Wild and Shaw, FinMan 8e Solutions Manual: Chapter 3
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Serial Problem, SP 3 (Continued)
Computer Equipment
Acct. No. 167
Date
Explanation
PR
Debit
Credit
Balance
Oct.
1
20,000
20,000
Acct. No. 168
Wages Payable
Acct. No. 210
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31
500
500
Unearned Computer Services Revenue
Acct. No. 236
Date
Explanation
PR
Debit
Credit
Balance
Dec.
14
1,500
1,500
Acct. No. 307
Date
Explanation
PR
Debit
Credit
Balance
Oct.
Acct. No. 318
Date
Explanation
PR
Debit
Credit
Balance
Dec.
Closing
31
Closing
7,100
Date
Explanation
PR
Debit
Credit
Balance
31
3,600
3,600
Nov.
30
2,000
5,600
Dec.
31
1,500
7,100
31
Closing
7,100
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31
1,250
1,250
Acct. No. 201
Date
Explanation
PR
Debit
Credit
Balance
Oct.
1,420
1,420
1,420
Dec.
15
1,100
1,100
Wild and Shaw, FinMan 8e Solutions Manual: Chapter 3
Serial Problem, SP 3 (Continued)
Computer Services Revenue
Acct. No. 403
Date
Explanation
PR
Debit
Credit
Balance
Oct.
6
4,800
4,800
12
1,400
6,200
28
5,208
Nov.
2
4,633
8
5,668
24
3,950
Dec.
20
5,625
31
Closing
0
Acct. No. 612
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31
400
400
31
Closing
400
0
Acct. No. 613
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31
1,250
1,250
31
Closing
1,250
0
Wages Expense
Acct. No. 623
Date
Explanation
PR
Debit
Credit
Balance
Oct.
31
875
875
Nov.
30
1,750
2,625
Dec.
10
750
3,375
31
500
3,875
31
Closing
3,875
0
Acct. No. 637
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31
555
555
31
Closing
555
0
Acct. No. 640
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31
2,475
2,475
31
Closing
2,475
0
Wild and Shaw, FinMan 8e Solutions Manual: Chapter 3
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Serial Problem, SP 3 (Concluded)
Computer Supplies Expense
Acct. No. 652
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31
3,065
3,065
31
Closing
3,065
0
Advertising Expense
Acct. No. 655
Date
Explanation
PR
Debit
Credit
Balance
Oct.
20
1,728
1,728
Dec.
2
1,025
2,753
31
Closing
2,753
0
Mileage Expense
Acct. No. 676
Date
Explanation
PR
Debit
Credit
Balance
Nov.
1
320
320
28
384
704
Dec.
29
192
31
Closing
0
Acct. No. 677
Date
Explanation
PR
Debit
Credit
Balance
Nov.
22
250
250
Dec.
31
Closing
0
Repairs Expense—Computer
Acct. No. 684
Date
Explanation
PR
Debit
Credit
Balance
Oct.
17
805
805
Dec.
3
500
1,305
31
Closing
1,305
0
Income Summary
Acct. No. 901
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31
Closing
31
Closing
31
Closing
0
Wild and Shaw, FinMan 8e Solutions Manual: Chapter 3
Company Analysis — AA 3-1 (20 minutes)
($ millions)
2. Unfavorable
Explanation: An unfavorable trend is the result of a declining profit
3. Outperform
Explanation: In the most recent year, Apple’s profit margin exceeded the
4. $48,351
Explanation: The balance of Income Summary before it is closed as of
Wild and Shaw, FinMan 8e Solutions Manual: Chapter 3
Comparative Analysis — AA 3-2 (25 minutes)
($ millions)
1. (a) Apple
Current year, profit margin $48,351 / $229,234 = 21.1%
2. Apple
3. (a) Apple
Current year, current ratio $128,645 / $100,814 = 1.28
4. Google
Explanation: In the current year, Google has the higher current ratio,
suggesting a better ability to pay short-term obligations. Overall,
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Global Analysis — AA 3-3 (20 minutes)
1. Samsung (KRW in millions)
Current year, profit margin = ₩42,186,747 / ₩239,575,376 = 17.6%
2. Apple
Ethics Challenge — BTN 3-1
1. There are several courses of action that Tamira could have taken. Two
possibilities follow:
a. She could have consulted with the president and told him that
finalized financial statements would not be ready by the time of the
2. Students may offer one of the above alternatives or another response
they may think of, given the situation. Try to generate a discussion of
ethical concerns and the impact of her decisions on the well-being of
users (such as the bankers and the investors in the banks).
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Communicating in Practice — BTN 3-2
TO: _____________________
FROM: _____________________
DATE: ______________________
SUBJECT: CLARIFICATIONS—OBJECTIVE OF THE CLOSING PROCESS
[Following is a sample of what the memorandum’s contents might include.]
When we speak of “closing the books” or the closing process we are not
talking about ending or closing the business nor doing anything that reflects
this thinking in the financial statements. Let me use an analogy to explain the
concept of the closing process and then you will see the distinction more
clearly.
Scoreboards are used to temporarily hold information that will allow us to
determine who won or lost in an athletic game or event. When the athletic
The revenue and expense accounts temporarily hold the information to
determine if the owner(s) won or lost in the game of business. Each fiscal
period should be viewed as a separate game. After the data in these accounts
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Taking It to the Net — BTN 3-3
2. The Gap’s fiscal year–end is January 28, 2017. It appears that The Gap’s
fiscal year-end is consistently set as of the Saturday closest to January
31 – meaning it falls in the last week of January or first week of
February.
3. Net sales for the year ended January 28, 2017, are $15,516 million.
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Teamwork in Action — BTN 3-4
Note that there is no specific solution to this activity. Still, the presentation
Before Adjusting
Balance Sheet Income Statement
Type Account Account Adjusting Entry
Prepaid expenses Asset overstated Expense understated Dr. Expense
Cr. Asset*
* For depreciation, one would credit the Accumulated Depreciation contra account.
Some implementation notes: This activity allows all students to be actively
involved in the learning process. Encourage students to take the opportunity
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Entrepreneurial Decision — BTN 3-5
1. A classified balance sheet classifies liabilities into current and non–
current. The current liabilities are those that are due in the short-term,
2. To better understand the company’s operations, the entrepreneur must
make sure that all revenues earned in a particular accounting period are
included in that period’s income statement. In addition, they must
3. Closing procedures will accomplish two objectives for the owner. First,
the temporary accounts will be reset to zero and be readied for use in
Hitting the Road — BTN 3-6
There is no formal solution to this field activity. The instructor may wish to
tally students’ findings to show results across companies as to use of work
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