© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
IncSt
RE
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
+1,800
–1,800
Solutions8-22
8.30 a. continued.
2012
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
–13,500 –13,500
IncSt
RE
Assets = Liabilities +
Shareholders’
Equity (Class.)
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
Assets = Liabilities +
Shareholders’
Equity (Class.)
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
8-23Solutions
8.31 (Schneider Corporation; journal entries for the allowance
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
Assets = Liabilities +
Shareholders’
Equity (Class.)
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
+11,200
–11,200
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
2013
Assets = Liabilities +
Shareholders’
Equity (Class.)
–48,000 –48,000
IncSt
RE
Solutions8-24.31 a. continued.
Assets = Liabilities +
Shareholders’
Equity (Class.)
+23,600
–23,600
8.32 (Fujitsu Limited; reconstructing events when using the allowance
method.) (amounts in millions of Japanese yen)
Assets = Liabilities +
Shareholders’
Equity (Class.)
+5,100,163 +5,100,163
IncSt
RE
02
Assets = Liabilities +
Shareholders’
Equity (Class.)
–51,002 –51,002
IncSt
RE
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Assets = Liabilities +
Shareholders’
Equity (Class.)
8-25Solutions
8.32 continued.
d. Ca
sh
………………………………………………………………..
4,880,538
Accounts R
ecei
vab
l
e ………………………………………4,880,538
Assets = Liabilities +
Shareholders’
Equity (Class.)
8.33 (WollyMartin Limited; efects of transactions involving
suppliers and customers on cash flows.) (amounts in euros)
a. 127,450 =
130,000 – (8,600 – 8,000) + (750 – 700) –
85,000 – 500 + 200.
8.34 (Shannon Construction Company; percentage-of-completion and
completed contract methods of income recognition.) (amounts in
US$)
Percentage-of-Completion Method
Year Degree of Completion Revenue Expen
s
e
Income
2012
$1,200,000/$4,800,000 =
25.0%
$ 1,500,000 $
1,200,000
$
300,000
2013
$3,000,000/$4,800,000 =
62.5%
750,00
0
2014
$ 600,000/$4,800,000 =
12.5%
75
0
,
00
0
60
0
, 00
0
15
0
, 00
$
6
, 00
0
, 00
0 $
4
, 80
0
, 00
0
$
1
, 20
0
, 00
0
Completed Contract Method
Year Revenue Expense Income
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
2012 — — —
2013 — — —
2014 $
6
, 00
0
, 00
0 $
4
, 80
0
, 00
0
$
1
, 20
0
, 00
0
$
6
, 00
0
, 00
0 $
4
, 80
0
, 00
0
$
1
, 20
0
, 00
0
8-26
8.35 (Raytheon; percentage-of-completion and completed contract
Percentage-of-Completion Method
Year Degree of Completion Revenue Expense Income
$
$
20
0
.0
Completed Contract Method
Year Revenue Expense Inco
m
e
2011 — — —
2012 — — —
8.36 (Cunningham Realty Partners; installment and cost recovery
methods of income recognition.) (amounts in US$)
Installment Method
(
P
LUG
)
Year Revenue ExpensebIncomea
aIncome = Gross Margin Percentage X Cash Received, or
($40,000/
Year Revenue ExpensebIncom
2012 $ 24 $ 19 $ 5
$
$
1
5
$
$
4
0
, 00
0
(amounts in millions of US$)
Installment Method
(
P
LUG)
e
a
aIncome = Gross Margin Percentage X Cash Received, or
($15/$72)
X
$24 = $5 million.
Cost-Recovery-First Method
Year Revenue Expense Income
2012 $ 24 $ 24 $ -0-
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Assets = Liabilities +
Shareholders’
Equity (Class.)
Solutions8-28
8.38 a. continued.
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
IncSt
RE
IncSt
RE
b. Adjusting Entries for December 2013
Bad Debt
Expense
……………………………………………. 240,000
Sales Ret
urns
………………………………………………….. 400,000
Allowance for Uncollectibles and Returns ……….640,000
Assets = Liabilities +
Shareholders’
Equity (Class.)
–640,000 –240,000
IncSt
RE
–400,000
IncSt
RE
c. Nordstrom Earned Income Before Taxes
Sales Revenue
………………………………………………………….
$
20,000,000
Less Sales Returns
…………………………………………………..
(
40
0
, 00
0
Net Sales
Revenue
……………………………………………………
$
19,600,000
Cost of Goods
Sold…………………………………………………….
(7,200,00
0)
Bad Debt
Expense
…………………………………………………….
(
24
0
, 00
0
Income Before Taxes…………………………………………………. $
d. January 2014
Advances from Customers (Gift Cards) ……………… 6,000,000
Assets = Liabilities +
Shareholders’
Equity (Class.)
IncSt
RE
IncSt
RE
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
–3,600,000 –6,000,000 –3,600,000
IncSt
RE
+6,000,000
IncSt
RE
8-29Solutions
8.38 d. continued.
Assets = Liabilities +
Shareholders’
Equity (Class.)
–120,000 –120,000
IncSt
RE
8.39 (Hilton Garden Inn; revenue recognition at and after time of
sale.) (amounts in US$)
a. February 2, 2013: Journal entry to record internet
special reservation for four nights at $150 per night.
Ca
sh
……………………………………………………………….. 600
Advances from C
us
tom
er
……………………………….600
Assets = Liabilities +
Shareholders’
Equity (Class.)
February 20, 2013: Journal entry to record revenue after
services supplied.
Assets = Liabilities +
Shareholders’
Equity (Class.)
–600 +600
IncSt
RE
Solutions8-30
8.39 continued.
b. February 2, 2013: Journal entry to record internetspecial
reservation for four nights at $150 per night.
Ca
sh
………………………………………………………………..600
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Assets = Liabilities +
Shareholders’
Equity (Class.)
+600 +600
February 14, 2013: Journal entry to record revenue after
customer cancels the reservation.
Assets = Liabilities +
Shareholders’
Equity (Class.)
c. February 2, 2013: Journal entry to record refundable
room reservation for four nights at $220 per night.
Assets = Liabilities +
Shareholders’
Equity (Class.)
+880 +880
February 20, 2013: Journal entry to record revenue after
services supplied.
Assets = Liabilities +
Shareholders’
Equity (Class.)
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
+1,800
–1,800
Solutions8-22
8.30 a. continued.
2012
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
–13,500 –13,500
IncSt
RE
Assets = Liabilities +
Shareholders’
Equity (Class.)
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
Assets = Liabilities +
Shareholders’
Equity (Class.)
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
8-23Solutions
8.31 (Schneider Corporation; journal entries for the allowance
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
Assets = Liabilities +
Shareholders’
Equity (Class.)
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
+11,200
–11,200
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
2013
Assets = Liabilities +
Shareholders’
Equity (Class.)
–48,000 –48,000
IncSt
RE
Solutions8-24.31 a. continued.
Assets = Liabilities +
Shareholders’
Equity (Class.)
+23,600
–23,600
8.32 (Fujitsu Limited; reconstructing events when using the allowance
method.) (amounts in millions of Japanese yen)
Assets = Liabilities +
Shareholders’
Equity (Class.)
+5,100,163 +5,100,163
IncSt
RE
02
Assets = Liabilities +
Shareholders’
Equity (Class.)
–51,002 –51,002
IncSt
RE
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Assets = Liabilities +
Shareholders’
Equity (Class.)
8-25Solutions
8.32 continued.
d. Ca
sh
………………………………………………………………..
4,880,538
Accounts R
ecei
vab
l
e ………………………………………4,880,538
Assets = Liabilities +
Shareholders’
Equity (Class.)
8.33 (WollyMartin Limited; efects of transactions involving
suppliers and customers on cash flows.) (amounts in euros)
a. 127,450 =
130,000 – (8,600 – 8,000) + (750 – 700) –
85,000 – 500 + 200.
8.34 (Shannon Construction Company; percentage-of-completion and
completed contract methods of income recognition.) (amounts in
US$)
Percentage-of-Completion Method
Year Degree of Completion Revenue Expen
s
e
Income
2012
$1,200,000/$4,800,000 =
25.0%
$ 1,500,000 $
1,200,000
$
300,000
2013
$3,000,000/$4,800,000 =
62.5%
750,00
0
2014
$ 600,000/$4,800,000 =
12.5%
75
0
,
00
0
60
0
, 00
0
15
0
, 00
$
6
, 00
0
, 00
0 $
4
, 80
0
, 00
0
$
1
, 20
0
, 00
0
Completed Contract Method
Year Revenue Expense Income
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
2012 — — —
2013 — — —
2014 $
6
, 00
0
, 00
0 $
4
, 80
0
, 00
0
$
1
, 20
0
, 00
0
$
6
, 00
0
, 00
0 $
4
, 80
0
, 00
0
$
1
, 20
0
, 00
0
8-26
8.35 (Raytheon; percentage-of-completion and completed contract
Percentage-of-Completion Method
Year Degree of Completion Revenue Expense Income
20
0
.0
Completed Contract Method
Year Revenue Expense Inco
m
e
2011 — — —
2012 — — —
8.36 (Cunningham Realty Partners; installment and cost recovery
methods of income recognition.) (amounts in US$)
Installment Method
(
P
LUG
)
Year Revenue ExpensebIncomea
aIncome = Gross Margin Percentage X Cash Received, or
($40,000/
Year Revenue ExpensebIncom
2012 $ 24 $ 19 $ 5
1
5
4
0
, 00
0
(amounts in millions of US$)
Installment Method
(
P
LUG)
e
a
aIncome = Gross Margin Percentage X Cash Received, or
($15/$72)
X
$24 = $5 million.
Cost-Recovery-First Method
Year Revenue Expense Income
2012 $ 24 $ 24 $ -0-
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Assets = Liabilities +
Shareholders’
Equity (Class.)
Solutions8-28
8.38 a. continued.
0
Assets = Liabilities +
Shareholders’
Equity (Class.)
b. Adjusting Entries for December 2013
Bad Debt
Expense
……………………………………………. 240,000
Sales Ret
urns
………………………………………………….. 400,000
Allowance for Uncollectibles and Returns ……….640,000
Assets = Liabilities +
Shareholders’
Equity (Class.)
–640,000 –240,000
IncSt
RE
–400,000
IncSt
RE
c. Nordstrom Earned Income Before Taxes
Sales Revenue
………………………………………………………….
$
20,000,000
Less Sales Returns
…………………………………………………..
(
40
0
, 00
0
Net Sales
Revenue
……………………………………………………
$
19,600,000
Cost of Goods
Sold…………………………………………………….
(7,200,00
0)
Bad Debt
Expense
…………………………………………………….
(
24
0
, 00
0
Income Before Taxes…………………………………………………. $
d. January 2014
Advances from Customers (Gift Cards) ……………… 6,000,000
Assets = Liabilities +
Shareholders’
Equity (Class.)
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
–3,600,000 –6,000,000 –3,600,000
IncSt
RE
+6,000,000
IncSt
RE
8-29Solutions
8.38 d. continued.
Assets = Liabilities +
Shareholders’
Equity (Class.)
–120,000 –120,000
IncSt
RE
8.39 (Hilton Garden Inn; revenue recognition at and after time of
sale.) (amounts in US$)
a. February 2, 2013: Journal entry to record internet
special reservation for four nights at $150 per night.
Ca
sh
……………………………………………………………….. 600
Advances from C
us
tom
er
……………………………….600
Assets = Liabilities +
Shareholders’
Equity (Class.)
February 20, 2013: Journal entry to record revenue after
services supplied.
Assets = Liabilities +
Shareholders’
Equity (Class.)
–600 +600
IncSt
RE
Solutions8-30
8.39 continued.
b. February 2, 2013: Journal entry to record internetspecial
reservation for four nights at $150 per night.
Ca
sh
………………………………………………………………..600
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Assets = Liabilities +
Shareholders’
Equity (Class.)
+600 +600
February 14, 2013: Journal entry to record revenue after
customer cancels the reservation.
Assets = Liabilities +
Shareholders’
Equity (Class.)
c. February 2, 2013: Journal entry to record refundable
room reservation for four nights at $220 per night.
Assets = Liabilities +
Shareholders’
Equity (Class.)
+880 +880
February 20, 2013: Journal entry to record revenue after
services supplied.
Assets = Liabilities +
Shareholders’
Equity (Class.)