Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
Serial Problem — SP 5 (Continued)
Part 2
Ledger accounts as of March 31 before posting of March 31 adjusting entries
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 48,372
Jan. 4 625 47,747
Accounts Receivable—Alex’s Engineering Co. Acct. No. 106.1
Date Explanation PR Debit Credit Balance
Accounts Receivable—Wildcat Services Acct. No. 106.2
Date Explanation PR Debit Credit Balance
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Serial Problem — SP 5 (Continued)
Accounts Receivable—Easy Leasing Acct. No. 106.3
Date Explanation PR Debit Credit Balance
Accounts Receivable—Delta Co. Acct. No. 106.7
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
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Serial Problem — SP 5 (Continued)
Accounts Receivable—Dream, Inc. Acct. No. 106.9
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Merchandise Inventory Acct. No. 119
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 0
Jan. 7 5,800 5,800
Computer Supplies Acct. No. 126
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 580
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Serial Problem — SP 5 (Continued)
Accumulated Depreciation—Office Equipment Acct. No. 164
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 400
Computer Equipment Acct. No. 167
Accounts Payable Acct. No. 201
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 1,100
Wages Payable Acct. No. 210
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 500
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Serial Problem — SP 5 (Continued)
S. Rey, Capital Acct. No. 301
Date Explanation PR Debit Credit Balance
Dec. 31 Balance 80,360
Sales Acct. No. 413
Date Explanation PR Debit Credit Balance
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Serial Problem — SP 5 (Continued)
Sales Discounts Acct. No. 415
Date Explanation PR Debit Credit Balance
Jan. 22 47 47
Cost of Goods Sold Acct. No. 502
Date Explanation PR Debit Credit Balance
Jan. 13 3,560 3,560
Depreciation Expense—Office Equipment Acct. No. 612
Date Explanation PR Debit Credit Balance
Depreciation Expense—Computer Equipment Acct. No. 613
Date Explanation PR Debit Credit Balance
Wages Expense Acct. No. 623
Date Explanation PR Debit Credit Balance
Jan. 4 125 125
Insurance Expense Acct. No. 637
Date Explanation PR Debit Credit Balance
Rent Expense Acct. No. 640
Date Explanation PR Debit Credit Balance
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Serial Problem — SP 5 (Continued)
Computer Supplies Expense Acct. No. 652
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
Miscellaneous Expenses Acct. No. 677
Date Explanation PR Debit Credit Balance
Repairs Expense—Computer Acct. No. 684
Date Explanation PR Debit Credit Balance
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Serial Problem — SP 5 (Continued) Part 3
BUSINESS SOLUTIONS
Partial Work Sheet
March 31, 2018
Acct.
No.
Account Title
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
106.1
Alex’s Engineering Co. ………..
0
0
106.2
106.3
IMF Co. …………………………..
106.5
0
0
106.6
0
0
106.7
0
0
106.8
106.9
0
0
119
Merchandise inventory …………
210
Wages payable …………………..
302
S. Rey, Withdrawals ……………
4,800
4,800
502
Cost of goods sold …………….
14,052
637
Insurance expense ……………..
0
0
677
Miscellaneous expenses ……….
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Serial Problem — SP 5 (Continued)
Part 4
BUSINESS SOLUTIONS
Income Statement
For Three Months Ended March 31, 2018
Revenues
Computer services revenue ……………………………….. $25,307
Part 5
BUSINESS SOLUTIONS
Statement of Owner’s Equity
For Three Months Ended March 31, 2018
S. Rey, Capital, Dec. 31, 2017 ……………………………… $ 80,360
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Serial Problem — SP 5 (Concluded)
Part 6
BUSINESS SOLUTIONS
Balance Sheet
March 31, 2018
Assets
Current assets
Cash ………………………………………………………………….. $ 68,057
Plant assets
Office equipment ………………………………………………… $8,000
Liabilities
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359
Reporting in Action — BTN 5-1
1. Compute cost of sales for 2015 as follows ($ millions)
September 27, 2014 inventory………………………… $ 2,111
2.
2015
2014
($ millions)
Current
Ratio
Acid-Test
Ratio
Current
Ratio
Acid-Test
Ratio
Current assets
Cash and equivalents ……….
$21,120
$21,120
$13,844
$13,844
Short–term marketable sec ……
Accounts receivables, net …..
Inventories, net …………………
Deferred tax assets …………..
Vendor non–trade receivables …
Other current assets …………
$89,378
$42,537
$80,610
$63,448
Interpretation: The current ratio increased from 1.08 in 2014 to 1.11 in
2015. The acid-test ratio increased from 0.67 in 2014 to 0.73 in 2015. The
3. Solution depends on the financial statement data obtained.
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Comparative Analysis — BTN 5-2
1.
Apple
Google
($ millions)
Current
Prior
Current
Prior
Net sales ………………
$233,715
$182,795
$74,989
$66,001
Gross margin ………..
$46,825
$40,310
2. In both years, Google’s gross margin ratio was higher than that for
Ethics Challenge — BTN 5-3
1. A few students sometimes feel that Amy has devised a clever way to
beat the system. She appears to be succeeding in getting something for
free. However, most students fortunately feel that Amy is abusing the
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361
Ethics Challenge, BTN 5-3 — (Concluded)
2. The merchandising company accounts for sales returns using a contra
revenue account called Sales Returns and Allowances. A dress
returned with a sales bill of $200 would be accounted for as follows:
Communicating in Practice — BTN 5-4
Note: While responses will vary, the essence of its content follows:
TO: Mr. V. Velakturi
FROM:
DATE:
SUBJECT: Reply to inventory shrinkage question
You are correct in noting that Music Plus has lost inventory as a result of
shoplifting and other forms of shrinkage. However, you will be pleased to
know your investment in security has paid off. Let me explain.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
Taking It to the Net — BTN 5-5
Fiscal Year ($ thousands)
2013
2014
2015
Net sales …………………………..
$2,227,717
$2,428,257
$2,579,695
Gross margin …………………………..
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363
Teamwork in Action — BTN 5-6
1.
a. Net sales computation
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Teamwork in Action (Concluded)
e. Net income computation
3. The inventory account balance is $84,000. If actual (physical) inventory
is $76,000, an $8,000 loss from inventory shrinkage occurred. This
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Entrepreneurial Decision — BTN 5-7
1.
Sword & Plough
Forecasted Income Statement
For Year Ended January 31, 2017
Net sales ($1,000,000 x 1.09) ………………………………………. $1,090,000
2. The proposal yields a forecasted net income of $213,100. This compares
3. There are many issues that should be considered. Among them are:
• First, there is the issue of the prediction itself. That is, are estimates
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Hitting the Road — BTN 5-8
There is no formal solution for this field activity. As the discussion
Global Decision — BTN 5-9
1.
(in millions)
Samsung*
Apple
Google
Net sales …………………………..
₩200,653,482
$233,715
$74,989
Gross margin …………………………..
$46,825
Gross margin ratio ………………………
Gross Margin %
Rank
Google …………………………..…..
62.4%
1
38.5%
3
2. Samsung, Apple and Google each use the multiple-step format for their
income statements. Google’s income statement is a mix between