Archives: Solution Manual

*PROBLEM 10-10B 2014 (a) Jan. 1 Cash ………………………………………….. 2,154,434 Bonds Payable ……………………. 2,000,000 Premium on Bonds Payable … 154,434 (b) IMELDA CORPORATION Bond Premium Amortization Effective-Interest Method—Annual Interest Payments 6% Bonds Issued at 5% Annual Interest Periods (A) Interest to […]

10–18 Learning Objective 11- Compare the accounting procedures for liabilities under GAAP and IFRS.  A Look at IFRS—IFRS and GAAP have similar definitions of liabilities. IFRSs related to reporting and recognition of liabilities are found in IAS 1 (revised) […]

*PROBLEM 10-7A 2014 (a) Jan. 1 Interest Payable …………………………… 96,000 Cash …………………………………….. 96,000 (b) Dec. 31 Interest Expense ………………………….. 98,400 Interest Payable ($2,400,000 X 4%) ………………. 96,000 Discount on Bonds Payable ($24,000 ÷ 10) ……………………. 2,400 2015 (c) Jan. 1 […]

EXERCISE 10-10 (a) Jan. 1 Cash ($600,000 × 1.03) ………………………. 618,000 Bonds Payable …………………………… 600,000 Premium on Bonds Payable ……… 18,000 (b) Long-term Liabilities Bonds Payable, due 2024 ………………………… $600,000 Add: Premium on Bonds Payable …………….. 10,800 $610,800 (c) The […]

CHAPTER 10 Reporting and Analyzing Liabilities Learning Objectives 1. Explain a current liability and identify the major types of current liabilities. 2. Describe the accounting for notes payable. 3. Explain the accounting for other current liabilities. 4. Identify the types […]

Continuing Cookie Chronicle 1 Continuing Cookie Chronicle (Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 9.) CCC10 Natalie is thinking of repaying all amounts outstanding to her grandmother. Recall that Cookie Creations borrowed $2,000 on […]

10-1 CHAPTER 10 Reporting and Analyzing Liabilities Learning Objectives 1. Explain a current liability and identify the major types of current liabilities. 2. Describe the accounting for notes payable. 3. Explain the accounting for other current liabilities. 4. Identify the […]

SOLUTIONS TO PROBLEMS PROBLEM E-1 2014 Jan. 1 Debt Investments …………………………. 600,000 Cash ……………………………………… 600,000 July 1 Cash ($600,000 X .07 X 1/2) …………… 21,000 Interest Revenue ……………………. 21,000 Dec. 31 Interest Receivable ………………………. 21,000 Interest Revenue ……………………. 21,000 2017 […]

APPENDIX E Reporting and Analyzing Investments Learning Objectives 1. Identify the reasons corporations invest in stocks and debt securities. 2. Explain the accounting for debt investments. 3. Explain the accounting for stock investments. 4. Describe the purpose and usefulness of […]

E-1 APPENDIX E REPORTING AND ANALYZING INVESTMENTS Learning Objectives 1. Identify the reasons corporations invest in stocks and debt securities. 2. Explain the accounting for debt investments. 3. Explain the accounting for stock investments. 4. Describe the purpose and usefulness […]

D-1 APPENDIX D TIME VALUE OF MONEY LEARNING OBJECTIVES 1. Distinguish between simple and compound interest. 2. Solve for future value of a single amount.. 3. Solve for future value of an annuity. 4. Identify the variables fundamental to solving […]

APPENDIX D Time Value of Money Learning Objectives 1. Distinguish between simple and compound interest. 2. Solve for future value of a single amount. 3. Solve for future value of an annuity. 4. Identify the variables fundamental to solving present […]

CHAPTER 9 Reporting and Analyzing Long-Lived Assets Learning Objectives 1. Describe how the historical cost principle applies to plant assets. 2. Explain the concept of depreciation. 3. Compute periodic depreciation using the straight-line method, and contrast its expense pattern with […]

9-1 CHAPTER 9 Reporting and Analyzing Long-Lived Assets Learning Objectives 1. Describe how the cost principle applies to plant assets. 2. Explain the concept of depreciation. 3. Compute periodic depreciation using the straight-line method, and contrast its expense pattern with […]

9-18 o When the productivity of the asset varies significantly from one period to another, the units-of-activity method results in the best matching of expenses with revenues. o This method is easy to apply when assets are purchased during the […]

(a) STRAIGHT-LINE DEPRECIATION Computation End of Year Annual Depreciable Depreciation Depreciation Accumulated Book Years Cost X Rate = Expense Depreciation Value 2014 $360,000a 20%b $ 72,000 $ 72,000 $308,000 2015 360,000 20% 72,000 144,000 236,000 2016 360,000 20% 72,000 216,000 […]

Continuing Cookie Chronicle 1 Continuing Cookie Chronicle (Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 8.) CCC9 Part 1 Now that she is selling mixers and her customers can use credit cards to pay for […]

*EXERCISE 9-19 (a) Declining-balance method: 2014 depreciation = $90,000 X 25%* X 3/12 = $5,625 Book value January 1, 2015 = $90,000 – $5,625 = $84,375 2015 depreciation = $84,375 X 25% = $21,093.75. *(1/8) X 2 = 25% (b) […]

PROBLEM 8-2A (Continued) (d) $2,500,000 – $50,000 ($563,000* + $763,000**) ÷2=$2,450,000 $663,000 =3.7 times *$600,000 – $37,000 **$809,000 – $46,000 The average collection period is: 365 days 3.7 = 98.6 days Copyright © 2013 John Wiley & Sons, Inc. Kimmel, […]

CHAPTER 8 Reporting and Analyzing Receivables Learning Objectives 1. Identify the different types of receivables. 2. Explain how accounts receivable are recognized in the accounts. 3. Describe the methods used to account for bad debts. 4. Compute the interest on […]

COMPREHENSIVE PROBLEM SOLUTION (a) Jan. 1 Notes Receivable ……………………………………. Accounts Receivable— Matheny Company …………………………. 1,200 1,200 3 Allowance for Doubtful Accounts…………….. Accounts Receivable ……………………….. 730 730 8 Inventory ………………………………………………… Accounts Payable …………………………….. 17,200 17,200 11 Accounts Receivable ………………………………. Sales Revenue […]

8-1 Chapter 8 Reporting and Analyzing Receivables Learning Objectives 1. Identify the different types of receivables. 2. Explain how accounts receivable are recognized in the accounts. 3. Describe the methods used to account for bad debts. 4. Compute the interest […]

8-16  LOOKING TO THE FUTURE It appears likely that the question of recording fair values for financial instruments will continue to be an important issue to resolve as the Boards work toward convergence. Both the IASB and the FASB […]

Continuing Cookie Chronicle 1 Continuing Cookie Chronicle (Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 7.) CCC8 One of Natalie’s friends, Curtis Lesperance, runs a coffee shop where he sells specialty coffees and prepares and […]

BYP 7-5 REAL-WORLD FOCUS (a) The mission of the Financial Accounting Standards Board is to estab- lish and improve standards of financial accounting and reporting that foster financial reporting by non-governmental entities that provides decision-useful information to investors and other […]

PROBLEM 7-7B NOBLE CORPORATION Cash Budget For the Two Months Ending February 28, 2014 January February Beginning cash balance …………………………………. $ 52,000 $ 40,000 Add: Cash receipts Collections from customers ……………………… 279,500 298,000 Interest receivable ………………………………… 7,500 Sale of securities […]

EXERCISE 7-14 ENRIGHT COMPANY Cash Budget For the Two Months Ending February 28, 2014 January February Beginning cash balance ………………………………….. $ 46,000 $ 24,000 Add: Cash receipts Collections from customers ………………….. 71,000 146,000 Sale of short-term investments ……………… 12,000 0 […]

CHAPTER 7 Fraud, Internal Control, and Cash Learning Objectives 1. Define fraud and internal control. 2. Identify the principles of internal control activities. 3. Explain the applications of internal control principles to cash receipts. 4. Explain the applications of internal […]

7-16 Annals of Improbable Research (AIR), they are presented by a group that includes genuine Nobel laureates at a ceremony at Harvard University’s Sanders Theater. ▪ Internal controls are a system of checks and balances designed to prevent and detect […]

7-1 CHAPTER 7 Fraud, Internal Control, and Cash Learning Objectives 1. Define fraud and internal control. 2. Identify the principles of internal control activities. 3. Explain the applications of internal control principles to cash receipts. 4. Explain the applications of […]

Continuing Cookie Chronicle 1 Continuing Cookie Chronicle (Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 6.) CCC7 Part 1 Natalie is struggling to keep up with the recording of her accounting transactions. She is spending […]

BYP 6-7 COMMUNICATION ACTIVITY In a period of changing prices, the cost flow assumption can have a signifi- cant impact on income and on evaluations based on income. Under the FIFO method, the costs of the earliest goods purchased are […]

*PROBLEM 6-8A (Continued) (b) Gross profit: LIFO FIFO Moving- Average Sales $15,690 $15,690 $15,690 – Cost of goods sold 8,200 7,825 7,927 Gross profit $ 7,490 $ 7,865 $ 7,763 Ending Inventory $ 1,500 $ 1,875 $ 1,773 In a […]

EXERCISE 6-11 (a) Inventory turnover $16,255 ($3,042 + $2,397) ÷ 2 = $16,255 $2,719.5 = 5.98 Days in inventory 365 = 61 days 5.98 (b) Based on data presented: Current ratio $30,857 ÷ $12,753 = 2.42 : 1 After adjusting […]

CHAPTER 6 Reporting and Analyzing Inventory Learning Objectives 1. Describe how to classify inventory and inventory quantities. 2. Explain the basis of accounting for inventories and apply the inventory cost flow methods under a periodic inventory system. 3. Explain the […]

COMPREHENSIVE PROBLEM SOLUTION (Continued) (c) HARRISEN COMPANY Adjusted Trial Balance December 31, 2014 DR. CR. Cash ……………………………………………………… $ 3,040 Accounts Receivable……………………………… 9,580 Inventory ……………………………………………….. 2,342 Equipment …………………………………………….. 21,000 Accumulated Depreciation — Equipment….. $ 1,700 Accounts Payable ………………………………….. 5,880 Salaries and […]

6-14 Vocabulary Quiz Name _____________________________________ Date _______________ Chapter 6 1. An inventory costing method that assumes that the costs of the latest goods purchased are the first to be allocated to cost of goods sold. 2. Measure of the average […]

6-1 CHAPTER 6 Reporting and Analyzing Inventory Learning Objectives 1. Determine how to classify inventory and inventory quantities. 2. Explain the basis of accounting for inventories and apply the inventory cost flow methods under a periodic inventory system. 3. Explain […]

Continuing Cookie Chronicle 1 Continuing Cookie Chronicle (Note: This is a continuation of the Cookie Chronicle from Chapters 1 through 5.) CCC6 Natalie is busy establishing both divisions of her business (cookie classes and mixer sales) and completing her business […]

BYP 5-2 COMPARATIVE ANALYSIS PROBLEM ( a ) Tootsie Roll Hershey Company (1) Profit margin $43,938 $532,505 = 8.3% $628,962 $6,080,788 = 10.3% (2) Gross profit (000’s) $163,144 = ($528,369 – $365,225) $2,531,892 = ($6,080,788 – $3,548,896) (3) Gross profit […]

PROBLEM 5-6B (Continued) (c) BUSE’S FASHION CENTER Adjusted Trial Balance November 30, 2014 Debit Credit Cash ……………………………………………………. Accounts Receivable ……………………………. Inventory ……………………………………………… Supplies ………………………………………………. Equipment …………………………………………… 43,000 4,000 143,000 Accumulated Depreciation— Equipment ……………………………………….. Notes Payable ……………………………………… Accounts Payable ………………………………… Interest […]

PROBLEM 5-7A ERMLER DEPARTMENT STORE Income Statement (Partial) For the Year Ended November 30, 2014 Sales Sales revenue …………………….. $902,000 Less: Sales returns and allowances ……………….. 20,000 Net sales …………………………………… 882,000 Cost of goods sold Inventory, Dec. 1, 2013 ………… […]

CHAPTER 5 Merchandising Operations and the Multiple-Step Income Statement Learning Objectives 1. Identify the differences between a service company and a merchandising company. 2. Explain the recording of purchases under a perpetual inventory system. 3. Explain the recording of sales […]

EXERCISE 5-10 Inventory, September 1, 2013 ……………………………… $ 18,700 Purchases …………………………………………………………. $154,000 Less: Purchase returns and allowances ……………. 5,000 Net purchases ……………………………………………………. 149,000 Add: Freight-in ……………………………………………….. 8,000 Cost of goods purchased …………………………………… 157,000 Cost of goods available for sale …………………………. […]

5-13 Chapter 5 Review 1. What are the differences between a service enterprise and a merchandising company? 2. Give a detailed explanation of the recording of purchases under a perpetual inventory system. Use hypothetical figures to illustrate the perpetual inventory […]