Archives: Solution Manual

(continued) Decision Case 1 Req. 1 *Cost of goods sold: Units Cost La Petite (FIFO): 10,000 × $4 = $ 40,000 5,000 × 5 = 25,000 7,000 × 6 = 42,000 3,000 × 7 = 21,000 25,000 $128,000 Burgers (LIFO): […]

(continued) P 7-70B Req. 2 The depreciation method that maximizes reported income in the first year of the computer’s life is the straight-line method, which produces the lowest depreciation for that year ($50,400). The method that maximizes cash flow by […]

(25-35 min.) P 7-60A Journal DATE ACCOUNT TITLES DEBIT CREDIT Jan. 3 Equipment (new) ……………………………….. 175,000 Accumulated Depreciation — Equipment ………………………………………… 68,000 Equipment (old) ……………………………… 131,000 Cash ……………………………………………… 104,000 Gain on Trade-in of Equipment [$71,000 – ($131,000 − $68,000)] ……… […]

(5-10 min.) E 7-27A Req. 1 Net profit margin ratio for the years ended: January 31, 2013 January 31, 2012 Net earnings $ 2,010 = 4.12% $ 1,783 = 3.78% Net sales $48,815 $47,220 The net profit margin ratio improved […]

Chapter 7 Plant Assets, Natural Resources, & Intangibles Short Exercises (5 min.) S 7-1 1. Whole Foods Market, Inc., reported Buildings and leasehold improvements of $2,219,763 (thousand) and Fixtures and equipment of $1,674,089 (thousand) at September 30, 2012. Included in […]

(20-30 min) P 6-75 Req. 1 Beginning inventory $ 300,000 + Purchases ? $3,930,000 – Ending inventory (330,000) = Cost of goods sold $3,900,000 Req. 2 Inventory …………………………. 3,930,000 Accounts Payable ……. 3,930,000 Accounts Receivable ……….. 6,700,000 Sales ……………………….. 6,700,000 […]

(20-25 min.) P 6-61A Req. 1 Cost of sales, budgeted ($721,000 × 1.05) …………. $ 757,050 + Ending inventory, budgeted …………………………….. 86,000 = Cost of goods available …………………………………… 843,050 − Beginning inventory ……………………………………….. (64,000) = Purchases, budgeted ………………………………………. $ 779,050 […]

(10-15 min.) E 6-26B Req. 1 Inventory Beg. bal. (6 units @ $170) 1,020 Purchases Aug. 15 (8 units @ $172) 1,376 Cost of goods sold 26 (14 units @ $180) 2,520 (17 units @ $?) ? Ending bal. (11 […]

Chapter 6 Inventory & Cost of Goods Sold Short Exercises (10-15 min.) S 6-1 1. (Journal entries) Inventory ……………………………………………… 120,000 Accounts Payable …………………………….. 120,000 Accounts Receivable ……………………………. 165,000 Sales Revenue ………………………………….. 165,000 Cost of Goods Sold ………………………………. 84,000 Inventory ($120,000 […]

(continued) P 5-61B Req. 2 The current ratio improved from 1.38 to 1.74. The quick (acid-test) ratio increased from 0.83 to 0.99. Days’ sales in receivables improved from 18 days to 17 days. All three ratio values improved during the […]

(continued) P 5-53A Req. 2 December 31, BALANCE SHEET 2015 2014 Current assets: Note receivable …………………………………… $15,000 $24,000 Interest receivable ………………………………. 98 240 Copyright © 2015 Pearson Education Inc. Chapter 5 Short Term Investments & Receivables 5-41 (15-25 min.) P […]

(15-20 min.) E 5-25B Journal DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT 2014 Dec. 31 Doubtful-Account Expense ($795,000 × .02) … 15,900 Allowance for Doubtful Accounts …………… 15,900 BALANCE SHEET Current assets: Accounts receivable, net of allowance for doubtful accounts […]

Chapter 5 Short-Term Investments & Receivables Short Exercises (5 min.) S 5-1 1. Trading securities are reported at their current market value (fair value). 2. A trading security is always a current asset because the investor intends to sell the […]

(30-45 min.) P 4-53B Tampa Wireless Cash Budget 2015 Cash balance, beginning $ 1,500 Budgeted cash receipts: Collections from customers ($66,000 × 1.25) 82,500 Receipt of interest 100 84,100 Budgeted cash payments: Cash paid for inventory ($50,000 × 1.24) $62,000 […]

(10-20 min.) E 4-29B Joe Donney Bank Reconciliation August 31, 2014 BANK: Balance, August 31 $ 638 Add: Deposit in transit 1,695 2,333 Less: Outstanding checks (756) Adjusted bank balance $1,577 BOOKS: Balance, August 31 $1,620 Add: EFT collection — […]

Chapter 4 Internal Control & Cash Short Exercises (5 min.) S 4-1 Fraud is an intentional misrepresentation of facts, made for the purpose of persuading another party to act in such a way that causes injury or damage to that […]

(continued) Amazon.com, Inc. Req. 3 (amounts in millions) Journal DATE ACCOUNT TITLES DEBIT CREDIT a. Accrued Expenses and Other ………………….. 3,751 Cash ………………………………………………….. 3,751 b. Operating Expenses…………………………… 14,446 Cash ………………………………………………….. 8,762 Accrued Expenses and Other ……………… 5,684 The balance of […]

(continued) P 3-75 Supporting computations (a) Cash Bal. 12/31/2013 1,300 Cash collections from customers Issuance of common stock 31,000 8,000 12,500 500 5,000 Salaries paid Dividends paid Purchase of equipment 5,500 Payments of accounts payable 1,500 Advertising paid 1,500 Bal. […]

(45-60 min.) P 3-64A Req. 1 (All amounts in millions) Current ratio = Total current assets = $15.8 = 1.84 Total current liabilities $8.6 $13.9 Debt ratio = Total liabilities = $8.6 + $5.3 = 0.43 Total assets $32.1 Req. […]

(continued) E 3-39 Reqs. 3 and 4 Sean Huffman, Certified Public Accountant, P.C. Adjusted Trial Balance January 31, 2014 TRIAL BALANCE ADJUSTMENTS ADJUSTED TRIAL BALANCE ACCOUNT TITLE DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT Cash 9,500 9,500 Accounts receivable — (a) […]

(20-30 min.) E 13-62 ORDER OF COMPUTATION Millions 5 Sales ($1,700 ÷ 0.25) ………………………………………… $6,800 6 Operating expenses ($6,800 − $1,700) ………………. 5,100 4 Operating income ……………………………………………. 1,700 Given Interest expense ……………………………………………… 800 2 Pretax income [$540 ÷ (1 − […]

(10-20 min.) E 3-25A Journal DATE ACCOUNT TITLES DEBIT CREDIT Closing Entries Dec. 31 Service Revenue ………………………………… 31,900 Other Revenue …………………………………… 400 Retained Earnings …………………………. 32,300 31 Retained Earnings ……………………………… 25,400 Cost of Services Sold ……………………. 14,300 Selling, General, and […]

Chapter 3 Accrual Accounting & Income Short Exercises (10 min.) S 3-1 Millions Sales revenue ……………………………………………………………. $825 Cost of goods sold ……………………………………………………. (255) All other expenses …………………………………………………….. (325) Net income ……………………………………………………………….. $245 Beginning cash …………………………………………………………. $ 75 Collections ($825 − […]

(20-30 min.) E 2-66 Req. 1 3 PT, Inc. Trial Balance October 31, 2014 Cash…………………………… $ 3,900 Accounts receivable……….. 7,400 Land…………………………… 34,400 Accounts payable………….. $ 6,000 Note payable………………… 5,500 Common stock……………… 20,100 Retained earnings………….. 7,500 Service revenue…………….. 9,500 Salary expense……………… […]

(50-60 min.) P 2-58A Req. 1 Journal DATE ACCOUNT TITLES DEBIT CREDIT Jan. 2 Cash ……………………………………………. 65,000 Common Stock …………………….. 65,000 3 Supplies ……………………………………….. 1,000 Equipment …………………………………… 12,000 Accounts Payable …………………. 13,000 4 Cash ……………………………………………. 5,500 Service Revenue …………………… 5,500 […]

(10-15 min.) E 2-25B a. Increased assets (cash) b. Increased assets (land) c. Increased assets (supplies) d. No effect (a personal transaction) e. No effect on total assets. Increase in equipment offsets the decrease in cash. f. Increased assets (cash) […]

Chapter 2 Transaction Analysis Short Exercises (5 min.) S 2-1 Alexander’s payment was not an expense. Alexander acquired an asset, Equipment, because the computer is an economic resource of the business. (5 min.) S 2-2 a. $19,400 ($15,000 + $4,400 […]

(continued) Amazon.com 6. Evaluating stock as an investment Student opinions and answers based on the market price of the stock will vary. The following statistics will bolster their positions. Ratio Computation 2012 2011 Interpretation Price Market price $251* $173** earnings […]

Copyright © 2015 Pearson Education Inc. Chapter 13 Financial Statement Analysis 13–61 (20-30 min.) E 13-62 ORDER OF COMPUTATION Millions 5 Sales ($1,700 ÷ 0.25) ………………………………………… $6,800 6 Operating expenses ($6,800 − $1,700) ………………. 5,100 4 Operating income ……………………………………………. 1,700 […]

(continued) P 13-51A Holiday Flights’ statement of cash flows reveals the following strengths (no significant weaknesses): 1. During both years, operating activities were the major source of cash. 2. The company’s heavy investments in plant assets suggest expansion. The use […]

(continued) E 13-23A g. Operating income percentage: 2014: $77,000 = 0.29 2013: $54,000 = 0.27 $263,000 $199,000 h. Earnings per share of common stock: 2014: $42,000 − $2,000 = $2.67 2013: $23,000 − $1,000 = $1.57 15,000 14,000 The company’s […]

Chapter 13 Financial Statement Analysis Short Exercises (5-10 min.) S 13-1 Increase (Decrease) (Dollars in thousands) 2014 2013 2014 2013 2012 Amount Percent Amount Percent Revenues $20,289 $20,045 $18,449 $244 1.2% $1,596 8.7% Expenses 10,915 10,338 10,100 Net income $ […]

Challenge Exercises and Problem (20-30 min.) E 12-76 (All amounts in thousands) Decrease in Sales + Accounts Receivable a. Collections = $25,133 = $25,118 + ($612 − $597) Cost Increase in Increase in − Accounts b. Payments for of sales […]

(40 min.) P 12-68B Req. 1 Lexington Luxury Autos, Inc. Income Statement Year Ended December 31, 2014 Sales revenue …………………………………………………….. $490,000 Cost of goods sold [$234,000 + (1 × $47,000)] ………. 281,000 Salary expense …………………………………………………… 78,000 Rent expense ……………………………………………………… 16,000 […]

Problems (40 min.) P 12-58A Req. 1 Fairfax Fine Automobiles, Inc. Income Statement Year Ended December 31, 2014 Sales revenue …………………………………………………………….. $497,000 Cost of goods sold [$136,000 + (3 × $45,000)] ………………. 271,000 Salary expense …………………………………………………………… 102,000 Depreciation expense ($150,000 […]

(continued) E 12-20A Req. 2 Tullis’ cash flows look strong. Operations are the main source of cash. The company is investing in new plant assets without having to borrow. It was able to issue stock and pay off a long-term […]

Chapter 12 The Statement of Cash Flows Short Exercises (10 min.) S 12-1 The statement of cash flows helps investors and creditors: a. Predict future cash flows by reporting past cash receipts and payments, which are reasonably good predictors of […]

Chapter 11 Evaluating Performance: Earnings Quality, the Income Statement, & the Statement of Comprehensive Income 11–53 Decision Cases (15-20 min.) Decision Case 1 EPS to use for predicting future profits: Unaudited EPS …………………………………………………………………. $1.19 Include: Gain on sale of building […]

Chapter 11 Evaluating Performance: Earnings Quality, the Income Statement, & the Statement of Comprehensive Income 11–41 (25-35 min.) P 11-54A Req. 1 Pretax accounting income of 2014 ……………………….. $225,000 + Additional taxable income for income earned in 2015 that is […]

Chapter 11 Evaluating Performance: Earnings Quality, the Income Statement, & the Statement of Comprehensive Income 11–21 (20-30 min.) E 11-23A Req. 1 Bowersox International Corporation Statement of Comprehensive Income Year Ended December 31, 2014 Net income ………………………………………………………………… $3,500,000 Other comprehensive […]

Chapter 11 Evaluating Performance: Earnings Quality, the Income Statement, & the Statement of Comprehensive Income 11-1 Chapter 11 Evaluating Performance: Earnings Quality, the Income Statement & the Statement of Comprehensive Income Short Exercises (5-10 min.) S 11-1 There are several […]

(continued) Decision Case 1 Req. 4 Plan 1 appears to fit the plans of Smith and Jones better than Plan 2 because: • Their primary goal is to raise as much capital as possible without giving up control of the […]

(20-30 min.) P 10-76B Req. 1 and 2 ASSETS = LIABILITIES + STOCKHOLDERS’ EQUITY CASH FLOW Feb. 3 $297,000 = $ 0 + $297,000 $+297,000 Mar. 19 (83,700) = 0 + (83,700) -83,700 Apr. 24 44,800 = 0 + 44,800 […]

(20-25 min.) E 10-44B Req. 1 (Thousands) $3.00 Par Common Stock Additional Paid In Capital Retained Earnings Accum. Other Comprehensive Income Total Shareholders’ Equity Balance, Dec. 31, 2013 .. $375 $2,225 $4,200 $12 $6,812 Net earnings ……………… 990 990 Other […]

(15 min.) E 10-25A Preferred Common Total 2014 Total dividend $ 86,000 Preferred dividends in arrears: 2012: 90,000 shares × $1.00(par) per share × .05 = $4,500 2013: 90,000 shares × $1.00(par) per share × .05 = 4,500 Preferred dividends, […]

Chapter 10 Stockholders’ Equity Short Exercises (5–10 min.) S 10-1 Corporation’s advantages: • Continuous life • Transferability of ownership • Limited liability of the stockholders • Ease of raising capital Corporation’s disadvantages: • Double taxation of distributed profits • Government […]

(20-25 min.) P 1-59B Req. 1 Nancy Boyd, Realtor, Inc. Balance Sheet September 30, 2015 ASSETS LIABILITIES Cash $ 56,000 Accounts payable $ 41,000 Office supplies 3,000 Note payable 86,000 Land 117,000 Total liabilities 127,000 Furniture 50,000 STOCKHOLDERS’ Franchise 25,000 […]

(10-20 min.) E 1-30B Diaz Design Company Balance Sheet July 31, 2014 (Amounts in millions) ASSETS LIABILITIES Cash $ 4.7 Current liabilities $ 5.3 Receivables 1.6 Long-term liabilities 99.5 Investment assets 108.9 Total liabilities 104.8 Property and equipment, net 57.6 […]

Chapter 1 The Financial Statements Short Exercises (5 min.) S 1-1 Computed amounts in boxes Total Assets = Total Liabilities + Stockholders’ Equity a. $660,000 = $320,000 + $340,000 b. 135,000 = 57,000 + 78,000 c. 401,000 = 45,000 + […]

3M – “3M employees continuously challenge the upper limits of product reliability and capability through process and product innovation and the application of proven quality principles. Underlying this effort is a strong corporate commitment to the Six Sigma strategy for […]