Archives: Solution Manual

13–16 Solutions Manual P13–6. Req. 1 . Component Percentages 2015 Income statement: Sales revenue (the base amount) 100.00 Cost of goods sold 58.95 Balance sheet: Cash 3.88 Accounts receivable (net) 13.59 Inventory 38.83 Operational assets (net) 43.69 Total assets (the […]

Chapter 13 Analyzing Financial Statements ANSWERS TO QUESTIONS 1. Published financial statements are designed primarily to meet the needs of external decision makers, including present and potential owners, investment analysts, and creditors. 2. The three factors are: Economy-wide factors, industry […]

ALTERNATE PROBLEMS AP12–1. Req. 1 Related Cash Balance sheet at December 31 Flow Section Current Year Prior Year Change Δ in Cash Cash $34,000 $29,000 +5,000 10 Net increase in cash O Accounts receivable 45,000 28,000 +17,000 3 Subtract from […]

CHAPTER 45 WILLS, INHERITANCES, AND TRUSTS Answers to Learning Objectives 1. A will is an instrument, prepared in the form prescribed by law, setting forth how an owner of property wishes it to be distributed after the owner’s death. The […]

Financial Accounting, 9/e 12–21 E12–23. Req. 1 Cash flows from operating activities—direct method Cash collected from customers1 $151,600 Cash payments to employees (55,400) Cash payments for income tax4 (220) Net cash provided by operating activities $30,758 1. Cash collected from […]

166 CHAPTER 44 LANDLORD AND TENANT Answers to Learning Objectives 1. The relation of landlord and tenant is created by contract. The contract that creates the relationship is called a lease and may be oral or written, express or implied, […]

163 CHAPTER 43 REAL ESTATE MORTGAGES Answers to Learning Objectives 1. A mortgage is an interest in real property given to secure payment of a debt. The mortgagor retains possession of the mortgaged property, but upon default, the mortgagee may […]

ALTERNATE PROBLEMS AP11–1. 1. Shares issued ($1,500,000  $1) …………………………………………………….. 1,500,000 Shares outstanding (1,500,000 – 100,000) ……………………………………….. 1,400,000 2. Additional paid-in capital: $118,500,000 (all shares were issued for $80. Subtract the $1 par value to get the per share amount […]

160 CHAPTER 42 TRANSFER OF REAL PROPERTY Answers to Learning Objectives 1. Title to real estate is transferred by a deed. A deed may be either a quitclaim deed, which conveys whatever interest the grantor has, or a warranty deed, […]

Financial Accounting, 9/e 11–21 Comments: Neither the stock dividend nor stock split changed total stockholders’ equity because neither involved the disbursement of assets. The stock dividend transferred E11–24. Comparative results: Items Before Dividend and Split After Stock Dividend After Cash […]

156 growing on the land are classified as real property. b. If a non-navigable river flows through a person’s land, that person owns the riverbed but not the water that flows over the bed. c. Personal property attached to a […]

Financial Accounting, 9/e 11-1 Chapter 11 Reporting and Interpreting Stockholders’ Equity ANSWERS TO QUESTIONS 1. A corporation is a legal entity separate and distinct from its owners. Owners are those who hold stock in the corporation. The primary advantages of […]

CHAPTER 40 BANKRUPTCY Answers to Learning Objective 1. The purposes of bankruptcy are to give the debtor a new start and to give creditors an equal chance to be paid. Any person or business, except banks, savings and loan associations, […]

Financial Accounting, 9/e 10–35 $2,717)) Req. 3 P10–12. Present value: $300,000 x 0.85349 = 256,047 $ 9,000* x 7.32548 = 65,929 Issue price = $321,976 *$300,000 x .12 x 1/4 **Using Excel or a financial calculator results in a present […]

148 CHAPTER 39 SECURITY DEVICES Answers to Learning Objectives 1. A contract of guaranty or suretyship is founded on another contract. It is a contract to ensure or guarantee that someone else will perform the first contract. 2. Contracts of […]

Financial Accounting, 9/e 10–21 Present value: $1,400,000 x 0.78941 = 1,105,174 $ 56,000* x 7.01969 = 393,103 Issue price = $1,498,277** Req. 1 January 1: Cash (+A) …………………………………………………………………… 1,498,277 Bonds Payable (+L) …………………………………………………. 1,498,277 Req. 2 June 30: Interest Expense […]

144 CHAPTER 38 TYPES OF INSURANCE Answers to Learning Objectives 1. Life insurance is a contract by which the insurer agrees to pay a specified sum or sums of money to a beneficiary upon the death of the insured. Insurers […]

Chapter 10 Reporting and Interpreting Bonds ANSWERS TO QUESTIONS 1. A company might choose to issue bonds instead of stock to avoid diluting shareholders’ interests, to benefit from the tax deductions associated with paying interest, and to potentially increase the […]

140 PART EIGHT RISK-BEARING DEVICES Teaching Suggestions 1. Have each student contact a life insurance agent and find out what types of insurance can be obtained and the various costs of the insurance for that student. 2. Ask the students […]

Financial Accounting, 9/e Appendix A-33 APA–2. Req. 1 Sept 15, 2016 Investments in TS (+A) …………………………………………….. 224,000 Cash (– A) [7,000 shares x $32] ……………………………… 224,000 Req. 2 Sept 15, 2016 Investments in AFS securities (+A) ……………………………. 224,000 Cash (– […]

136 CHAPTER 36 MANAGEMENT AND DISSOLUTION OF A CORPORATION Answers to Learning Objectives 1. The board of directors and officers manage a corporation. The directors select the officers, who are the chief agents of the corporation. The stockholders control management […]

Financial Accounting, 9/e Appendix A-21 PA–4. Req. 1 The fair value method must be used for both the D common stock and F bonds. The fair value method must be used for D common stock because only 14.74% of it […]

133 CHAPTER 35 OWNERSHIP OF A CORPORATION Answers to Learning Objectives 1. The capital stock of a corporation is the declared money value of its outstanding stock. 2. Stock can be common or preferred and preferred as to assets or […]