Archives: Solution Manual

E12-29 Computing the debt to equity ratio Learning Objective 6 Ludwig Corporation has the following data as of December 31, 2018: Total Current Liabilities $ 36,210 Total Stockholders’ Equity $ ?    Total Current Assets 58,200 Other Assets 36,800 Long-term Liabilities […]

E12-19 Preparing an amortization schedule and recording mortgages payable entries Learning Objective 1 3. Interest Expense $2,750.00 Kellerman Company purchased a building and land with a fair market value of $550,000 (building, $425,000, and land, $125,000) on January 1, 2018. […]

S12-10 Retiring bonds payable before maturity Learning Objectives 3, 4 On January 1, 2018, Powell Company issued $350,000 of 10%, five-year bonds payable at 102. Powell Company has extra cash and wishes to retire the bonds payable on January 1, […]

Chapter 12 Long-Term Liabilities Review Questions 1. Where is the current portion of notes payable reported on the balance sheet? The current portion of notes payable is reported in the current liability section of the balance sheet. 2. What is […]

Excel Skill Problem P11-35 Using Excel for Payroll Ankel Footwear employees three salespeople, and pays time-and-a-half for overtime. Weekly paychecks are distributed on the Tuesday following the last day of the week (Saturday). Ankel withholds income tax (20%), FICA—OASDI (6.2%), […]

P11-31B Computing and journalizing payroll amounts Learning Objective 2 1. Net Pay $128,360 Liam Wallace is general manager of Moonwalk Salons. During 2018, Wallace worked for the company all year at a $13,400 monthly salary. He also earned a year-end […]

P11-26A Computing and journalizing payroll amounts Learning Objective 2 1. Net Pay $152,199 Logan White is general manager of Valuepoint Salons. During 2018, White worked for the company all year at a $13,600 monthly salary. He also earned a year-end […]

E11-20 Recording employee and employer payroll taxes Learning Objective 2 2. Salaries & Wages Payable $15,923.20 County Company had the following partially completed payroll register: © 2018 Pearson Education, Inc. 11-1 Earnings Withholdings Net Pay Check No. Salaries and Wages […]

S11-9 Computing bonus payable Learning Objective 3 On December 31, Weston Company estimates that it will pay its employees a 5% bonus on net income after deducting the bonus. The company reports net income of $64,000 before the calculation of […]

Chapter 11 Current Liabilities and Payroll Review Questions 1. What are the three main characteristics of liabilities? The three main characteristics of liabilities are: 2. What is a current liability? Provide some examples of current liabilities. Current liabilities must be […]

P10-25, cont. SOLUTION Requirement 1 P10-25, cont. Requirement 1, cont. Calculations: Cost of investments: Total cost = Number of shares × Price per share Adobe = 8,000 shares × $3 per share = $ 24,000 Date Accounts and Explanation Debit […]

P10-22B Classifying and accounting for debt and equity investments Learning Objectives 1, 2, 3, 4 2. Sep. 16 Gain on Disposal CR $2,940 Captain Transfer Corporation generated excess cash and invested in securities as follows: 2018 Jul. 2 Purchased 4,200 […]

Problems (Group A) P10-18A Accounting for debt investments Learning Objective 2 1. Dec. 31 Int. Rev. CR $15,00 Suppose Solomon Brothers purchases $500,000 of 6% annual bonds of Morin Corporation at face value on January 1, 2018. These bonds pay […]

E10-13 Accounting for equity investments Learning Objectives 3, 4 Captain Investments completed the following investment transactions during 2018: Jan. 14 Purchased 200 shares of Velcon stock, paying $53 per share. The investment represents 4% ownership in Velcon’s voting stock. Captain […]

S10-6 Accounting for debt investments Learning Objectives 3, 4 On June 1, 2018, Josh’s Restaurant decides to invest excess cash of $54,400 from the tourist season by purchasing a Jackrabbit, Inc. bond at face value. At year-end, December 31, 2018, […]

Chapter 10 Investments Review Questions 1. What is a debt security? 2. What is an equity security? An equity security represents stock ownership in another company that sometimes pays cash or stock dividends. 3. Why would a company invest in […]

Comprehensive Problem, cont. Requirement 8 Liquidity Ratios: Current ratio = Total current assets / Total current liabilities = $1,255,355 / $295,000 = 4.26 Analysis: Top Quality Appliance—Long Beach has substantially high liquidity ratios indicating the company has the means to […]

Comprehensive Problem, cont. Requirements 2, 3, and 7, cont. Sales Revenue 215,000 j. 150,000 k. 80,000 l. 350,000 p. 265,000 r. 985,000 t. 2,045,000 Bal. Interest Revenue 6,000 q. 1,565 z. 7,565 Bal. 3,533 Adj. d. 11,098 Bal. Cost of […]

Comprehensive Problem for Chapters 7-9 Top Quality Appliance—Long Beach has just purchased a franchise from Top Quality Appliance (TQA). TQA is a manufacturer of kitchen appliances. TQA markets its products via retail stores that are operated as franchises. As a […]

P9-32A Recording lump-sum asset purchases, depreciation, and disposals Learning Objectives 1, 2, 3 Sep. 1 Gain $193,250 Ellie Johnson Associates surveys American eating habits. The company’s accounts include Land, Buildings, Office Equipment, and Communication Equipment, with a separate Accumulated Depreciation […]

E9A-28 Exchanging assets—two situations Learning Objective 7 Appendix 9A 2. Loss $(7,000) Partner Bank recently traded in office fixtures. Here are the facts: Old fixtures: New fixtures: Cost, $91,000 Cash paid, $110,000 Accumulated depreciation, $68,000 Market value, $133,000 Requirements 1. […]

E9-20 Computing depreciation—three methods Learning Objective 2 1. Double-declining-balance, 12/31/19, Exp. $8,250 Crispy Fried Chicken bought equipment on January 2, 2018, for $33,000. The equipment was expected to remain in service for four years and to operate for 6,750 hours. […]

S9-8 Discarding an asset Learning Objective 3 On October 31, 2018, Alternative Landscapes discarded equipment that had a cost of $26,920. Accumulated Depreciation as of December 31, 2017, was $25,000. Assume annual depreciation on the equipment is $1,920. Journalize the […]

Chapter 9 Plant Assets, Natural Resources, and Intangibles Review Questions 1. Define property, plant, and equipment. Provide some examples. Property, plant, and equipment are long-lived, tangible assets used in the operation of a 2. Plant assets are recorded at historical […]

Practice Seta P8-44 Accounting for uncollectible accounts using the allowance method and reporting net accounts receivable on the balance sheet This problem continues the Crystal Clear Cleaning problem begun in Chapter 2 and continued through Chapter 7. Crystal Clear Cleaning […]

P8-39B Accounting for notes receivable and accruing interest Learning Objective 4 1. Note 2 Maturity Value $20,430 Logan Realty loaned money and received the following notes during 2018. Note Date Principal Amount Interest Rate Term (1) Oct. 1 $ 16,000 […]

Problems (Group B) P8-35B Accounting for uncollectible accounts using the allowance (percent-of-sales) and   direct write-off methods and reporting receivables on the balance sheet Learning Objectives 1, 2, 3 1. Sep. 30 Bal. Accounts Receivable $91,000 On August 31, 2018, […]

P8-30A Accounting for uncollectible accounts using the allowance method (percent-of-sales) and reporting receivables on the balance sheet Learning Objectives 1, 3 2. Net AR $119,800 Delta Watches completed the following selected transactions during 2018 and 2019: 2018 Dec. 31 Estimated […]

E8-24 Journalizing note receivable transactions Learning Objective 4 Jul. 1, 2019 Cash DR $17,280 The following selected transactions occurred during 2018 and 2019 for Baltic Importers. The company ends its accounting year on September 30. 2018 Jul. 1 Loaned $16,000 […]

E8-18 Accounting for uncollectible accounts using the allowance method (percent-of-sales)   and reporting receivables on the balance sheet Learning Objectives 1, 3 2. AR, Dec. 31 $54,700 Requirements 1. Journalize Hilltop’s transactions that occurred during 2018. The company uses the […]

S8-8 Applying the allowance method (aging-of-receivables) to account for uncollectibles Learning Objective 3 Surf and Sun had the following balances at December 31, 2018, before the year-end adjustments: The aging of accounts receivable yields the following data: Requirements 1. Journalize […]

Chapter 8 Receivables Review Questions 1. What is the difference between accounts receivable and notes receivable? Accounts receivable represent the right to receive cash in the future from customers for 2. List some common examples of other receivables, besides accounts […]

Practice Set P7-37 Preparing a bank reconciliation and journal entries This problem continues the Crystal Clear Cleaning problem begun in Chapter 2 and continued through Chapter 6. In March 2019, Crystal Clear Cleaning opened a new checking account at First […]

P7-32B Accounting for petty cash transactions Learning Objective 4 2. Sep. 30, Cash CR $140 Suppose that on September 1, Cool Gyrations, a disc jockey service, creates a petty cash fund with an imprest balance of $350. During September, Ruth […]

P7-27A Preparing a bank reconciliation and journal entries Learning Objective 6 1. Adjusted Balance $18,025 The December cash records of Davidson Insurance follow: Cash Receipts Cash Payments Date Cash Debit Check No. Cash Credit Dec. 4 $ 4,240 1416 $ […]

E7-22 Preparing a bank reconciliation Learning Objective 6 1. Book Deductions $314 Jim Root Corporation operates four bowling alleys. The business just received the October 31, 2018, bank statement from City National Bank, and the statement shows an ending balance […]

Exercises E7-12 Understanding the Sarbanes-Oxley Act and identifying internal control strengths and weaknesses Learning Objective 1 The following situations suggest a strength or a weakness in internal control. a. Top managers delegate all internal control procedures to the accounting department. […]

Chapter 7 Internal Control and Cash Review Questions 1.What is internal control? Internal control is the organizational plan and all the related measures adopted by an entity to 2.How does the Sarbanes-Oxley Act relate to internal controls? The Sarbanes-Oxley Act […]

Comprehensive Problem, cont. Requirement 8 © 2018 Pearson Education, Inc. 6-1 DAVIS LAMP COMPANY Income Statement For Year Ended December 31, 2018 Net Sales Revenue $ 3,725,350 Cost of Goods Sold 1,526,655 Gross Profit 2,198,695 Operating Expenses: Selling Expenses: Salaries […]

Comprehensive Problem, cont. Requirements 2 and 5, cont. Comprehensive Problem, cont. Requirements 2 and 5, cont. FLOOR LAMPS Purchases Cost of Goods Sold Inventory on Hand Date Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost […]

Comprehensive Problem for Chapters 5 and 6 The Davis Lamp Company (DLC) is a wholesale company that purchases lamps from the manufacturer and resells them to retail stores. The company has three inventory items: desk lamps, table lamps, and floor […]

P6A-37B Accounting for inventory using the periodic inventory system—FIFO, LIFO, and weighted-average, and comparing FIFO, LIFO, and weighted-average Learning Objectives 2, 3, 7 Appendix 6A 1. LIFO Ending Merch. Inv., $9,460 Right Now Electronic Center began October with 100 units […]

P6-34B Accounting for inventory using the perpetual inventory system—FIFO, LIFO, and weighted-average, and comparing FIFO, LIFO, and weighted-average Learning Objectives 2, 3 5. FIFO GP $4,640 Accounting for inventory using the perpetual inventory system—FIFO, LIFO, and weighted-average, and comparing FIFO, […]

P6A-32A Accounting for inventory using the periodic inventory system—FIFO, LIFO, and weighted-average, and comparing FIFO, LIFO, and weighted-average Learning Objectives 2, 3, 7 Appendix 6A 1. LIFO Ending Merch. Inv., $6,680 Futuristic Electronic Center began October with 65 units of […]

P6-29A Accounting for inventory using the perpetual inventory system—FIFO, LIFO, and weighted-average, and comparing FIFO, LIFO, and weighted-average Learning Objectives 2, 3 5. FIFO GP $5,235 Steel Mill began August with 50 units of iron inventory that cost $35 each. […]

E6A-27 Computing periodic inventory amounts Learning Objective 7 Appendix 6A Consider the data of the following companies which use the periodic inventory system: Company Net Sales Revenue Beginning Merchandis e Inventory Net Cost of Purchases Ending Merchandise Inventory Cost of […]

E6-21 Applying the lower-of-cost-or-market rule to merchandise inventories Learning Objective 4 Clarmont Resources, which uses the FIFO inventory costing method, has the following account balances at May 31, 2019, prior to releasing the financial statements for the year: Merchandise Inventory, […]

E6-18 Measuring ending inventory and cost of goods sold in a perpetual inventory system—Weighted-average Learning Objective 2 1. COGS $3,236 Requirements 1. Prepare Golf Unlimited’s perpetual inventory record for the putters assuming Golf Unlimited uses the weighted-average inventory costing method. […]

Exercises For all exercises, assume the perpetual inventory system is used unless stated otherwise. E6-14 Using accounting vocabulary Learning Objectives 1, 2 Match the accounting terms with the corresponding definitions. 1. Specific identification 2. Materiality concept 3. Last-in, first-out (LIFO) […]

S6-6 Preparing a perpetual inventory record and journal entries—Weighted-average Learning Objective 2 Requirements 1. Prepare Boston Cycle’s perpetual inventory record assuming the company uses the weighted-average inventory costing method. 2. Journalize the October 16 purchase of merchandise inventory on account […]