Archives: Solution Manual

Reporting in Action — BTN 13-1 (All shares in thousands.) 1. As of September 28, 2013, the shares of common stock issued and The weighted-average common shares used in calculating earnings per share are disclosed on its statement of income. […]

Problem 13-5A (40 minutes) 1. Market price = $85 per share (current stock exchange price given) 2. Computation of par values of stock 3. Book values with no dividends in arrears Book value per preferred share = par value (when […]

Exercise 13-13 (30 minutes) 1. Net income…………………………………………………………………………$960,000 Exercise 13-14 (15 minutes) Stock Market Value per Share Divided by Earnings per Share Price-Earnings Ratio 1…………. $176.40 $12.00 = 14.7 2…………. 96.00 10.00 = 9.6 3…………. 93.75 7.50 = 12.5 4…………. 250.00 […]

EXERCISES Exercise 13-1 (15 minutes) Characteristic Corporations 1. Owner authority and control………………….One vote per share 2. Ease of formation…………………………………Requires government approval Exercise 13-2 (15 minutes) 1. Feb. 20 Cash……………………………………………………………….152,000 Common Stock, $2 Par Value*…………………….. 38,000 Paid-In Capital in Excess of […]

Chapter Outline Notes 2. Prior Period Adjustments a. Corrections of material errors made in prior periods. b. Include arithmetic mistakes, unacceptable accounting, and missed facts. c. Reported in statement of retained earnings as corrections (net of income tax effects) to […]

Reporting in Action — BTN 12-1 1. The founders of Apple are Steve Wozniak, Steve Jobs and Ron Wayne. Each Apple I personal computer kit was single-handedly designed and 2. At least two differences would be immediately apparent between Apple’s […]

PROBLEM SET B Problem 12-1B (45 minutes) Preliminary calculations Plan (a) & Plan (c) Percentages based on initial investments Plan (b) Percentages based on time Bell = 0.333/1.333 = 25% Green = 1.000/1.333 = 75% Plan (c) & Plan (d) […]

Problem 12-1A (Concluded) Income (Loss) Year 2 Sharing Plan Calculations Watts Lyon (a) 40% x $90,000 income……………………………………..$36,000 60% x $90,000 income…………………………………….. $54,000 (b) 33 1/3% x $90,000 income………………………………..$30,000 66 2/3% x $90,000 income……………………………….. $60,000 Income (Loss) Year 3 Sharing Plan […]

Exercise 12-5 (35 minutes) Kramer Knox Total 1. Net income…………………………………………… $ 98,800 Salary allowances…………………………………$50,000 $ 40,000 90,000 Interest allowances 2. Net income…………………………………………… $ (16,800) Salary allowances…………………………………$50,000 $ 40,000 90,000 Interest allowances ($60,000 x 10%)…………………………………..6,000 6,000 ($80,000 x 10%)………………………………….. 8,000 8 […]

4. The solution depends on the financial statement information accessed. Comparative Analysis — BTN 11-2 1. Apple—Times interest earned ($ millions) Current Year One Year Prior Two Years Prior Net income…………………………………………$37,037 $41,733 $25,922 Google—Times interest earned ($ millions) Current Year […]

Problem 11-6BA (50 minutes) June 15 FICA—Social Security Taxes Payable………………. 992 30 Office Salaries Expense………………………………………………………………………… 3,800 Shop Salaries Expense…………………………………………………………………………. 4,200 FICA—Social Security Taxes Payable……………………………………………. 496 FICA—Medicare Taxes Payable…………………………………………………….. 116 Employee Fed. Income Taxes Payable……………………………………………. 1,050 Salaries Payable……………………………………………………………………………… 6,338 To record […]

Problem 11-6AA (Concluded) Apr. 15 FICASocial Security Taxes Payable…………………………………………………… 3,472 15 State Unemployment Taxes Payable…………………………………………………….. 2,800 Cash……………………………………………………………………………………………….. 2,800 To record payment of SUTA taxes [$2,240 + $560]. 30 Federal Unemployment Taxes Payable………………………………………………… 420 Cash……………………………………………………………………………………………….. 420 To record payment of FUTA […]

Problem 11-1A (Concluded) 5. 2014 Apr. 20 Merchandise Inventory……………………………………. 40,250 Accounts Payable—Locust………………………… 40,250 Purchased merchandise on credit. May 19 Accounts Payable—Locust……………………………… 40,250 July 8 Cash………………………………………………………………. 80,000 Notes Payable—National……………………………. 80,000 Borrowed cash with a 120-day, 9% note. Aug. 17 Interest Expense…………………………………………….. […]

Exercise 11-9 (30 minutes) a. Employee Cumulative Pay Pay Subject to FICA Social Security Pay Subject to FICA Medicare Pay Subject to FUTA Taxes Pay Subject to SUTA Taxes Ken S……………….$ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000 […]

Chapter 11 – Current Liabilities and Payroll Accounting Chapter 11 Current Liabilities and Payroll Accounting QUESTIONS 4. The amount of the sale for the item only is $950 ($988/1.04). 5. The combined Social Security tax rate (assuming the maximum wage […]

Chapter 11 – Current Liabilities and Payroll Accounting CHAPTER 11 CURRENT LIABILITIES AND PAYROLL ACCOUNTING Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe current and long-term liabilities and their characteristics. […]

Problem 10-8B (20 minutes) 1. 2015 (a) To record payment for sublease. (b) Jan. 1 Prepaid Rent………………………………………………………36,000 Cash…………………………………………………………….. 36,000 To record prepaid annual lease rental. (c) Jan. 3 Leasehold Improvements…………………………………….20,000 Cash…………………………………………………………….. 20,000 To record costs of leasehold improvements. 2. 2015 […]

PROBLEM SET B Problem 10-1B (50 minutes) Part 1 Estimated Market Value Percent of Total Apportioned Cost Building…………………….. $ 890,000 50% $ 900,000 2015 Jan. 1 Buildings……………………………………………………………..900,000 Land…………………………………………………………………….432,000 Land Improvements………………………………………………252,000 Trucks………………………………………………………………….216,000 Cash………………………………………………………………. 1,800,000 To record asset purchases. Part 2 Year […]

Exercise 10-25 (20 minutes) (Amounts for this exercise are in euros millions) 1. Depreciation expense…………………………………………… ……………………………………………………………………… 6,689 2. Property, plant and equipment………………………………. ……………………………………………………………………… 11,061 Cash……………………………………………………………… 11,061 To record betterments (improvements) on property, plant and equipment. 3. Cash……………………………………………………………………. 700 Loss on […]

Chapter 10 – Plant Assets, Natural Resources, and Intangibles Exercise 10-3 (20 minutes) Purchase price………………………………………………….. $375,280 Allocation of total cost Appraised Value Percent of Total Applying % to Cost Apportioned Cost Land…………………………$157,040 40% $395,380 x .40 $158,152 Land improvements……. 58,890 […]

Chapter 10 – Plant Assets, Natural Resources, and Intangibles Chapter 10 Plant Assets, Natural Resources, and Intangibles QUESTIONS 1. A plant asset is tangible; it is used in the production or sale of other assets or services; 2. The cost […]

VISUAL #10-1 FORMULAS FOR DEPRECIATION METHODS 1. STRAIGHT LINE FHC* – Estimated salvage Annual Estimated useful life Depreciation *Full Historical Cost 2. UNITS OF PRODUCTION (Depreciable) a) FHC – Estimated salvage Cost per Predicted units of production Unit b) CPU* […]

Problem 9-5B (Concluded) June 15 Notes Receivable—R. Solon…………………………. 2,000 June 21 Notes Receivable—J. Felton…………………………. 9,500 Accounts Receivable—J. Felton………………. 9,500 To record note received on account. Aug. 14 Cash……………………………………………………………. 2,034 Interest Revenue*……………………………………. 34 Notes Receivable—R. Solon…………………….. 2,000 To record cash received […]

Problem 9-3A (35 minutes) Part 1 Calculation of the estimated balance of the allowance for uncollectibles Not due: $830,000 x .0125 = $10,375 Part 2 Dec. 31 Bad Debts Expense…………………………………….. 27,150 Allowance for Doubtful Accounts……………. 27,150 To record estimated bad […]

Exercise 9-6 (Concluded) b. Dec. 31 Bad Debts Expense…………………………………….. 8,220 Allowance for Doubtful Accounts……………. 8,220 To record estimated bad debts.* c. Dec. 31 Bad Debts Expense…………………………………….. 11,920 Allowance for Doubtful Accounts……………. 11,920 To record estimated bad debts.* *Unadjusted balance………………………………$ 100 […]

Chapter 09 – Accounting for Receivables Chapter 9 Accounting for Receivables QUESTIONS 1. When customers use credit cards, the selling companies can avoid having to directly evaluate the credit standing of their customers. They also avoid the risk of bad […]

Chapter 09 – Accounting for Receivables CHAPTER 9 ACCOUNTING FOR RECEIVABLES Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Describe accounts receivable and how they occur and are recorded. 1 9-1, […]

Communicating in Practice — BTN 8-4B Memorandum To: “Owner” From: “Consultant” Date: __________ Subject: Advice on monitoring purchase discounts [Instructor’s Note: The response should acknowledge the owner’s concern and recommend the net method of recording purchases. It should explain how […]

Part 3 In a banking context, a debit memo is notification from the bank that it has debited the depositor’s account. Since the depositor’s account is a liability of the bank (a credit balance account), the debit notification means the […]

Problem 8-4A (30 minutes) Part 1 BRANCH COMPANY Bank Reconciliation July 31, 2015 Bank statement balance….. $27,233 Book balance………………………………………………………………………….$27,497 Add Add 38,747 collection charge………………………………………………………………… 7,955 35,452 Deduct Deduct Checks No. 3031….$1,482 NSF check………….$ 805 3065…. 382 Service charge……. 25 3069…. […]

Exercise 8-6 (20 minutes) 1. To establish a petty cash fund. 2. Jan. 8 Postage Expense………………………………………….. 74 Merchandise Inventory*…………………………………. 29 Delivery Expense………………………………………….. 16 Miscellaneous Expenses……………………………….. 43 Cash……………………………………………………….. 162 To reimburse the petty cash fund. *Transportation-in costs are included in Merchandise […]

Chapter 08 – Cash and Internal Controls Chapter 8 Cash and Internal Controls QUESTIONS 1. The seven broad principles are: Establish responsibilities; Maintain adequate records; 2. Internal control procedures become especially critical when the manager of a business can no […]

Chapter 08 – Cash and Internal Control CHAPTER 8 CASH AND INTERNAL CONTROL Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Define internal control and its purpose and principles. 1, 2, […]

Comprehensive Problem, Colo Company (Continued) Part 3—continued COLO COMPANY Statement of Owner’s Equity For Month Ended May 31, 2015 Jenny Colo, Capital, April 30, 2015……………. $308,085 Plus: Net income…………………………………….. 31,647 339,732 Less: Withdrawals by owner…………………….. (7,000) Jenny Colo, Capital, May […]

Comprehensive Problem, Colo Company (Continued) Part 2 COLO COMPANY Work Sheet for Month Ended May 31, 2015 Unadjusted Trial Balance Adjustments Income Statement Balance Sheet or State-ment of Owner’s Equity Account Debit Credit Debit Credit Debit Credit Debit Credit Cash……………………………………………….. […]

Problem 7-3B (80 minutes) Parts 1 and 3 PURCHASES JOURNAL Page 3 Date Account Date of Invoice Terms PR Accounts Payable Cr. Inventory Dr. Office Supplies Dr. Other Accounts Dr. July 1 Teton Company……………………………….6/30 2/10, n/30 6,500 6,500 7 Store […]

PROBLEM SET B Problem 7-1B (100 Minutes) Parts 1 and 2 SALES JOURNAL Page 2 Date Account Debited Invoice Number PR Accounts Receivable Dr. Sales Cr. Cost of Goods Sold Dr. Inventory Cr. Nov. 8 Cyd Rounder………………………………..439 6,550 3,910 10 […]

Problem 7-2A (Continued) Parts 2 and 3 GENERAL LEDGER Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Accounts Receivable Acct. No. 106 Date Explanation PR Debit Credit Balance Apr. 30 S3 37,470 37,470 30 R3 27,600 9,870 Inventory […]

Chapter 07 – Accounting Information Systems Exercise 7-10 (30 minutes) Part 1 ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER Anna Page Sara Reed Aaron Reckers 25 1,340 Part 2 GENERAL LEDGER Accounts Receivable Sales Sales Returns and Allowances May 10,010 May 350 May […]

Chapter 7 Accounting Information Systems QUESTIONS 1. The five components of an accounting system are: source documents, input 2. Source documents contain data about business transactions or events that are put into the accounting system and processed. Examples of source […]

Problem 7-5AA (Continued) Parts 2 and 3—continued ACCOUNTS PAYABLE LEDGER Custer, Inc. Date Explanation PR Debit Credit Balance Grant Company Date Explanation PR Debit Credit Balance Apr. 17 P3 13,750 13,750 23 G3 750 13,000 26 D3 13,000 0 Hal’s […]

Appendix 7A – Accounting Information Systems Appendix 7A—PERIODIC Accounting Information Systems QUICK STUDIES Quick Study 7-11A (20 minutes) PURCHASES JOURNAL Date Account Date of Invoice Terms PR Account s Payable Cr. Purchases Dr. Office Supplies Dr. Other Accounts Dr. May […]

Problem 7-6BA (Continued) CASH RECEIPTS JOURNAL Page 2 Date Account Credited Explanation PR Cash Dr. Sales Discount Dr. Accounts Receivable Cr. Sales Cr. Other Accts. Cr. Nov. 2 L.T. Notes Pay…………………………………..Note to bank……………………………………………………………….. 251/88,500 88,500 15 Sales………………………………………………Cash sales………………………………………………………………….. 18,170 18,170 […]

Problem 7-4BA (Continued) Parts 2 and 3 GENERAL LEDGER Cash Acct. No. 101 Date Explanation PR Debit Credit Balance Accounts Receivable Acct. No. 106 Date Explanation PR Debit Credit Balance July 31 S3 74,670 74,670 31 R3 40,350 34,320 Inventory […]

Chapter 07 – Accounting Information Systems Alternate Demonstration Problem Chapter 7 Bedrock Company completed these transactions during February of the current year: Feb 1 Owner, F. Stone invested $100,000 cash in the business. 1 Sent Flint Company check No. 413 […]

CHAPTER 7 ACCOUNTING INFORMATION SYSTEMS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Identify the fundamental principles and components of accounting information systems. 1, 2, 3, 4, 5, 6 7-1, 7-2 […]

Teamwork in Action — BTN 6-6 Concepts and procedures to illustrate in expert presentation: Specific Identification Expert: (a) and (b) Concept: Purchases are always recorded at the actual specific costs. The specific (a) and (b) Procedures: Date Goods Purchased Cost […]

Problem 6-8BA (30 minutes) Part 1 SHEPARD COMPANY Income Statements Comparing FIFO, LIFO, and Weighted Average For Year Ended December 31, 2015 FIFO LIFO Weighted Average Sales……………………………………………………. $400,000 $400,000 $400,000 Cost of goods sold Inventory, Dec. 31, 2014……………………….. 48,720 48,720 […]

Problem 6-3B (40 minutes) 1. Compute cost of goods available for sale and units available for sale Beginning inventory……………………… 150 units @ $300 $ 45,000 Cost of goods available for sale…….. $249,300 2. Units in ending inventory Units available (from […]

Problem 6-9AB (25 minutes) Part 1 ALASKA COMPANY Estimated Inventory December 31 At Cost At Retail Goods available for sale Beginning inventory……………………………………. $ 469,010 $ 928,950 Cost of goods purchased……………………………. 3,376,050 6,381,050 Part 2 Estimated physical inventory at cost: $1,686,900 […]