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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
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
350
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
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
351
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
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
352
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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353
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
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
354
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
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
355
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
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
356
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
302
S. Rey, Withdrawals ...............
4,800
4,800
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
357
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
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
358
Serial Problem — SP 5 (Concluded)
Part 6
BUSINESS SOLUTIONS
Balance Sheet
March 31, 2018
Assets
Current assets
Cash ............................................................................. $ 68,057
Plant assets
Office equipment ......................................................... $8,000
Liabilities
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
359
Reporting in Action — BTN 5-1
1. Compute cost of sales for 2015 as follows ($ 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
$13,844
Interpretation: The current ratio increased from 1.08 in 2014 to 1.11 in
2015. The acid-test ratio increased from 0.67 in 2014 to 0.73 in 2015. The
3. Solution depends on the financial statement data obtained.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
360
Comparative Analysis — BTN 5-2
1.
Apple
Google
($ millions)
Current
Prior
Current
Prior
Net sales ..................
$233,715
$182,795
$74,989
$66,001
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
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
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
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
363
Teamwork in Action — BTN 5-6
1.
a. Net sales computation
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
364
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
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
365
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
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 5
366
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 %
Rank
Google .....................................
62.4%
1
2. Samsung, Apple and Google each use the multiple-step format for their
income statements. Google’s income statement is a mix between
