115
Problem 2-5B (60 minutes)
Part 1
TAMA CO.
Balance Sheet
December 31, 2016
Assets
Liabilities
Cash ……………………………..
$ 30,000
Accounts payable …………………………..
$ 4,000
Accounts receivable ………
Office supplies ………………
Machinery ……………………..
Total equity …………………………..
TAMA CO.
Balance Sheet
December 31, 2017
Assets
Liabilities
Cash ……………………………..
$ 5,000
Accounts payable …………………………..
$ 12,000
Accounts receivable ………
25,000
Note payable …………………………..
250,000
Office supplies ………………
13,500
Total liabilities …………………………..
Office equipment……………
40,000
50,000
Total equity …………………………..
150,000
Part 2
Computation of 2017 net income:
Owner investment ………………………………………………………………..
5,000
Add net income ……………………………………………………………………
?
Deduct withdrawals by owner ……………………………………………….
116
Problem 2-6B (35 minutes)
Part 1
GOULD SOLUTIONS
Trial Balance
April 30
Debit Credit
Cash …………………………………………………………….. $20,000
Part 2
Cash
(a)
15,000
(b)
1,800
5,200
Balance
Transactions a through g coded in T-account:
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
117
Serial Problem — SP 2
Part 1 (120 minutes) Serial Problem, Business Solutions
2017
Oct. 1 Cash …………………………………………………. 101 45,000
Office Equipment ………………………………. 163 8,000
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
118
Serial Problem, Business Solutions (Continued)
28 Accounts Receivable ……………………….. 106 5,208
Reimbursed Rey for mileage.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
119
Serial Problem, Business Solutions (Continued)
Part 2
General Ledger accounts
Cash Acct. No. 101
Date
Explanation
PR
Debit
Credit
Balance
Oct. 1 45,000 45,000
2 3,300 41,700
Accounts Receivable Acct. No.106
Date
Explanation
PR
Debit
Credit
Balance
Oct. 6 4,800 4,800
Date
Explanation
PR
Debit
Credit
Balance
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
Serial Problem, Business Solutions (Continued)
Prepaid Insurance Acct. No. 128
Date
Explanation
PR
Debit
Credit
Balance
Oct. 5 2,220 2,220
Date
Explanation
PR
Debit
Credit
Balance
Date
Explanation
PR
Debit
Credit
Balance
Date
Explanation
PR
Debit
Credit
Balance
Date
Explanation
PR
Debit
Credit
Balance
S. Rey, Capital Acct. No. 301
Date
Explanation
PR
Debit
Credit
Balance
Date
Explanation
PR
Debit
Credit
Balance
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
121
Serial Problem, Business Solutions (Concluded)
Computer Services Revenue Acct. No. 403
Date
Explanation
PR
Debit
Credit
Balance
Oct. 6 4,800 4,800
Wages Expense Acct. No. 623
Date
Explanation
PR
Debit
Credit
Balance
Advertising Expense Acct. No. 655
Date
Explanation
PR
Debit
Credit
Balance
Mileage Expense Acct. No. 676
Date
Explanation
PR
Debit
Credit
Balance
Date
Explanation
PR
Debit
Credit
Balance
Date
Explanation
PR
Debit
Credit
Balance
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
122
Serial Problem, Business Solutions (Continued)
Part 3
BUSINESS SOLUTIONS
Trial Balance
November 30
Debit Credit
Cash ………………………………………………………… $38,264
Wages expense ……………………………………….. 2,625
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
Reporting in Action — BTN 2-1
1. Apple reports ($ millions):
2. Apple reports ($ millions):
3. $ millions:
4. Apple employed more financial leverage as of September 26, 2015, when
58.9% of its assets were financed by debt, relative to September 27,
5. Solution depends on the financial statements accessed.
Comparative Analysis — BTN 2-2
1. Apple ($ millions)
2. Google ($ millions)
3. Apple has the higher degree of financial leverage. Apple’s debt ratio is
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
124
Ethics Challenge — BTN 2-3
This case involves a conflict between the need for efficiency and the need
for control. While it makes sense to take and process lunch orders quickly,
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
125
Communicating in Practice — BTN 2-4
MEMORANDUM
To: Lila Corentine
From:
Subject: Financial statements explanation
Date:
The four major financial statements and their purposes are:
• Income statement describes a company’s revenues and expenses along
with the resulting net income or loss over a period of time. It helps
explain how equity changes during a period due to earnings activities.
• Statement of owner’s equity explains changes in equity due to net
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
126
Taking It to the Net — BTN 2-5
2. The three years net cash provided by operations follows ($ millions):
3. In 2014, Amazon had net loss of $(241) million and operating cash flows
of $6,842 million; and, in that same year, total net cash increased by
Teamwork in Action — BTN 2-6
<Instructor note: There is no specific solution to this activity.>
The following sample solution gives a summary outline of what a minimum report
needs to include. Assume a team member selects assets:
Category: Assets
c. Assets = Liabilities + Owner, Capital – Withdrawals + Revenues – Expenses
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
127
Entrepreneurial Decision — BTN 2-7
There are several issues that this entrepreneurial owner should consider.
Those considerations include the following three issues (among others):
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
128
Entrepreneurial Decision — BTN 2-8
1.
MARTIN MUSIC SERVICES
Balance Sheet
December 31, 2017
Assets Liabilities
Cash ……………………………… $ 3,600 Accounts payable ………………. $ 2,200
2.
3. The prospects of a bank loan are likely to be good. (i) The debt ratio
indicates that 78% of the company’s funding is from equity. Also, there
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 2
129
Hitting the Road — BTN 2-9
Findings will vary. It is advisable that the instructor obtain a few classified
Global Decision — BTN 2-10
1. An analysis of return on assets suggests that Apple (20.4%) yields the
2. An analysis of the debt ratio suggests that Apple (at 58.9%) presents the
greatest risk, followed by Samsung (26.1%), and then Google (18.4%)
3. In this case, there is no clear answer based on these two ratios alone.
Apple has a relatively higher return on assets but also the highest debt