DQ1.
DQ8.
Unethical ways of accounting include recording and reporting business transactions
that did not occur or being dishonest in recording those that did occur. Fraudulent
CHAPTER 1—Solutions
The primary purpose of accounting is to provide decision makers with the financial
ACCOUNTING PRINCIPLES AND
THE FINANCIAL STATEMENTS
Discussion Questions
1-1
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1.
1. = +
=+
Short Exercises
SE1. Accounting Concepts
bb
4.
Owner’s Equity
Owner’s Equity
Liabilities
SE4. The Accounting Equation
Assets
$90,000
$240,000
1-2
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1. +
=+
$ 1,400
Wages payable
$11,600
Cash
Assets Liabilities
Manteno Company
Balance Sheet
June 30, 2014
SE7. Preparation and Completion of a Balance Sheet
Investment
Withdrawals
Net Income*
*($260,000 – $160,000) – $40,000 + $48,000 = $108,000
48,000
$ 40,000
108,000
End of year:
During year:
SE5. The Accounting Equation
Assets
Owner’s Equity
Beginning of year:
Liabilities
SE6. The Accounting Equation and Net Income
+ 5,000
$ 40,000
Beginning:
Change:
$ 90,000
Liabilities
$50,000
=
=
Liabilities
+ 30,000
*
1-3
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$ 500
2,350
Accounts payable $ 450
Total liabilities and
1. 6.
2. 7.
1. 3.
bd
SE 10. Ethics and Accounting
gi
fd
SE9. Accounting and Business Enterprises
Owner’s capital, December 31, 2014
Owner’s capital, December 31, 2013
Net income for the year
Randall Company
Balance Sheet
SE8. Preparation of Financial Statements
For the Year Ended December 31, 2014
December 31, 2014
Cash
Liabilities
Randall Company
Statement of Owner’s Equity
For the Year Ended December 31, 2014
Randall Company
Income Statement
Revenues:
Assets
$1,890
1-4
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
2.
3.
2,000,000 × $2,000,000
5,000,000 × $650,000
350,000,000 × $4,200,000
3,000,000 × $3,960,000
1,300,000 × $1,300,000
2,400,000 × $312,000
250,000,000 × $3,000,000
3,900,000 × $5,148,000
Yes, this is an expense of the business.
Yes, this is an expense of the business.
place.
No, this is not a business transaction because no economic exchange has taken
Exercises: Set A
E1A. Business Transactions
Aiko is the largest in terms of sales and Orca is the largest in terms of assets.
0.130
0.012
1.320
=
=
=
=
0.130
0.012
Sales
Dao
Company
Abril Chip
=
1.000
=
=
1.000
Orca
Assets
Aiko
Company
1.320
E3A. Money Measure
=
Orca
Dao
Aiko
Abril Chip
1-5
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1. = Liabilities +
= Liabilities +
3. = 1/3 Assets +
4. = Liabilities +
=
1.
= Liabilities +
2.
3.
4.
Beginning:
E4A. The Accounting Equation
$150,000
Liabilities
Owner’s Equity
$400,000 $155,000
Assets $160,000
$125,000
$275,000
Assets
Owner’s Equity
Net income is:
Net income is:
Change in owner’s equity
Net loss is:
Change in owner’s equity
– Owner’s investments
Net loss
$(10,000)
16,250
$(10,000)
$ 6,250
$ 6,250
$33,750
$ 6,250
Net income
Change in owner’s equity
Assets
$21,250
$ 6,250
E5A. Owner’s Equity and the Accounting Equation
$6,250
Net income is:
1-6
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1. a. 2. a.
b. b.
$ 25,000 $ 50,000
62,500 $ 50,000
IS
BS
E6A. Identification of Accounts
A
L
Oxford Services Company
Accounts receivable Total liabilities
E7A. Preparation of a Balance Sheet
Liabilities
Balance Sheet
December 31, 2014
Assets
Accounts payableCash
1-7
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$13,200
$1,200
$1,000
1,240
$1,550 $ 450
750 $ 450
Expenses:
E8A. Preparation and Integration of Financial Statements
Dukakis Company
Statement of Owner’s Equity
Revenues:
Service revenue
Rent expense
For the Year Ended December 31, 2014
Owner’s capital, December 31, 2013
Investments by K. Dukakis
Total liabilities
Dukakis Company
Income Statement
For the Year Ended December 31, 2014
Assets Liabilities
December 31, 2014
Accounts payable
Dukakis Company
Balance Sheet
Accounts receivable
Cash
1-8
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.