Archives: Solution Manual

Requirement 2 Debit Credit Amortization Expense 25,000 * Requirement 3 Togo’s Sandwich Shop December 31, 2015 Cost Accumulated Depreciation Book Value Land $ 85,000 – $ 85,000 Building 560,000 ($273,280) 286,720 Equipment 145,000 (45,000) 100,000 Patent 125,000 (75,000) 50,000 $127,500 […]

Requirement 2 Double-declining-balance University Car Wash Calculation End of Year Amounts Year Beginning Book Value XDepreciation Rate* =Depreciation Expense Accumulated Depreciation Book Value** 1 270,000 1/3 90,000 90,000 180,000 2 180,000 1/3 60,000 150,000 120,000 3 120,000 1/3 40,000 190,000 […]

Exercise 7-4 (LO 7-1, 7-4) 1. Land is not depreciated. However, depreciation on the building is tax-deductible. If management allocates less of the purchase price to land 2. If the true allocation should have been 20% to land and 80% […]

Question 7-1 (LO 7-1) WorldCom recorded assets on the balance sheet that should have been recorded as expenses on the income statement. When WorldCom uses the telecommunication lines of another Question 7-2 (LO 7-1) The two major categories for long-term […]

Chapter 7 Long-Term Assets Purchase price of land (and building to be removed) $400,000 Title insurance 3,000 Back property taxes 4,000 Cost of removing the building 25,000 Less: Salvaged materials (2,000) Level the land 6,000 EXERCISES Exercise 7-1 Total cost […]

Chapter 7 Long-Term Assets INSTRUCTOR’S MANUAL Learning Objectives  LO7-1 Identify the major types of property, plant, and equipment.  LO7-2 Identify the major types of intangible assets.  LO7-3 Describe the accounting treatment of expenditures after acquisition.  LO7-4 […]

November 2 Debit Credit Inventory 8,000 November 3 Inventory 210 Cash 210 (Pay freight-in) November 9 Accounts Payable 1,000 Inventory 1,000 (Return inventory on account) November 11 Accounts Payable 7,000 Inventory 140 Cash 6,860 (Pay on account less 2% discount) […]

Problem 6-1C Requirement 1 Date Transaction Number of units Unit cost Ending Inventory Jun. 1 Beginning Inventory 1 $ 240 $ 240 Jun. 12 Purchase 5 230 1,150 Jun. 24 Purchase 0 220 0 Jun. 29 Purchase 8 210 1,680 […]

Great Adventures, Inc. Partial Income Statement For the year ended December 31, 2016 Sales revenue $60,000 Cost of goods sold (32,900) Gross profit $27,100 Inventory items Cost per unit Market per unit Lower-of-c ost-or-mark et per unit Quantity Total lower-of-co […]

Problem 6-6B (continued) Requirement 1 (continued) November 21 Debit Credit Inventory 7,280 November 24 Cash 12,600 Sales Revenue 12,600 (Sell inventory for cash) Cost of Goods Sold 9,212 Inventory 9,212 (Record cost of inventory sold) [$9,160 = ($100 × 37 […]

Problem 6-1B (concluded) Requirement 3 LIFO Date Transaction Number of units Unit cost Ending Inventory Date Transaction Number of units Unit cost Cost of Goods Sold Jun. 1 Beginning inventory 2 $350 $ 700 Jun. 12 Purchase 10 340 3,400 […]

Problem 6-6A (continued) Requirement 1 (continued) October 20 Debit Credit Inventory 7,000 October 22 Cash 8,000 Sales Revenue 8,000 (Sell inventory for cash) Cost of Goods Sold 6,840 Inventory 6,840 (Record cost of inventory sold) ($6,840 = ($54 × 10 […]

Problem 6-1A (concluded) Requirement 3 LIFO Date Transaction Number of units Unit Cost Ending Inventory Oct. 1 Beginning inventory 6 $900 $5,400 Date Transaction Number of units Unit Cost Cost of Goods Sold Oct. 10 Purchase 3 $910 $ 2,730 […]

Exercise 6-12 (LO 6-5) August 6 Accounts Receivable 14,000 Cost of Goods Sold 12,600 Inventory 12,600 (Record cost of inventory sold) August 10 Sales Returns 1,200 Accounts Receivable 1,200 (Receive return on account) August 14 Cash 12,672 Sales Discounts 128 […]

Exercise 6-4 (concluded) Requirement 3 Weighted average Date Transaction Number of units Unit cost Total cost Jan. 1 Beginning Inventory 50 $42 $ 2,100 Apr. 7 Purchase 130 44 5,720 Jul. 16 Purchase 200 47 9,400 Oct. 6 Purchase 110 […]

Brief Exercise 6-14 (LO 6-6) Inventory Quantity Lower-of-Cost -or-Market Ending Inventory Ski jackets 20 $ 95 $1,900 Skis 25 300 7,500 Brief Exercise 6-15 (LO 6-6) Inventory Quantity Lower-of-Cost -or-Market Ending Inventory Optima cameras 110 $45 $4,950 Inspire speakers 50 […]

Question 6-1 (LO 6-1) Inventory includes items a company intends for sale to customers. Inventory also includes items that are not yet finished products. The cost of inventory that has not been sold by the end of the Question 6-2 […]

Inventory Quantity Lower of Cost or Market Ending Inventory Shirts 52 $ 75 $ 3,900 MegaDriver 12 180 2,160 MegaDriver II 40 320 12,800 Debit Credit Cost of Goods Sold 840 Inventory 840 (Adjust inventory down to market) ($840 = […]

Exercise 6-6 Debit Credit Inventory 320,000 Debit Credit Accounts Receivable 450,000 Sales Revenue 450,000 (Sell inventory on account) Cost of Goods Sold 340,000 Inventory 340,000 (Cost of inventory sold) Accounts Payable 320,000 (Purchase inventory on account) Exercise 6-7 June 5 […]

Exercise 6-1 Beginning inventory $ 63,800 Add: Purchases 925,500 Cost of goods available for sale 989,300 Less: Ending inventory (41,500) Chapter 6 Inventory and Cost of Goods SoldEXERCISES Cost of goods sold $947,800 Exercise 6-2 Wayman Corporation Multiple-step Income Statement […]

1. Calculate cost of goods sold and ending inventory using the LIFO method. Cost of goods available for sale = Cost of goods sold +Ending inventory Beginning inventory and purchases Number of units xUnit cost =Total Cost Jan. 1{50 $20 […]

Chapter 6 Inventory and Cost of Goods Sold INSTRUCTOR’S MANUAL Learning Objectives  LO6-1 Trace the flow of inventory costs from manufacturing companies to merchandising companies.  LO6-2 Understand how cost of goods sold is reported in a multiple-step income […]

Revenue recognized in 2015 Scenario 1: $100,000 Scenario 2: $60 (= $75 x 80%) Scenario 3: $15,000 Scenario 4: $125,000 June 10 Debit Credit No entry June 12 No entry June 13 No entry June 16 Accounts Receivable 1,440 June […]

Jan. 24, 2016 Debit Credit Equipment 5,000 Feb. 25, 2016 Accounts Receivable 3,000 Service Revenue 3,000 (Provide TEAM event) Feb. 28, 2016 Cash 2,850 Sales Discounts 150 Accounts Receivable 3,000 (Receive cash on account less 5% discount) Mar. 19, 2016 […]

Problem 5-4B (LO 5-4, 5-5) Requirement 1 Age group Amount receivable Estimated percent uncollectible Estimated amount uncollectible Not yet due $40,000 3% $1,200 0-30 days past due 11,000 4% 440 Requirement 2 December 31, 2015 Debit Credit Bad Debt Expense […]

Problem 5-6A (LO 5-3) Requirement 1 Debit Credit Bad Debt Expense 59,000 Requirement 2 Revised operating income = $260,000 − $59,000 (bad debt expense) = $201,000 Willie will not get his bonus because the revised operating income of $201,000 is […]

Exercise 5-17 (LO 5-7) Requirement 1 April 1, 2015 Debit Credit Notes Receivable 600,000 Requirement 2 December 31, 2015 Debit Credit Interest Receivable 49,500 Interest Revenue 49,500 (Adjust interest receivable) (Interest revenue = $600,000 x 11% x 9/12) Requirement 3 […]

Exercise 5-4 (LO 5-1, 5-2) March 12 Debit Credit Accounts Receivable 11,000 March 31 Cash 11,000 Accounts Receivable 11,000 (Receive cash on account) Exercise 5-5 (LO 5-1, 5-2) March 12 Debit Credit Service Fee Expense 11,000 Accounts Payable 11,000 (Receive […]

Question 5-1 (LO 5-1) When recording a credit sale, we debit accounts receivable. Accounts receivable are reported Question 5-2 (LO 5-1) Trade receivables are amounts receivable from customers due to credit sales. Nontrade receivables are receivables from those other than […]

Exercise 5-11 Requirement 1 Age Group Amount Receivable Estimated Percent Uncollectible Estimated Amount Uncollectible Not yet due $ 69,500 10% $ 6,950 0-60 days past due 56,700 20% 11,340 61-120 days past due 32,400 45% 14,580 Requirement 2 December 31, […]

Chapter 5 Receivables and Sales May 7 Debit Credit Accounts Receivable 4,760 May 13 Cash 4,760 Accounts Receivable 4,760 (Collect cash on account) EXERCISES Exercise 5-1 Service Revenue 4,760 (Provide services on account) May 1 Debit Credit Cash 300 Exercise […]

Problem #1 Mercy Care normally charges $200 for an annual physical exam. Currently, the company is offering a $50 discount to expectant mothers. In addition, Mercy offers terms 2/10, n/30 to all customers receiving services on account. The following events […]

Weber Productions Bank Reconciliation February 28 Bank’s Cash Balance Company’s Cash Balance Per bank statement $ 4,576 Per general ledger $21,861 Deposits outstanding + 7,348 NSF check − 6,783 Checks outstanding − 541 Service fees − 195 PROBLEMS: SET C […]

June 2 Debit Credit Cash 19,000 June 3 Debit Credit Rent Expense 1,200 Cash 1,200 (Pay current month rent) June 7 Debit Credit Cash 5,200 Accounts Receivable 3,500 Service Revenue 8,700 (Provide services for cash and on account) June 11 […]

Requirement 2 Debit Credit Cash 6,450 Notes Receivable 6,000 Accounts Receivable 200 Advertising Expense 300 Rent Expense 1,100 Service Fee Expense 125 Cash 1,725 (Record NSF check, recording error, automatic payment, and bank service fee) Interest Revenue 450 (Record note […]

Exercise 4-1 (LO 4-1) 1. False 2. True 3. True 4. False 5. True 6. True Exercise 4-2 (LO 4-1) 1. True 2. False 3. True 4. True 5. False 6. False Exercise 4-3 (LO 4-2) 1. True 2. False […]

Question 4-1 (LO 4-1) Occupational fraud is the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources. Occupational Question 4-2 (LO 4-1) Internal control is a company’s plan to (1) safeguard […]

Chapter 4 Cash and Internal Controls 1. True 2. False 3. True 4. True 5. False 6. False EXERCISES Exercise 4-1 1. False 2. True 3. True 4. False 5. True 6. True Exercise 4-2 1. True 2. False 3. […]

Trial Balance Account Title Debit Credit Cash $ 34,500 Accounts Receivable 25,300 Supplies 3,700 Equipment 26,400 Debit Credit Depreciation Expense 2,900 Accumulated Depreciation 2,900 (Adjust accumulated depreciation) Supplies Expense 2,500 Supplies 2,500 (Adjust medical supplies) Unearned Revenue 4,000 Service Revenue […]

Problem 3-7C (continued) David’s Services Balance Sheet December 31, 2015 Assets Liabilities Cash $18,100 Accounts payable $10,500 Accts. receivable 16,200 Salaries payable 4,200 Supplies 3,000 Utilities payable 1,900 Notes payable 40,000 Equipment 95,000 Accum. depr. (40,800) Stockholders’ Equity Common stock […]

Problem 3-1C Accrual-Basis Cash-Basis Transaction Revenue Expense Revenue Expense 1. Record employee salaries incurred 2. Pay advertising for the current month, $700. $0 $700 $0 $700 3. Pay utilities for the previous month, $750. $0 $0 $0 $750 4. Receive […]

Additional Perspective 3-3 Requirement 1 Current assets equal $276,873 thousand. Current assets include cash and cash Requirement 2 Current liabilities equal $128,956 thousand. Current liabilities include accounts payable, accrued employee compensation, accrued store operating expenses, gift certificates redeemable, and income […]

Additional Perspective 3-1 (continued) Requirement 1 (concluded) Dec. 8, 2015 Miscellaneous Expense 1,200 Dec. 12, 2015 Supplies (Racing) 2,800 Accounts Payable 2,800 (Purchase racing supplies on account) Dec. 15, 2015 Cash 20,000 Service Revenue (Racing) 20,000 (Receive cash for adventure […]

Problem 3-8B (connued) Requirement 2 (a) Debit Credit Accounts Receivable 65,000 Cash 20,000 (b) Debit Credit Cash 53,000 Accounts Receivable 53,000 (Collect on account) (c) Debit Credit Cash 11,000 Common Stock 11,000 (Issue common stock) (d) Debit Credit Salaries Expense […]

Problem 3-5B (LO 3-5) Orange Designs Income Statement For the year ended December 31, 2015 Service revenue $111,900 Expenses: Salaries 43,000 Rent 19,000 Depreciation 8,000 Problem 3-5B (concluded) Orange Designs Statement of Stockholders’ Equity For the year ended December 31, […]

Problem 3-8A (connued) Requirement 6 (adjusted entries posted in) Cash Accounts Receivable Supplies 20,000 39,000 26,000 13,000 8,000 21,000 18,000 4,000 Equipment Accumulated Depr. Salaries Payable 15,000 8,000 7,500 23,000 10,000 1,100 5,000 7,500 Common Stock Retained Earnings Service Revenue […]

Problem 3-6A (LO 3-6, 3-7) Requirement 1 December 31 Debit Credit Service Revenue 77,500 Retained Earnings 62,100 Salaries Expense 46,000 Utilities Expense 8,200 Insurance Expense 5,800 Supplies Expense 2,100 (Close expense accounts) Retained Earnings 6,000 Dividends 6,000 (Close dividends account) […]

Exercise 3-20 (connued) Requirement 3 Red Flash Photography Adjusted Trial Balance December 31, 2015 Accounts Debit Credit Cash $ 30,000 Accounts Receivable 30,000 Supplies 5,000 Prepaid Rent 9,000 Land 60,000 Accounts Payable $ 22,000 Salaries Payable 4,000 Common Stock 70,000 […]

(e) Debit Credit Supplies Expense 3,900 Exercise 3-13 (LO 3-3) (a) Debit Credit Interest Receivable 270 Interest Revenue 270 (Adjust interest receivable) (b) Debit Credit Rent Expense 3,000 Prepaid Rent 3,000 (Adjust prepaid rent) (c) Debit Credit Unearned Revenue 5,500 […]

Interest Payable 900 (Adjust interest payable) = $150 (or 1% of $15,000) per month x 6 months (Jul. – Dec.) (3) Interest Payable Interest Expense Jan. 1, 2015 Beginning balance $ 0 $ 0 Brief Exercise 3-13 (LO 3-3) (1) […]