978-0078025907 Chapter 7 Solution Manual Part 6

subject Type Homework Help
subject Pages 14
subject Words 1227
subject Textbook Fundamental Financial Accounting Concepts 9th Edition
subject Authors Christopher Edmonds, Frances Mcnair, Philip Olds, Thomas Edmonds
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page-pf1
7-100
EXERCISE 7-4B a. & c. (cont.)
Reliable Auto Service
T-Accounts
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Retained Earnings
2016
2016
2.
32,000
5. cl
450
4. cl
45,000
Bal.
32,000
Bal.
44,550
2017
3.
66,000
Service Revenue
Bal.
98,000
2016
4. cl
45,000
1.
45,000
Accounts Receivable
Bal.
-0-
2016
2017
1.
45,000
2.
32,000
2.
65,000
Bal.
13,000
Bal.
65,000
2017
2.
65,000
1.
320
Uncoll. Accts. Expense
3.
66,000
2016
Bal.
11,680
3.
450
5. cl
450
Bal.
-0-
Allow. For Doubt. Accts.
2017
2016
4.
650
3.
450
Bal.
650
Bal.
450
2017
1.
320
4.
650
Bal.
780
page-pf2
7-101
EXERCISE 7-4B (cont.)
(2) Net Cash Flow from Operating Activities: $32,000
(3) Balance of Accounts Receivable, 12/31/2016: $13,000
(4) Net Realizable Value of Accounts Receivable, 12/31/2016:
(2) Net Cash Flow from Operating Activities: $66,000
(3) Balance of Accounts Receivable, 12/31/2017: $11,680
(4) Net Realizable Value of Accounts Receivable, 12/31/2017:
page-pf3
7-102
EXERCISE 7-5B
a.
Event
Assets
=
Liab.
+
Equity
Rev.
–
Exp.
=
Net Inc.
Cash Flows
Cash
A. Rec.
Allow.
=
+
Ret. Earn.
1.
NA
+
NA
NA
+
+
NA
+
NA
2.
+
−
NA
NA
NA
NA
NA
NA
+ OA
3.
NA
−
−
NA
NA
NA
NA
NA
NA
4.
NA
NA
+
NA
−
NA
+
−
NA
b.
Tull Bros.
General Journal
Event
Account Title
Debit
Credit
1.
Accounts Receivable
68,000
Service Revenue
68,000
2.
Cash
62,000
Accounts Receivable
62,000
3.
Allowance for Doubtful Accounts
500
Accounts Receivable
500
4.
Uncollectible Accounts Expense
1,360
Allowance for Doubtful Accounts
1,360
page-pf4
7-103
EXERCISE 7-6B
1. Uncollectible accounts written off: $ 2,900
3. Sales on account: 210,000
4. Collections of accounts receivable: 215,000
5. Uncollectible Accounts Expense (210,000 x 1%): 2,100
a.
Edd’s Shoe Repair
General Journal
Event
Account Title
Debit
Credit
2017
1.
Allowance for Doubtful Accounts
2,900
Accounts Receivable
2,900
2a.
Accounts Receivable
200
Allowance for Doubtful Accounts
200
2b.
Cash
200
Accounts Receivable
200
3.
Accounts Receivable
210,000
Service Revenue
210,000
4.
Cash
215,000
Accounts Receivable
215,000
5.
Uncollectible Accounts Expense
2,100
Allowance for Doubtful Accounts
2,100
page-pf5
EXERCISE 7-6B a. (cont.)
page-pf6
7-105
EXERCISE 7-7B
a.
Pollard Service Co.
General Journal
Date
Account Titles
Debit
Credit
2016
1.
Accounts Receivable
86,000
Service Revenue
86,000
2.
Cash
72,000
Accounts Receivable
72,000
3.
Salaries Expense
39,000
Cash
39,000
4.
Uncollectible Accounts Expense1
1,625
Allowance for Doubtful Accounts
1,625
1
Number of days
Past Due
Amount
Percent Likely to
be Uncollectible
Allowance Balance
Current
$7,500
.01
$ 75
0-30
2,000
.05
100
31-60
1,500
.10
150
61-90
1,000
.30
300
Over 90 days
2,000
.50
1,000
Total
$1,625
page-pf7
7-106
EXERCISE 7-7B a. (cont.)
Pollard Service Co.
T-Accounts – 2016
Assets
=
Liabilities
+
Equity
Cash
Service Revenue
2.
72,000
3.
39,000
1.
86,000
Bal.
33,000
Bal.
86,000
Accounts Receivable
Salaries Expense
1.
86,000
2.
72,000
3.
39,000
Bal.
14,000
Bal.
39,000
Allow. For Doubt. Accts.
Uncoll. Accts. Expense
4.
1,625
4.
1,625
Bal.
1,625
Bal.
1,625
b.
Pollard Service Co.
Income Statement
For the Year Ended December 31, 2016
Service Revenue
$86,000
Operating Expenses
Salaries Expense
$39,000
Uncollectible Accounts Expense
1,625
Total Operating Expenses
(40,625)
Net Income
$45,375
c. Net Realizable Value:
Accounts Receivable $14,000
Less, Allowance for Doubtful Accounts (1,625)
Net Realizable Value $12,375
page-pf8
7-107
EXERCISE 7-8B
a.
Juno Inc.
General Journal
Date
Account Titles
Debit
Credit
2016
1.
Cash
5,000
Common Stock
5,000
2.
Accounts Receivable
80,000
Service Revenue
80,000
3.
Cash
22,000
Service Revenue
22,000
4.
Cash
65,000
Accounts Receivable
65,000
5.
Salaries Expense
24,000
Cash
24,000
6.
Uncollectible Accounts Expense*
750
Allowance for Doubtful Accounts
750
cl
Service Revenue
102,000
Retained Earnings
102,000
cl
Retained Earnings
24,750
Uncollectible Accounts Exp.
750
Salaries Expense
24,000
page-pf9
7-108
EXERCISE 7-8B a. (cont.)
Juno Inc. T-Accounts
Assets
=
Liabilities
+
Stockholders’ Equity
Common Stock
Cash
2016
2016
1.
5,000
1. 5,000
5.
24,000
Bal.
5,000
3.
22,000
4.
65,000
Retained Earnings
Bal.
68,000
2016
cl
24,750
cl
102,000
Accounts Receivable
Bal.
77,250
2016
2.
80,000
4.
65,000
Service Revenue
Bal
15,000
2016
2.
80,000
3.
22,000
.Allow. For Doubt. Accts.
Bal.
102,000
2016
cl
102,000
6.
750
Bal.
-0-
Bal
750
Salaries Expense
.
2016
5.
24,000
Bal.
24,000
cl
24,000
Bal.
Uncoll. Accts. Expense
2016
6.
750
Bal.
750
cl
750
7-109
Bal.
-0-
page-pfb
7-110
EXERCISE 7-8B (cont.)
b.
Juno Inc.
Income Statement
For the Year Ended December 31, 2016
Service Revenue
$102,000
Operating Expenses
Salaries Expense
$24,000
Uncollectible Accounts Expense
750
Total Operating Expenses
(24,750)
Net Income
$77,250
Juno Inc.
Statement of Changes in Stockholders’ Equity
For the Year Ended December 31, 2016
Beginning Common Stock
$ -0-
Plus: Common Stock Issued
5,000
Ending Common Stock
$ 5,000
Beginning Retained Earnings
$ -0-
Plus: Net Income
77,250
Ending Retained Earnings
$77,250
Total Stockholders’ Equity
$82,250
page-pfc
7-111
EXERCISE 7-8B b. (cont.)
Juno Inc.
Balance Sheet
As of December 31, 2016
Assets
Cash
$ 68,000
Accounts Receivable
$15,000
Less: Allowance for Doubtful Accounts
(750)
14,250
Total Assets
$ 82,250
Liabilities
$ -0-
Stockholders’ Equity
Common Stock
$ 5,000
Retained Earnings
77,250
Total Stockholders’ Equity
82,250
Total Liabilities and Stockholders’ Equity
$82,250
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash Flows From Operating Activities:
Inflow from Customers
$ 87,000
Outflow for Expenses
(24,000)
Net Cash Flow from Operating Activities
$63,000
Cash Flows From Investing Activities
-0-
Cash Flows From Financing Activities
-0-
Inflow from Issue of Common Stock
5,000
Net Change in Cash
68,000
Plus: Beginning Cash Balance
-0-
Ending Cash Balance
$68,000
c. Accounts Receivable, 12/31/2016 $15,000
Less: Allowance for Doubtful Accounts, 12/31/2016 (750)
Net Realizable Value, 12/31/2016 $14,250
page-pfd
7-112
EXERCISE 7-8B (cont.)
d.
Juno Inc.
General Journal
Date
Account Titles
Debit
Credit
2017
1.
Allowance for Doubtful Accounts
620
Accounts Receivable
620
2.
Accounts Receivable
95,000
Service Revenue
95,000
3.
Cash
15,000
Service Revenue
15,000
4.
Cash
90,000
Accounts Receivable
90,000
5.
Salaries Expense
35,000
Cash
35,000
6.
Uncollectible Accounts Expense*
839
Allowance for Doubtful Accounts
839
page-pfe
7-113
EXERCISE 7-8B d. (cont.)
Juno Inc. T-Accounts - 2017
Assets
=
Liabilities
+
Stockholders’ Equity
Common Stock
Cash
2016
5,000
2017
Bal.
5,000
Bal.
68,000
5.
35,000
3.
15,000
Retained Earnings
4.
90,000
2017
Bal.
138,000
Bal.
77,250
Service Revenue
2017
2.
95,000
Accounts Receivable
3.
15,000
2017
Bal.
110,000
Bal.
15,000
1.
620
2.
95,000
4.
90,000
Salaries Expense
Bal.
19,380
2017
5.
35,000
Allow. For Doubt. Accts.
Bal.
35,000
2017
Bal.
750
Uncoll. Accts. Expense
1.
620
6.
839
2017
Bal.
969
6.
839
Bal.
839
page-pff
EXERCISE 7-8B d. (cont.)
Juno, Inc.
Income Statement
For the Year Ended December 31, 2017
Service Revenue
$110,000
Operating Expenses
Salaries Expense
$35,000
Uncollectible Accounts Expense
839
Total Operating Expenses
(35,839)
Net Income
$74,161
Juno, Inc.
Statement of Changes in Stockholders’ Equity
For the Year Ended December 31, 2017
Beginning Common Stock
$ 5,000
Plus: Common Stock Issued
-0-
Ending Common Stock
$ 5,000
Beginning Retained Earnings
77,250
Plus: Net Income
74,161
Ending Retained Earnings
$151,411
Total Stockholders’ Equity
$156,411
page-pf10
7-115
EXERCISE 7-8B d. (cont.)
Juno Inc.
Balance Sheet
As of December 31, 2017
Assets
Cash
$138,000
Accounts Receivable
$19,380
Less: Allowance for Doubtful Accounts
(969)
18,411
Total Assets
$156,411
Liabilities
$ -0-
Stockholders’ Equity
Common Stock
$ 5,000
Retained Earnings
151,411
Total Stockholders’ Equity
156,411
Total Liabilities and Stockholders’ Equity
$156,411
Juno Inc.
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash Flows From Operating Activities:
Inflow from Customers
$105,000
Outflow for Expenses
(35,000)
Net Cash Flow from Operating Activities
$70,000
Cash Flows From Investing Activities
-0-
Cash Flows From Financing Activities
-0-
Net Change in Cash
70,000
Plus: Beginning Cash Balance
68,000
Ending Cash Balance
$138,000
Accounts Receivable, 12/31/2017 $19,380
Less: Allowance for Doubtful Accounts, 12/31/2017 (969)
Net Realizable Value, 12/31/2017 $18,411
page-pf11
7-116
EXERCISE 7-9B
a. NC – Net Change in Cash
Applied Business Systems
Horizontal Statements Model
Balance Sheet
Income Statement
Statement of
Event
Assets
=
Liab.
+
Equity
Rev.
–
Exp.
=
Net Inc.
Cash Flows
Cash
+
Acct. Rec.
=
+
Ret. Ear.
2016
1.
46,000
+
NA
=
NA
+
46,000
46,000
−
NA
=
46,000
46,000 OA
2.
NA
+
9,000
=
NA
+
9,000
9,000
−
NA
=
9,000
NA
3.
(32,100)
+
NA
=
NA
+
(32,100)
NA
−
32,100
=
(32,100)
(32,100) OA
Bal.
13,900
+
9,000
=
NA
+
22,900
55,000
−
32,100
=
22,900
13,900 NC
2017
4.
NA
+
(325)
=
NA
+
(325)
NA
−
325
=
(325)
NA
Bal.
13,900
+
8,675
=
NA
+
22,575
-0-
−
325
=
(325)
NA
b. Net Income for 2016: $22,900
page-pf12
7-117
EXERCISE 7-9B (cont.)
c.
Applied Business Systems
General Journal
Date
Account Titles
Debit
Credit
2016
1.
Cash
46,000
Service Revenue
46,000
2.
Accounts Receivable
9,000
Service Revenue
9,000
3.
Operating Expenses
32,100
Cash
32,100
2017
4.
Uncollectible Accounts Expense
325
Accounts Receivable
325
page-pf13
7-118
EXERCISE 7-10B
Accounts Receivable
Allowance for Doubt. Accts.
Sales 320,000
Coll. 295,000
Write-off 1,400
Est. 3,200
Write-off 1,400
Bal. 1,800
Bal. 23,600
a.
(1) $23,600 (see above)
(2) $1,800
(3) $3,200 ($320,000 x 1%)
(4) $23,600 − $1,800 = $21,800
b.
(1) $23,600 (same as above)
(2) $1,400 (the amount written off)
(3) $23,600 (the balance of accounts receivable)
page-pf14
7-119
EXERCISE 7-11B
Cachet Enterprises
General Journal
Date
Account Titles
Debit
Credit
9/1/2016
Notes Receivable
30,000
Cash
30,000
12/31/2016
Interest Receivable1
600
Interest Revenue
600
9/1/2017
Interest Receivable2
1,200
Interest Revenue
1,200
9/1/2018
Cash
31,800
Notes Receivable
30,000
Interest Receivable
1,800
1$30,000 x 6% x 4/12 = $600
2$30,000 x 6% x 8/12 = $1,200
b.
Balance Sheet
Income Statement
Statement of
Date
Assets
=
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
Cash
+
Note Rec.
+
Int. Rec.
=
Ret. Ear.
9/1/16
(30,000)
30,000
NA
NA
NA
NA
NA
(30,000) IA
12/31/16
NA
NA
600
600
600
NA
600
NA
9/1/17
NA
NA
1,200
1,200
1,200
NA
1,200
NA
9/1/17
31,800
(30,000)
(1,800)
NA
NA
NA
NA
30,000 IA
1,800 OA

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