Archives: Solution Manual

Problem 1-9B (60 minutes) Parts 1 and 2 Assets = Liabilities + Equity Date Cash +Accounts Receivable +Office Supplies +Office Equipment +Roofing Equipment =Accounts Payable +R. Rivera, Capital – R. Rivera, With-draw als +Reve-nue s–Expen-se s July 1 + $80,000 […]

PROBLEM SET B Problem 1-1B (25 minutes) Balance Sheet Income Statement Statement of Cash Flows Transaction Total Assets Total Liab. Total Equity Net Income Operating Activities Financing Activities Investing Activities 1 Owner invests cash in business + + + 2 […]

Part 3 The Gram Co. Income Statement For Month Ended May 31 Revenues Consulting services revenue ……….. $11,100 Expenses Rent expense………………………………. $2,200 Salaries expense………………………….. 1,500 The Gram Co. Statement of Owner’s Equity For Month Ended May 31 G. Gram, Capital, […]

Chapter 01 – Accounting in Business .Exercise 1-13 (30 minutes) Assets =Liabilities +Equity Cash +Accounts Receivable +Equip- ment =Accounts Payable +M.Chen, Capital – M.Chen, With- drawals +Revenues –Expenses a. +$60,000 + $15,000 = + $75,000 b. – 1,500 ______ ______ […]

QUICK STUDIES Quick Study 1-1 (10 minutes) 1. f. Technology 2. c. Recording 3. e. Recordkeeping (bookkeeping) Quick Study 1-2 (10 minutes) a. E g. E Quick Study 1-3 (10 minutes) a. The choice of an accounting method when more […]

Chapter 1 Accounting in Business QUESTIONS 1. The purpose of accounting is to provide decision makers with relevant and reliable 2. Technology reduces the time, effort, and cost of recordkeeping. There is still a demand for people who can design […]

CHAPTER 1 ACCOUNTING IN BUSINESS Related Assignment Materials Student Learning Objectives Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives C1. Explain the purpose and importance of accounting 1, 5, 1-1 1-1, 1-4, 1-6 1-6 C2. Identify users and […]

PROBLEM SET B Problem C-1B (45 minutes) 1. Wrapping $500,000/100,000 units = $5/unit Assembling* $400,000/20,000 direct labor hours = $20/DLH * The costs of Assembling and Obtaining business licenses should NOT be combined because they are different with respect to […]

Appendix C – Activity-Based Costing Exercise C-6 (30 minutes) Calculation of predetermined overhead rates to apply ABC Overhead Cost Category (Activity Cost Pool) Total Cost Total Amount of Cost Driver Predetermined Overhead Rate Supervision…………………………$ 5,400 $36,000 15% of direct labor […]

Appendix C – Activity-Based Costing Appendix C Activity-Based Costing QUESTIONS 1. Manufacturing overhead costs cannot be directly traced to units of product like direct materials and direct labor. Assigning overhead costs to units of product requires some sort of allocation […]

Appendix C – Activity-Based Costing APPENDIX C ACTIVITY-BASED COSTING Related Assignment Materials Student Learning Objectives Discussion Questions Quick Studies* Exercises* Problems* Beyond the Numbers Conceptual objectives: C1. Explain cost flows for activity based costing 1,3,4 Analytical objectives: A1. Identify and […]

Appendix B – Time Value of Money Appendix B Time Value of Money QUICK STUDIES Quick Study B-1 (10 minutes) 1. 2% n = 8 periods Quick Study B-2 (10 minutes) In Table B.1, where n = 15 and p […]

Appendix B – Time Value of Money APPENDIX B TIME VALUE OF MONEY Related Assignment Materials Student Learning Objectives Quick Studies* Exercises* Conceptual objectives: C1. Describe the earning of interest and the concepts of present and future values. B-1 B-11, […]

The Sports Warehouse Income Statements For the Year Ended December 31, 2015 Equipment Apparel Amount % Amount % Sales $1,700,000 100.0 $2,850,000 100.0 Cost of goods sold 1,100,000 65.7 1,400,000 49.1 Gross profit 600,000 35.3 1,450,000 50.9 Operating expenses 250,000 […]

($ in thousands) Increase (Decrease) 2013 2012 Amount % Net sales $ 3,475,802 $ 3,120,065 $ 355,737 11.4 Cost of sales 2,085,480 1,975,471 110,009 5.6 Gross profit 1,390,322 1,144,594 245,728 21.5 Selling, general, and admin. 834,601 718,123 116,478 16.2 Loss […]

Accounts payable $ 30,150 $ 46,800 $(16,650) (35.6) Long-term liabilities: Notes payable 138,150 127,600 10,550 8.3 Stockholders’ equity: Common stock 144,000 144,000 0 0 Retained earnings 118,350 68,000 50,350 74.0 Total liabilities and equity $450,000 $400,000 $50,000 12.5 Problem 12-4A […]

Exercise 12-5 (LO12.3) Requirement 1 Risk Ratios Calculations Receivables turnover ratio $19,310,000 Average collection period 365 14.3 = 25.5 days Inventory turnover ratio $12,250,000 ($1,500,000 + $2,000,000) / 2 = 7.0 times Average days in inventory 365 7.0 = 52.1 […]

Question 12-1 (LO 12.1, 12.2) The three types of comparisons commonly used in financial statement analysis are Question 12-2 (LO 12.1, 12.2) For vertical analysis, we express each item as a percentage of the same base amount, such as a […]

h1. Conservative accounting practices d2. Discontinued operation a3. Extraordinary item c4. Horizontal analysis g5. Liquidity b6. Quality of earnings f7. Solvency e8. Vertical analysis Descriptions a. A profit or loss unusual in nature and infrequent in occurrence. b. The ability […]

Type of Activity Cash Inflow or Outflow Transaction F CI 1. Issuance of common stock F CI 2. Issuance of bonds I CO 3. Investment in bonds I CI 4. Collection of a note receivable O CI 5. Sale of […]

Net sales $2,600,00 0 + Decrease in accounts receivable 16,000 0 Cost of goods sold $1,650,00 0 + Increase in inventory 15,000 = Purchases 1,665,000 + Decrease in accounts payable 63,000 = Cash paid to suppliers $1,728,00 0 Operating expenses […]

Google and Yahoo’s cash flow to sales ratio is similar to Apple and much higher than Dell, while its asset turnover is lower than Apple or Dell. Google and Yahoo’s *Problem 11-6A (LO 11-5) Alliance Technologies Statement of Cash Flows […]

Exercise 11-7 (LO 11-2, 11-3) Technology Solutions Statement of Cash Flows For the Year Ended December 31, 2015 Cash Flows from Operating Activities Net income Adjustments to reconcile net income to net cash flows from operating activities: List of items […]

Question 11-1 (LO 11-1) The three categories of cash flows are operating activities, investing activities, and financing activities. Operating activities include cash receipts and cash payments for transactions relating to revenue and expense activities, essentially the very same activities reported […]

Items __e__ 1. Indirect method __d__ 2. Direct method __f__ 3. Depreciation expense __g__ 4. Cash return on assets __a__ 5. Operating activities __b__ 6. Investing activities __h__ 7. Financing activities __c__ 8. Noncash activities Descriptions a. Cash transactions involving […]

Problem 10-1C Terms __h__ 1. 100% stock dividend __a__ 2. Statement of stockholders’ equity __e__ 3. Treasury stock __b__ 4. Value stocks __j__ 5. PE ratio __d__ 6. Stockholders’ equity section of the balance sheet __c__ 7. Return on equity […]

* $140,000 beginning balance in retained earnings + $150,000 net income – $115,000 in dividends Financial Analysis: American Eagle AP10-2 Requirement 1 $0.01 par value per share. The par value per share is listed in the stockholders’ Requirement 2 249,566,000 […]

Problem 10-6A (LO 10-2, 10-3, 10-4, 10-5, 10-7) Requirement 1 January 2, 2015 Debit Credit Cash (110,000 x $70) 7,700,000 Common Stock (110,000 x $1) 110,000 February 14, 2015 Cash (60,000 x $12) 720,000 Preferred Stock (60,000 x $10) 600,000 […]

Exercise 10-6 (LO 10-2, 10-3, 10-4) January 2, 2015 Debit Credit Cash (100,000 x $35) 3,500,000 Common Stock (100,000 x $1) 100,000 February 6, 2015 Cash (3,000 x $11) 33,000 Preferred Stock (3,000 x $10) 30,000 Additional Paid-in Capital (difference) […]

<<PRODUCTION: Note that this chapter does not have continued lines for the review questions, as did all other chapters. Also, note that the running foot needs to be corrected on all but the first page, to show the correct edition […]

Terms __g___ 1. Limited liability company __e___ 2. Limited liability __d___ 3. Articles of Incorporation __h___ 4. Organization chart __a___ 5. S Corporation __b___ 6. Publicly held corporation __c___ 7. Initial public offering __f___ 8. Double taxation Definitions a. Allows […]

Requirement 1 Face amount. The issue price is $600,000. Calculator Input Bond Characteristics Key Amount 1. Face amount FV $600,000 2. Interest payment PMT $18,000 = $600,000 x 6% x ½ year Calculator Output Issue price PV $600,000 (1) Date […]

Requirement 3 January 31, 2015 Interest Expense ($500,000 x 9% x 1/12) 3,750.00 Notes Payable (difference) 1,321.33 Requirement 4 Requirement 1 Assets = Liabilities + Stockholders’ Equity $201 million $91 + $61 = $152 million ? Total Liabilities ÷ Stockholders’ […]

Problem 9-5A (LO 9-6) Requirement 1 January 1, 2015 Building 360,000 Cash 60,000 Requirement 2 (1) Date (2) Cash Paid (3) Interest Expense (4) Decrease in Carrying Value (5) Carrying Value Monthly Payment Carrying Value x 0.07 x 1/12 (2) […]

Requirement 2 January 1, 2015 Cash 644,161 December 31, 2015 Interest Expense 38,650 Bonds Payable (difference) 3,350 Cash ($600,000 x 7%) 42,000 (Pay annual interest) December 31, 2016 Interest Expense 38,449 Bonds Payable (difference) 3,551 Cash ($600,000 x 7%) 42,000 […]

Exercise 9-1 (LO 9-1) Requirement 1 Issue Bonds Issue Stock Operating income $11,000,000 $11,000,000 Interest expense (bonds only) 2,450,000 Income before tax 8,550,000 11,000,000 Income tax expense (35%) 2,992,500 3,850,000 Net income $ 5,557,500 $ 7,150,000 Requirement 2 Issuing stock […]

Question 9-1 (LO 9-1) Capital structure is the mixture of liabilities and stockholders’ equity a business uses. Companies in the auto industry, like Ford, typically lean more toward liabilities for their financing, while companies in Question 9-2 (LO 9-1) One […]

Requirement 2 January 1, 2015 Cash 214,877 June 30, 2015 Interest Expense 6,446 Bonds Payable (difference) 554 Cash ($200,000 x 7% x ½) 7,000 (First semi-annual interest payment) December 31, 2015 Interest Expense 6,430 Bonds Payable (difference) 570 Cash ($200,000 […]

Exercise 9-1 Requirement 1 Issue Bonds Issue Stock Operating income $12,000,000 $12,000,000 Interest expense (bonds only) 4,000,000 Income before tax 8,000,000 12,000,000 Requirement 2 Issuing bonds results in earnings per share of $2.60 compared with earnings per share of $1.95 […]

2. If the market rate is 9%, the bonds will issue at a discount. The only change we make is that now I = 4.5% rather than 4%. Calculator Input Bond characteristics Key Amount 1. Face amount FV $500,000 2. […]

Chapter 9 Long-Term Liabilities INSTRUCTOR’S MANUAL Learning Objectives  LO9-1 Explain financing alternatives.  LO9-2 Identify the characteristics of bonds.  LO9-3 Determine the price of a bond issue.  LO9-4 Account for the issuance of bonds.  LO9-5 Record […]

List A List B __g___ 1. Long-term debt maturing within a. FICA __j___ 2. Borrowing from another company with maturities up to 270 days. b. Acid-test ratio __f___ 3. Classifying liabilities as either current or long-term helps investors and creditors […]

Requirement 2 ($ in millions) Quick Assets ÷ Total Current Liabilities = Acid-Test Ratio Southwest $3,548 ÷ $4,650 = 0.76 United Airlines (0.86) also has the best acid-test ratio followed by Southwest (0.76). Requirement 3 The purchase of additional inventory […]

Problem 8-6A Requirement 1 Cash 3,500 Requirement 2 Unearned Revenue 728 Sales Revenue ($728 / 1.04) 700 Sales Taxes Payable 28 (Redemption of gift certificates) Requirement 3 Unearned Revenue 728 3,500 2,772 Balance Problem 8-7A Requirement 1 The likelihood of […]

Exercise 8-7 Requirement 1 Total Salary Expense (100 x 40 hours x $20) $80,000 Less: Withholdings Federal Income Taxes (80,000 x .15) 12,000 State Income Taxes (80,000 x .05) 4,000 FICA Taxes (80,000 x .0765) 6,120 Requirement 2 FICA Taxes […]

Question 8-1 Liabilities have three essential characteristics. Liabilities are: (1) probable future sacrifices of economic benefits; (2) arising from present obligations to other entities; (3) resulting from past Question 8-2 In most cases, current liabilities are payable within one year […]

Reporting Method C. Current liability L. Long-term liability D. Disclosure note only N. Not reported Item __C__ 1. Accounts payable. __C__ 2. Customer advances. __C__ 3. Commercial paper. __D__ 4. Unused line of credit. __C__ 5. A loss contingency that […]

Alternate Let’s Review Problem #1 Assume Blue Sky Airlines borrows $1,000,000 from Midtown Bank on November 1, 2015 signing an 8%, six-month note payable. Required: 1. Record the issuance of the note. 2. Record the appropriate adjusting entry for the […]

Chapter 8 Current Liabilities INSTRUCTOR’S MANUAL Learning Objectives  LO8-1 Distinguish between current and long-term liabilities.  LO8-2 Account for notes payable and interest expense.  LO8-3 Account for employee and employer payroll liabilities.  LO8-4 Explain the accounting for […]

Land Building Purchase price of land $140,00 0 Land clearing costs 5,000 Architect fees (for new building) $ 30,000 Requirement 1 The ovens should be recorded in the equipment account at $99,000 as detailed in the following schedule: Purchase price […]