Stock
$60,000
Retained Earnings
61,180
Total Stockholders’ Equity
121,180
Total Liabilities and Stockholders’ Equity
$121,180
page-pfc
7-77
PROBLEM 7-22A c. (cont.)
Hooper Co.
Statement of Cash Flows
For the Year Ended 2016
Cash Flows From Operating Activities:
Inflow from Customers
$78,000
Outflow for Expenses
(26,000)
Net Cash Flow from Operating Activities
$52,000
Cash Flows From Investing Activities:
Outflow for Note Receivable
(20,000)
Cash Flows From Financing Activities:
Inflow from Stock Issued
$60,000
Outflow for Dividends
(2,000)
Net Cash Flow from Financing Activities
58,000
Net Change in Cash
90,000
Plus: Beginning Cash Balance
-0-
Ending Cash Balance
$90,000
page-pfd
7-78
PROBLEM 7-22A (cont.)
d. NC = Net Change in Cash
Hooper Co. Horizontal Statement Model
Balance Sheet
Income Statement
Statement of
Event
Assets
=
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
Cash
+
Accts.
Rec.
+
Notes
Rec.
+
Int.
Rec.
=
Com.
Stock
+
Ret.
Earn.
1.
60,000
NA
NA
NA
60,000
NA
NA
NA
NA
60,000 FA
2.
NA
90,000
NA
NA
NA
90,000
90,000
NA
90,000
NA
3.
78,000
(78,000)
NA
NA
NA
NA
NA
NA
NA
78,000 OA
4.
(20,000)
NA
20,000
NA
NA
NA
NA
NA
NA
(20,000) IA
5.
(26,000)
NA
NA
NA
NA
(26,000)
NA
26,000
(26,000)
(26,000) OA
6.
(2,000)
NA
NA
NA
NA
(2,000)
NA
NA
NA
(2,000) FA
7.
NA
NA
NA
100
NA
100
100
NA
100
NA
8.
NA
(920)
NA
NA
NA
(920)
NA
920
(920)
NA
Tot.
90,000
+
11,080
+
20,000
+
100
=
60,000
+
61,180
90,100
−
26,920
=
63,180
90,000 NC
page-pfe
7-79
PROBLEM 7-23A
Event
Type of
Event
Assets
Liabilities
Common
Stock
Retained
Earnings
Net
Income
Statement
of
Cash Flows
a.
AS
+
NA
NA
+
+
NA
b.
AU
−
NA
NA
−
−
NA
c.
AS
+
NA
NA
+
+
NA
d.
AE
+−
NA
NA
NA
NA
+
e.
AE
+−
NA
NA
NA
NA
−
f1.*
AS
+
NA
NA
+
+
NA
f2.
AU
−
NA
NA
−
−
NA
g.
AS
+
NA
NA
+
+
+
h.
AU
−
NA
NA
−
−
−
i.
AU
−
NA
NA
−
−
−
j.
AS
+
NA
NA
+
+
+
k.
AU
−
−
NA
NA
NA
−
l.
AE
+/−
NA
NA
NA
NA
−
m.
AE
+−
NA
NA
NA
NA
+
n.
AE
+−
NA
NA
NA
NA
+
*f1. recognizes sales revenue; f2. recognizes cost of goods sold.
page-pff
7-80
PROBLEM 7-24A
Sherman Equipment Co.
Income Statement
For the Year Ending December 31, 2016
Sales Revenue
$320,000
Cost of Goods Sold
(148,000)
Gross Margin
172,000
Operating Expenses
Salaries Expense
$69,000
Operating Expenses
62,000
Uncollectible Accounts Expense
8,100
Total Operating Expenses
(139,100)
Operating Income
32,900
Non-Operating Items
Interest Revenue
5,400
Net Income
$ 38,300
page-pf10
7-81
PROBLEM 7-24A (cont.)
Sherman Equipment Co.
Balance Sheet
As of December 31, 2016
Assets
Assets
Cash
$ 48,100
Accounts Receivable
$56,000
Less: Allow. for Doubtful Accounts
(7,800)
48,200
Inventory
98,300
Interest Receivable
1,500
Prepaid Rent
12,500
Supplies
1,200
Notes Receivable
24,000
Land
40,000
Total Assets
$273,800
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts Payable
$ 46,000
Salaries Payable
12,000
Total Liabilities
$ 58,000
Stockholders’ Equity
Common Stock
$100,000
Retained Earnings*
115,800
Total Stockholders’ Equity
215,800
Total Liabilities and Stockholders’ Equity
$273,800
*Must be computed: $81,000, Beg. Retained Earnings + $38,300, Net Income − $3,500,
Dividends= $115,800, Ending Retained Earnings
page-pf11
PROBLEM 7-25A
a. T-Accounts provided for the use of the instructor.
Accounts Receivable
Bal. 36,000
Chg. Sales 190,000
Write-offs 1,450
Coll 190,550
End. Bal. 34,000
page-pf12
7-83
PROBLEM 7-26A
a.
Tile, Etc., Inc.
General Journal
Event
Account Titles
Debit
Credit
1.
Merchandise Inventory
580,000
Accounts Payable
580,000
2a.
Accounts Receivable
890,000
Sales Revenue
890,000
2b.
Cost of Goods Sold
420,000
Merchandise Inventory
420,000
3a.
Cash
245,000
Sales Revenue
245,000
3b.
Cost of Goods Sold
160,000
Merchandise Inventory
160,000
4a.
Accounts Receivable
182,400
Credit Card Expense ($190,000 x 4%)
7,600
Sales Revenue
190,000
4b.
Cost of Goods Sold
96,000
Merchandise Inventory
96,000
5.
Cash
620,000
Accounts Receivable
620,000
6.
Accounts Payable
610,000
Cash
610,000
7.
Selling and Administrative Expenses
145,000
Cash
145,000
8.
Cash
182,400
Accounts Receivable
182,400
page-pf13
7-84
PROBLEM 7-26A a. (cont.)
Tile, Etc., Inc.
General Journal
Event
Account Titles
Debit
Credit
9.
Notes Receivable
60,000
Cash
60,000
10.
Allowance for Doubtful Accounts
7,500
Accounts Receivable
7,500
Adjusting Entries
11a.
Uncollectible Accounts Expense1
8,900
Allowance for Doubtful Accounts
8,900
11b.
Interest Receivable2
2,800
Interest Revenue
2,800
page-pf14
7-85
PROBLEM 7-26A a. (cont.)
Tile Etc., Inc.
T-Accounts
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Accounts Payable
Common Stock
Bal. 110,000
Bal. 95,000
Bal. 450,000
3a. 245,000
6. 610,000
6. 610,000
1. 580,000
5. 620,000
7. 145,000
Bal. 65,000
Retained Earnings
8. 182,400
9. 60,000
Bal. 97,000
Bal. 342,400
Sales Revenue
2a. 890,000
Accounts Receivable
3a. 245,000
Bal. 125,000
4a. 190,000
2a. 890,000
5. 620,000
Bal. 1,325,000
4a. 182,400
8. 182,400
10. 7,500
Cost of Goods Sold
Bal. 387,500
2b. 420,000
3b. 160,000
Allow. for Doubt. Acc.
4b. 96,000
Bal. 18,000
Bal. 676,000
10. 7,500
11a. 8,900
Bal. 19,400
Credit Card Expense
4a. 7,600
Merchandise Inventory
Bal. 7,600
Bal. 425,000
1. 580,000
2b. 420,000
Selling & Adm. Exp.
3b. 160,000
7. 145,000
4b. 96,000
Bal. 145,000
Bal. 329,000
Uncoll. Accts. Expense
Notes Receivable
11a. 8,900
9. 60,000
Bal. 8,900
Bal. 60,000
Interest Revenue
Interest Receivable
11b. 2,800
11b. 2,800
Bal. 2,800
Bal. 2,800

Trusted by Thousands of
Students

Here are what students say about us.

Resources
Company
Legal

Copyright ©2022 All rights reserved. | CoursePaper is not sponsored or endorsed by any college or university.