PROBLEM 2-5A (Continued)
Date
Account Titles and Explanation
Ref.
Debit
Credit
Salaries and Wages Expense ……………
726
3,100
Cash ………………………………………
101
3,100
(Paid salaries expense)
Cash ……………………………………………….
101
450
Accounts Receivable ……………………….
112
450
Rent Revenue ………………………….
429
(15% X $6,000)
(Received cash and balance
on account for rent
revenue)
Cash ……………………………………………….
101
9,000
Service Revenue ……………………..
400
9,000
(Received cash for services
performed)
(d) STARR THEATER
Trial Balance
March 31, 2017
Debit
Credit
Cash ………………………………………………………..
$10,150
Accounts Receivable ………………………………..
450
Land…………………………………………………………
24,000
Buildings ………………………………………………….
10,000
Equipment ………………………………………………..
10,000
Accounts Payable……………………………………..
40,000
Service Revenue ……………………………………….
Rent Revenue …………………………………………..
Advertising Expense …………………………………
900
Salaries and Wages Expense …………………….
Rent Expense …………………………………………..
CC2 COOKIE CREATIONS
(a)
GENERAL JOURNAL
J1
Account Titles and Explanation
Debit
Credit
Nov. 8 No entry required for cashing U.S.
Savings Bonds—this is a personal
transaction.
8 Cash ………………………………………………… 500
Owner’s Capital ……………………………. 500
13 Supplies …………………………………………… 125
Cash …………………………………………….. 125
14 Equipment ……………………………………….. 300
Owner’s Capital ……………………………. 300
17 Equipment ……………………………………….. 900
Cash …………………………………………….. 900
20 Cash ………………………………………………… 125
Service Revenue …………………………... 125
25 Cash ………………………………………………… 30
Unearned Service Revenue ……………. 30
CC2 (Continued)
(b)
Cash
Date
Explanation
Ref.
Debits
Credits
Balance
Nov. 8 J1 500 500
11 J1 65 435
13 J1 125 310
Supplies
Date
Explanation
Ref.
Debits
Credits
Balance
Nov. 13 J1 125 125
Prepaid Insurance
Date
Explanation
Ref.
Debits
Credits
Balance
Equipment
Date
Explanation
Ref.
Debits
Credits
Balance
Nov. 14 J1 300 300
17 J1 900 1,200
Unearned Service Revenue
Date
Explanation
Ref.
Debits
Credits
Balance
CC2 (Continued)
(b) (Continued)
Notes Payable
Date
Explanation
Ref.
Debits
Credits
Balance
Nov. 16 J1 2,000 2,000
Owner’s Capital
Date
Explanation
Ref.
Debits
Credits
Balance
Service Revenue
Date
Explanation
Ref.
Debits
Credits
Balance
Nov. 20 J1 125 125
Advertising Expense
Date
Explanation
Ref.
Debits
Credits
Balance
CC2 (Continued)
(c)
COOKIE CREATIONS
Trial Balance
November 30, 2016
Debit Credit
Cash ………………………………………………………………… $ 245
Supplies …………………………………………………………… 125
BYP 2-1 FINANCIAL REPORTING PROBLEM
(a)
Account
(1)
Increase
Side
(1)
Decrease
Side
(2)
Normal
Balance
Accounts Payable
Credit
Debit
Credit
Accounts Receivable
Debit
Credit
Debit
Property, Plant, and Equipment
Debit
Debit
Cash and Cash Equivalents
Debit
Credit
Debit
Debit
Debit
(b) 1. Cash is increased.
2. Cash is decreased.
3. Cash is decreased or Accounts Payable is increased.
BYP 2-2 COMPARATIVE ANALYSIS PROBLEM
PepsiCo Coca-Cola
(a)
1.
Inventory:
debit
1.
Accounts Receivable:
debit
2.
Property, Plant &
Equipment:
debit
2.
Cash and Cash Equivalents:
debit
3.
Accounts Payable:
credit
3.
4.
(b)
1. Increase in Accounts Receivable: Service Revenue or Sales
Revenue is increased (credited).
2. Decrease in Salaries and Wages Payable: Cash is decreased
(credited).
BYP 2-3 COMPARATIVE ANALYSIS PROBLEM
Amazon Wal-Mart
(a)
1.
Interest Expense:
debit
1.
Net Product Revenues:
credit
2.
Cash and Cash
debit
2.
Inventories:
debit
(b) The following other accounts are ordinarily involved:
1. Increase in Accounts Receivable: Service Revenue or Sales
Revenue is increased (credited).
2. Increase in Interest Expense: Cash is decreased (credited).
BYP 2-4 REAL-WORLD FOCUS
The answer is dependent upon the company selected by the student.
BYP 2-5 REAL-WORLD FOCUS
(a) The reason the Green Bay Packers’ issue an annual report is because
they are a publicly owned, nonprofit company. They issue the report to
the more than 100,000 shareholders who hold shares. None of the
other teams are publicly owned, so they have no obligation to make
their financial information available except to their small group of
owners.
(b) At the time that the article was written the owners of the NFL teams
and the players’ labor union were negotiating a new contract. Knowing
how profitable the NFL teams are would be useful information for the
players to know so that they would have a better sense of how much
BYP 2-6 COMMUNICATION ACTIVITY
Date: May 25, 2017
To: Accounting Instructor
From: Student
In the first transaction, bills totaling $6,000 were sent to customers for
services performed. Therefore, the asset Accounts Receivable is increased
$6,000 and the revenue Service Revenue is increased $6,000. Debits increase
assets and credits increase revenues, so the journal entry is:
Accounts Receivable …………………………………………………… 6,000
Service Revenue …………………………………………………… 6,000
(Billed customers for services performed)
In the second transaction, $2,000 was paid in salaries to employees. Therefore,
the expense Salaries and Wages Expense is increased $2,000 and the asset
Cash is decreased $2,000. Debits increase expenses and credits decrease
assets, so the journal entry is:
Salaries and Wages Expense ……………………………………….. 2,000
Cash …………………………………………………………………….. 2,000
(Salaries and wages paid)
BYP 2-7 ETHICS CASE
(a) The stakeholders in this situation are:
Ellynn Kole, assistant chief accountant.
Users of the company’s financial statements.
The Doman Company.
(b) By adding $1,000 to the Equipment account, that account total is inten-
tionally misstated. By not locating the error causing the imbalance,
some other account may also be misstated by $1,000. If the amount of
(c) Ellynn’s alternatives are:
1. Miss the deadline but find the error causing the imbalance.
BYP 2-8 ETHICS CASE
The decision whether to fire Mr. Edmondson was the responsibility of
Radio Shack’s board of directors, which is elected by the company’s
shareholders to oversee management. The board initially announced its
support for the CEO. After further investigation, the board encouraged
Mr. Edmondson to resign, which he did. In contrast, when Bausch &
Radio Shack says that although it did a reference check at the time of
Mr. Edmondson’s hiring, it did not check his educational credentials.
Under the Sarbanes-Oxley Act, companies must now perform thorough
background checks as part of a check of internal controls. The bottom
line: Your résumé must be a fair and accurate depiction of your past.
BYP 2-9 ALL ABOUT YOU
(a) Students’ responses to this question will vary. It is important that the
steps that they identify be as specific as possible, and clearly directed
(b) There are many sites on the Internet that provide information about
preparing a résumé. For example, you can find extensive resources at:
http://www.rileyguide.com/resprep.html. Many schools also have re-
sources in their placement centers or writing labs. The Writing Center
(c) It is important to provide accurate and complete documentation of all
relevant training, education, and employment experiences so as to
provide assurance to the potential employer, and also to enable that
employer to do follow-up work. If you say you have certain skills, such
(d) See the sample résumés provided in the websites above for various
BYP 2-10 CONSIDERING PEOPLE, PLANET AND PROFIT
(a) The existence of three different forms of certification would most
likely create confusion for coffee purchasers. It would be difficult to
know what aspects of the coffee growing process each certification
(b) The Starbucks certification appears to be the most common in that
area. It has the advantage of having a direct link to the Starbucks
coffee market. Although it does not guarantee that Starbucks will buy
its coffee, it is a requirement that must be met before Starbucks will
(c) The certifications have multiple objectives including organic farming
as a means to protect bird species, biodiversity and wildlife habitat.
Some included requirements are to improve workers’ living
conditions, such as providing running water in worker housing, child
IFRS 2-1 INTERNATIONAL FINANCIAL REPORTING PROBLEM
Account
Financial Statement
Position in Financial
Statement
Other operating
income and
expense
Consolidated Income
Statement
After gross profit and
before operating profit