Type:
Solution Manual
Resource:
College Accounting A Practical Approach
Edition:
14th Edition
Author(s):
Jeffrey Slater Brian Zwicker Debra Good
INSTRUCTOR’S SOLUTIONS MANUAL Brenda Ridgeley-Ketchell Okanagan College
College Accounting: A Practical Approach Fourteenth Canadian Edition Jeffrey Slater North Shore Community College
Debra Good Conestoga College
1 Accounting Concepts and Procedures: An Introduction
ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. 2. 3. 4.
5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
The functions of accounting are to analyze, record, classify, summarize, report and interpret information. Sole proprietorship—one owner, unlimited liability; easy to form Partnership—two or more owners; unlimited liability, easy to form Corporation—one or more shareholders; limited liability; more difficult to form. Service, merchandising, or manufacturing. The objective of accounting is to provide relevant, timely information for user decision making. Accountants must behave in an ethical manner so that the information they provide will be trustworthy and, therefore, useful for all decisions. Ethics are moral principles that guide the conduct of individuals. Sometimes business managers and accountants behave in an unethical manner. The three elements of the basic accounting equation are assets, liabilities, owner’s equity. Capital is the owner’s current investment or equity in the assets of a business. It is one subdivision of owner’s equity. True. The sum of the left side of the equation must equal the sum of the right side of the equation. False. It is the income statement that tells how well the company has performed. False. Revenue is a subdivision of owner’s equity. Owner’s equity is subdivided into Capital, Withdrawals, Revenue, and Expenses. False. It is a subdivision of owner’s equity. Reject. As expenses increase and revenue remains the same, owner’s equity decreases. Revenue less Expenses; an income statement shows performance—profit or loss for the period. False. It calculates ending capital. The question in this case is whether Paul should be allowed to “pad” his expense account with an additional $100 of expenses. Paul should be allowed to charge only those items that are business related. Paul’s argument that he is entitled to an additional $100 is not a valid assumption. However, he should be allocated money for any business expenses during the weekend. Paul should also ask his employer for additional compensation for working during his non scheduled time. The important point is that accountants need to be seen as being ethical and should not do unethical activities.
.
1-1
SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1.
CDE2.
CDE3.
a. b. c. d. e. f.
A A L A OE A
CDE4.
$24,000 ($12,000 + $12,000)
CDE5.
c. d. f. g.
J. Penny, Capital Advertising Expense Taxi Fees Earned J. Penny, Withdrawls
a. b. c.
Liabilities and or Equities Assets Accounts Payable
CDE6.
c. d.
Accounts Payable Grooming Fees Earned
a. b.
I S
CDE7.
a. b. d.
CDE10. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Balance Sheet Assets Liabilities Accounting Equation Accounts Payable Service Owner’s Equity Accounts Receivable Transaction Creditor
SOLUTIONS TO EXERCISES—SET A E1-1A. a.
$15,000
($19,000 − $4,000)
b.
$15,000
($ 6,000 + $9,000)
c.
$ 6,000
($10,000 − $4,000)
E1-2A. 1. 2. 3. 4. 5.
Service Merchandise Service Merchandise Merchandise
E1-3A. 1-3A Solutions 1. B 2. B 3. B 4. A 5. D 6. D 7. D 8. B 9. C 10. A
1-2
.
6. 7. 8. 9. 10.
Service Service Manufacturer Manufacturer Merchandise
CDE8.
a. b. c. d. e. f. g. h.
IS BS BS BS IS IS OE BS
CDE9
a. b. c. d.
OE BS BS IS
SOLUTIONS TO EXERCISES—SET A Cont. BELL’S COMPUTER COMPANY
E1-4A. Assets
Cash A.
Accounts + Receivable +
Computer Equipment =
Accounts Payable
+ $60,000 + $7,000 − $200
D.
+ $14,000
E.
+
B. Bell, Capital
−
B. Bell, Withdrawals
+
Revenue
− Expenses
+ $60,000
B. C.
Owner’s Equity
= Liabilities +
+ $7,000 + $200 + $14,000
+ $30,000
+ $30,000
F.
− $4,000
+ $4,000
G.
− $1,500
+ $1,500
ENDING BALANCE
$68,300
+ $30,000
+ $7,000
=
+ $105,300
+$7,000
−$200
+ $60,000
+ $44,000
− $5,500
= $105,300
Remember, as withdrawals or expenses increase, the end result is to reduce owner’s equity.
E1-5A. (a) FREDERICK REALTY INCOME STATEMENT FOR THE MONTH ENDED NOVEMBER 30, 2022 Revenue: Professional Fees Operating Expenses: Salaries Expense Utilities Expense Rent Expense
$3 0 0 0 0 0 $ 5 5 0 00 2 0 0 00 8 0 0 00 1 5 5 0 00
Total Operating Expenses
$1 4 5 0 0 0
Net Income
(b) FREDERICK REALTY STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED NOVEMBER 30, 2022 S. Frederick, Capital, November 1, 2022 Net Income for November Less: Withdrawals for November Increase in Capital
$9 0 0 0 0 0 $1 4 5 0 0 0 1 2 0 00 1 3 3 0 00
S. Frederick, Capital, November 2022
$ 10 3 3 0 0 0
.
1-3
E1-5A, Cont.
SOLUTIONS TO EXERCISES—SET A, Cont. (c) FREDERICK REALTY BALANCE SHEET NOVEMBER 30, 2022 LIABILITIES AND OWNER’S EQUITY
ASSETS Cash Accounts Receivable Office Equipment
Total Assets
$4 8 0 0 0 0 Liabilities Accounts Payable 1 2 3 0 00 8 3 0 0 0 0 Owner’s Equity S. Frederick, Capital $14 3 3 0 0 0
Total Liabilities and Owner’s Equity
SOLUTIONS TO EXERCISES—SET B E1-1B. a. A = 11,300 L = $4,200 OE = $7,100 b A = $18,00 L = $6,600 OE = 11,400 c. A = $21,000 L = $8,000 OE = 13,000
d. A = $7,500 L = 3,500 OE = $4,000 e. A = 15,270 L = $5,800 OE = $9,470 f. A = $17,600 L = 5,600 OE = $12,000
E1-2B. 1. Increases an asset and increases a liability – Receive a bank loan 2. Increases one asset and decreases another asset. – Receiver payment of an accounts receivable 3. Decreases an asset and decreases owner’s equity – Pay wages 4. Decreases an asset and decreases a liability – Pay an accounts payable 5. Increases an asset and increases owner’s equity – Cash sale
EI-3B. Accounting professionals practice in four broad fields including
Accounting-related opportunities within each field are numerous and include
Financial accounting
- Statement preparation - Statement analysis - Auditing - Regulatory - Consulting - Planning - Criminal investigation
Managerial accounting
- General accounting - Cost accounting - Budgeting - Internal auditing - Management advisory services
1-4
.
$4 0 0 0 0 0 10 3 3 0 0 0 $14 3 3 0 0 0
SOLUTIONS TO EXERCISES—SET B, Cont. E1-3B, Cont. Taxation
- Preparation - Planning - Regulatory - Investigations - Consulting
Accounting-related
- Lenders - Consultants - Analysts - Traders - Managers - Directors - Underwriters - Planners - Appraisers - Teachers
BELL’S COMPUTER COMPANY
E1-4B. Assets
Cash A.
Accounts + Receivable +
Computer Equipment =
Accounts Payable
+ $40,000 + $8,000 – $150
D.
+ $12,000
E.
B. Bell, Capital
+
−
B. Bell, Withdrawals
+
Revenue
− Expenses
+ $40,000
B. C.
Owner’s Equity
= Liabilities +
+ $8,000 + $150 + $12,000
+ $25,000
+ $25,000
F.
– $3,000
+ $3,000
G.
– $900
+ $900
ENDING BALANCE
$47,950
+ $25,000
+ $8,000
=
+ $8,000
+ $80,950
=
$80,950
– $150
+ $40,000
+ $37,000
– $3,900
Remember, as withdrawals or expenses increase, the end result is to reduce owner’s equity.
E1-5B. (a) FRENCH REALTY INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 2022 Revenue: Professional Fees Operating Expenses: Salaries Expense Utilities Expense Rent Expense Total Operating Expenses
$5 6 0 0 0 0 $ 8 0 0 00 7 6 0 00 6 5 0 00 2 2 1 0 00
Net Income
$3 3 9 0 0 0
.
1-5
SOLUTIONS TO EXERCISES—SET B, Cont. E1-5B, Cont. (b) FRENCH REALTY STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JUNE 30, 2022 $9 0 0 0 0 0
S. French, Capital, June 1, 2022 Net Income for June
$3 3 9 0 0 0 6 4 0 00
Less: Withdrawals for June Increase in Capital
2 7 5 0 00
S. French, Capital, June 30, 2022
$11 7 5 0 0 0
(c) FRENCH REALTY BALANCE SHEET JUNE 30, 2022 LIABILITIES AND OWNER’S EQUITY
ASSETS Cash Accounts Receivable Office Equipment
Total Assets
1-6
.
$4 6 5 0 0 0 2 6 0 0 00 8 5 0 0 00
$15 7 5 0 0 0
Liabilities Accounts Payable Owner’s Equity S. French, Capital Total Liabilities and Owner’s Equity
$4 0 0 0 0 0 11 7 5 0 0 0 $15 7 5 0 0 0
P1-1A. GROUP A PROBLEMS MIA’S NAIL SPA Assets Cash
Transaction A
+
Equipment
=
Liabilities
+
Owner’s Equity
=
Accounts Payable
+
Mia Annabelle, Capital
+ $20,000
+ $20,000
−4,000
Transaction B Transaction C Transaction D ENDING BALANCE
+$4,000 +6,000
+$6,000
−1,000 $15,000
−1,000 +
$10,000
=
$5,000
$25,000
=
$25,000
+
$20,000
P1-2A. SEE’S INTERNET SERVICE BALANCE SHEET SEPTEMBER 30, 2023 LIABILITIES AND OWNER’S EQUITY
ASSETS Assets: Cash Equipment Building Building
Liabilities: Accounts Payable $18 0 0 0 0 0 14 0 0 0 0 0 20 0 0 0 0 0 Owner’s Equity: B. See, Capital
Total Assets
Total Liabilities and $52 0 0 0 0 0 Owner’s Equity
$15 0 0 0 0 0
37 0 0 0 0 0
$52 0 0 0 0 0
P1-3A. FONTAN COMPUTER SERVICE Assets
A.
Cash
Accounts + Receivable +
+25,000
+
B.
+
C.
+
+800
Owner’s Equity
= Liabilities + Office Equipment =
Accounts Payable
=
+ 2,500
+ 2,500
+
R. Fontan, Capital
−
+
+25,000
R. Fontan, Withd.
Computer Service + Revenue − Expenses
−
+
−
+
−
+
−
=
+
−
+
+ 800
−
+2,100
−
D.
+
=
+
−
+
E.
(275)
+
=
+
−
+
−
+ 275
F.
(170)
+
=
+
−
+
−
+ 170
=
+
−
+
−
+1,200
+
−
+700
+
−
−
700
+
G.
+
H.
(700)
+
ENDING BALANCE
24,655
+
+ $2,100
1,200
=
2,100
2,500 29,255
=
3,700
+
25,000
29,255
.
1-7
2,900
−
1,645
GROUP A PROBLEMS, Cont. P1-4A. (a) WEST’S STENCILLING SERVICE INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 2023 Revenue: Stenciling Fees
$3 0 0 0 0 0
Operating Expenses: Advertising Expense Repair Expense Travel Expense Supplies Expense Rent Expense
$ 1 1 0 00 2 5 00 2 5 0 00 1 9 0 00 2 5 0 00
Total Operating Expenses Net Income
8 2 5 00 $2 1 7 5 0 0
(b) WEST’S STENCILLING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JUNE 30, 2023 J. West, Capital, June 1, 2023 Net Income for June Less: Withdrawals for June
$1 2 0 0 0 0 $2 1 7 5 0 0 3 0 0 00
Increase in Capital
1 8 7 5 00
J. West, Capital, June 30, 2023
$3 0 7 5 0 0
1-8
.
GROUP A PROBLEMS, Cont. P1-4A, Cont. (c) WEST’S STENCILLING SERVICE BALANCE SHEET JUNE 30, 2023 LIABILITIES AND OWNER’S EQUITY
ASSETS Assets: Cash Accounts Receivable Equipment
Liabilities: $2 3 0 0 0 0 Accounts Payable 4 0 0 00 6 8 5 0 0 Owner’s Equity
Total Assets
$ 3 1 0 00
J. West, Capital
3 0 7 5 00
Total Liabilities and $3 3 8 5 0 0 Owner’s Equity
$3 3 8 5 0 0
P1-5A. 1. MARTIN’S CATERING SERVICE Assets
Cash
10/28 10/29 10/30
+$8,000
10/31 11/1 11/4 11/8 11/11
−1,000
11/15 11/18 11/19 11/25 11/28 11/29 ENDING BALANCE
= Liabilities
Accounts + Receivable + Equipment =
Accounts Payable
Owner’s Equity
+
+
Jill Martin, Capital
−
Jill Martin, Withdrawls
+
Catering Revenue
− Expenses
+ $8,000
− 900
+$900 +1,800
+$1,800 −1,000
+ 2,900
+$2,900
− 720
+ $720 +$300
+300
−100
+100 − 75
+ 75
− 90
+90
+1,800
+1,800 +400
+400 +600
+600
− 400 $9,615
+400 +
$200
+
$3,100
=
$1,800
$12,915
=
$12,915
+
$8,000
−
$90
.
+
1-9
$5,000
−
$1,795
GROUP A PROBLEMS, Cont. P1-5A., Cont. 2. MARTIN’S CATERING SERVICE BALANCE SHEET ASSETS Assets: Cash Equipment
Total Assets
OCTOBER 31, 2022 LIABILITIES AND OWNER’S EQUITY Liabilities: $6 1 0 0 0 0 Accounts Payable
$ 8 0 0 00
2 7 0 0 00
$8 8 0 0 0 0
Owner’s Equity: Jill Martin, Capital
8 0 0 0 00
Total Liabilities and Owner’s Equity
$8 8 0 0 0 0
MARTIN’S CATERING SERVICE
3.
INCOME STATEMENT FOR THE MONTH ENDING NOVEMBER 30, 2022 Revenue: Catering Fees Operating Expenses: Salaries Expense Telephone Expense Rent Expense Supplies Expense Total Operating Expenses Net Income
1-10
.
$5 0 0 0 0 0
$ 7 2 0 00 7 5 00 6 0 0 00 4 0 0 00 1 7 9 5 00 $3 2 0 5 0 0
GROUP A PROBLEMS, Cont. P1-5A., Cont. 4. MARTIN’S CATERING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED NOVEMBER 30, 2022 Jill Martin, Capital, November 1, 2022 Net Income for November Less: Withdrawals for November
$8 0 0 0 0 0 $3 2 0 5 0 0 9 0 00
Increase in Capital
3 1 1 5 00
Jill Martin, Capital, November 30, 2022
$11 1 1 5 0 0
MARTIN’S CATERING SERVICE
5.
BALANCE SHEET NOVEMBER 30, 2022 LIABILITIES AND OWNER’S EQUITY
ASSETS Assets: Cash Accounts Receivable Equipment
Liabilities: $9 6 1 5 0 0 Accounts Payable 2 0 0 00 3 1 0 0 0 0 Owner’s Equity:
$1 8 0 0 0 0
Jill Martin, Capital
Total Assets
$12 9 1 5 0 0
11 1 1 5 0 0
Total Liabilities and Owner’s Equity
$12 9 1 5 0 0
.
1-11
GROUP B PROBLEMS P1-1B. MIA’S NAIL SPA Assets Cash
Transaction A
+ $16,000
Transaction B Transaction C
− 800
Transaction D ENDING BALANCE
+
Equipment
Liabilities
+
=
Accounts Payable
+
Mia Annabelle, Capital +$16,000
+
$16,000
+$1,500
+ $1,500 − 800
−3,000 $12,200
Owner’s Equity
=
+3,000 +
$4,500 $16,700
$700 =
$16,700
P1-2B. SEE’S INTERNET SERVICE BALANCE SHEET SEPTEMBER 30, 2023 LIABILITIES AND OWNER’S EQUITY
ASSETS Assets: Cash Building Equipment
Total Assets
1-12
.
Liabilities: $16 0 0 0 0 0 Accounts Payable 28 0 0 0 0 0 40 0 0 0 0 0 Owner’s Equity:
$84 0 0 0 0 0
$60 0 0 0 0 0
B. See, Capital
24 0 0 0 0 0
Total Liabilities and Owner’s Equity
$84 0 0 0 0 0
GROUP B PROBLEMS, Cont. P1-3B. RICK FOX DESKTOP PUBLISHING SERVICE Assets
Cash
A BALANCE B C BALANCE D E F G H ENDING BALANCE
+
Accounts Receivable +
Office Equipment
=
Liabilities
+
=
Accounts Payable
+
+$9,000
Owner’s Equity R. Fox, Capital
−
R. Fox, Withdrawals
+
Revenue
−
Expenses
+$9,000
9,000
9,000
= + $3,000
+ $3,000
+1,290
+ $1,290
10,290
+
3,000
=
3,000
+
9,000
+
1,290
−625
+$625 +$2,690
+2,690
−500
+500
−350
+$350 +100
$8,815
+
$2,690
+
$3,000
=
$3,100
$14,505
=
$14,505
+100
+
$9,000
−
$350
+
$3,980
$1,225
P1-4B. (a) WEST’S STENCILLING SERVICE INCOME STATEMENT FOR THE MONTH ENDED JUNE 30, 2023 Revenue: Stencilling Fees Operating Expenses: Advertising Expense Repair Expense Travel Expense Supplies Expense Rent Expense
$1 0 9 8 0 0
$ 1 3 5 00 4 5 00 9 0 00 2 7 0 00 2 4 0 00
Total Operating Expenses
7 8 0 00
Net Income
$ 3 1 8 00
.
1-13
GROUP B PROBLEMS, Cont. P1-4B. Cont. (b) WEST’S STENCILLING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JUNE 30, 2023 J. West, Capital, June 1, 2023 Net Income for June Less: Withdrawals for June
$3 7 2 0 0 0 $ 3 1 8 00 3 6 0 00
Decrease in Capital
4 2 00
J. West, June 30, 2023
$3 6 7 8 0 0
(c) WEST’S STENCILLING SERVICE BALANCE SHEET JUNE 30, 2023 LIABILITIES AND OWNER’S EQUITY
ASSETS Assets: Cash Accounts Receivable Equipment
Total Assets
1-14
.
$2 0 4 3 0 0 1 1 4 0 00 5 40 00
$3 7 2 3 0 0
Liabilities: Accounts Payable
$
4 5 00
Owner’s Equity J. West, Capital
3 6 7 8 00
Total Liabilities and Owner’s Equity
$3 7 2 3 0 0
GROUP B PROBLEMS, Cont. P1-5B. 1. THILDORE’S CATERING SERVICE
10/25 10/27 10/28 10/29 11/1 11/5 11/8 11/10 11/15 11/17 11/20 11/25 11/28 11/30 ENDING BALANCE
Cash +25,000
+ +
(1,200)
Accounts Receivable
Owner’s Equity
= Liabilities +
Assets
Accounts Payable
+ +
Equipment
+
+
+1,200
=
+
+
+800
=
+800
(400)
+
+
=
(400)
+2,200
+
+
(550)
+
+ +
J. Thildore, Capital
Thildore, Withd
Catering Revenue
−
+ +
+
−
+
−
+
−
+
−
+
−
+
=
+
−
+
+
=
+
−
+
+25,000
+
+250
+
=
+
−
+
(80)
Expenses −
− +2,200
− −
+250
+80
+
+
=
+
−
+
−
(50)
+
+
=
+
−
+
−
(120)
+
+
=
+
−
+
−
+2,500
+
+
+
+
+ (550)
+
26,910
+
170
+120
+550
− +50
−
+
−
+
=
+1,300
+
−
+
−
+
=
+650
+
−
+
−
+650
+
=
+
−
+
−
+550
−
1,800
+
= +1,300
3,300
=
2,350
$30,380
=
$30,380
+
25,000
−
120
+
+2,500
4,950
2. THILDORE’S CATERING SERVICE BALANCE SHEET OCTOBER 31, 2022 LIABILITIES AND OWNER’S EQUITY
ASSETS Assets Cash Equipment
Total Assets
$23 4 0 0 0 0 2 0 0 0 00
$ 25 4 0 0 0 0
Liabilities Accounts Payable
$ 4 0 0 00
Owner’s Equity J. Thildore, Capital
25 0 0 0 0 0
Total Liabilities and Owner’s Equity
$ 25 4 0 0 0 0
.
1-15
GROUP B PROBLEMS, Cont. P1-5B., cont. 3. THILDORE’S CATERING SERVICE INCOME STATEMENT FOR THE MONTH ENDED NOVEMBER 30, 2022 Revenue: Catering Revenue
$4 9 5 0 00
Operating Expenses: Salaries Expense Telephone Expense Rent Expense Supplies Expense
$ 5 5 0 00 5 0 00 6 5 0 00 5 5 0 00
Total Operating Expenses
1 8 0 0 00
Net Income
$3 1 5 0 00
4. THILDORE’S CATERING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED NOVEMBER 30, 2022 J. Thildore, Capital, November 1, 2022 Net Income for November Less: Withdrawals for November Increase in Capital J. Thildore, Capital, November 30, 2022
1-16
.
$25 0 0 0 0 0 $3 1 5 0 0 0 (1 2 0 0 0) 3 0 3 0 00 $28 0 3 0 0 0
GROUP B PROBLEMS, Cont. P1-5B., Cont. 5. THILDORE’S CATERING SERVICE BALANCE SHEET NOVEMBER 30, 2022 ASSETS Assets Cash Accounts Receivable Equipment
LIABILITIES AND OWNER’S EQUITY Liabilities $26 9 1 0 0 0 Accounts Payable 1 7 0 00 3 3 0 0 0 0 Owner’s Equity
$2 3 5 0 00
J. Thildore, Capital
Total Assets
28 0 3 0 0 0
Total Liabilities and $30 3 8 0 0 0 Owner’s Equity
$30 3 8 0 0 0
.
1-17
GROUP C PROBLEMS P1-1C. GOOD HOME HARDWARE INCOME STATEMENT FOR THE YEAR ENDED JULY 31, 2022 Revenues: Service revenue Repair revenue
$142 0 0 0 0 0 6 0 0 0 00
Total revenues Operating expenses: Wages expense Rent expense Supplies expense Utilities expense Interest expense
$148 0 0 0 0 0 $52 0 0 0 0 0 24 0 0 0 0 0 11 4 0 0 0 0 9 8 0 0 00 5 0 0 00
Total operating expenses
97 7 0 0 0 0
Net income
$50 3 0 0 0 0
GOOD HOME HARDWARE STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JULY 31, 2022 M. Good, capital, August 1, 2021 Add: Investments by owner Net income
$79 3 0 0 0 0 $ O 50 3 0 0 0 0
50 3 0 0 0 0
Total Less: Withdrawals by owner
$129 6 0 0 0 0 34 0 0 0 0 0
M. Good, capital, July 31, 2022
$95 6 0 0 0 0
GOOD HOME HARDWARE BALANCE SHEET JULY 31, 2022 ASSETS
LIABILITIES
Cash Accounts receivable Supplies Prepaid rent Office equipment Furniture
$11 8 0 0 0 0 56 0 0 0 0 0 2 4 0 0 00 12 0 0 0 0 0 29 2 0 0 0 0 19 0 0 0 0 0
Accounts payable Notes payable Total liabilities
Total assets
$130 4 0 0 0 0
Total liabilities and equity
1-18
.
$14 8 0 0 0 0 20 0 0 0 0 0 $34 8 0 0 0 0
Equity M. Good, capital
95 6 0 0 0 0 $130 4 0 0 0 0
GROUP C PROBLEMS, Cont. P1-2C. LEROY’S TRAINING SERVICES Assets Cash
A B C D E F G H I ENDING BALANCE
+
Accounts Receivable
+
Office Equipment
=
Liabilities
+
=
Accounts Payable
+
+$9,000
Owner’s Equity L. Greene, Capital
+
L. Greene, Withdrawals
+
Revenue
−
Expenses
+$9,000 +$4,250
$4,250
+2,350
+$2,350
− 800
+$800 +$3,650
+3,650
− 600
+600
− 1,000
+ $1,000 +400
+400
−192
$8,758
192
+
$3,650
+
$4,250
=
$4,650
$16,658
=
$16,658
+
$9,000
−
$1,000
+
$6,000
−
$1,992
P1-3C. 1. FIRST CITY SURVEYING SERVICE Assets
Cash
04/23 04/26 04/29 04/30 05/02 05/03 05/10 05/13 05/14 05/17 05/21 05/24 05/27 05/28 05/31 ENDING BALANCE
+
Accounts Receivable
+
Surveying Equipment
=
Liabilities
+
=
Accounts Payable
+
$17,000
Owner’s Equity H. McGraw Capital
−
H. McGraw, Withdrawals
+
Surveying Revenue
−
− 250
$5,000
− 2,895
+2,895
+$4,750
− 2,375
−2,375
+2,350
+$2,350
− 975
+$975
+2,000
+2,950
+2,500
− 2,500
+4,950
− 104
+104
−1,043
+$1,043
+1,825
+1,825 +2,415
+2,415
− 825
+825
− 246
+246 +410
16,962
Expenses
$17,000
+
450
+
10310
=
$5,200
$27,722
=
$27,722
+410
+
$17,000
−
$1,043
.
1-19
+
$9,125
−
$2,560
GROUP C PROBLEMS, Cont. P1-3C., Cont. 2. FIRST CITY SURVEYING SERVICE BALANCE SHEET APRIL 30, 2022 LIABILITIES AND OWNER’S EQUITY
ASSETS Assets: Cash Surveying Equipment
Total Assets
$11 4 8 0 0 0 7 8 9 5 00
$19 3 7 5 0 0
Liabilities: Accounts Payable
$2 3 7 5 0 0
Owner’s Equity: Howard McGraw, Capital
17 0 0 0 0 0
Total Liabilities and Owner’s Equity
$19 3 7 5 0 0
3. FIRST CITY SURVEYING SERVICE INCOME STATEMENT FOR THE MONTH ENDING MAY 31, 2022 Revenues: Surveying Revenue
$9 1 2 5 0 0
Operating Expenses: Salaries Expense Telephone Expense Rent Expense Supplies Expense Advertising Expense Total Operating Expenses Net Income
1-20
.
$ 9 7 5 00 1 0 4 00 8 2 5 00 2 4 6 00 4 1 0 00 2 5 6 0 00 $6 5 6 5 0 0
GROUP C PROBLEMS, Cont. P1-3C., Cont. 4. FIRST CITY SURVEYING SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MAY 31, 2022 Howard McGraw, Capital, May 1, 2022 Net Income for May Less: Withdrawals for May
$17 0 0 0 0 0 $6 5 6 5 0 0 1 0 4 3 00
Increase in Capital
5 5 2 2 00
Howard McGraw, Capital, May 31, 2022
$22 5 2 2 0 0
5. FIRST CITY SURVEYING SERVICE BALANCE SHEET MAY 31, 2022 LIABILITIES AND OWNER’S EQUITY
ASSETS Assets: Cash Accounts Receivable Equipment
Liabilities: $16 9 6 2 0 0 Accounts Payable 4 5 0 00 10 3 1 0 0 0 Owner’s Equity:
$5 2 0 0 0 0
Howard McGraw, Capital
Total Assets
$27 7 2 2 0 0
22 5 2 2 0 0
Total Liabilities and Owner’s Equity
$27 7 2 2 0 0
.
1-21
GROUP C PROBLEMS, Cont. P1-4C. Roger’s Window Washing Company Income Statement For The Year Ended December 31, 2022 Revenue: Window Cleaning Operating Expenses: Salaries Expense Supplies Expense Interest Expense Advertising Expense Total Operating Expenses Net Income
Insights $14 2 7 6 0 0
$11 3 7 6 0 0 +2 9 0 0 0 0 $14 2 7 6 0 0
$6 8 8 0 0 0 1 4 0 0 00 3 0 0 00 9 5 00 8 6 7 5 00
$5 0 8 0 0 0 +1 8 0 0 0 0
$5 6 0 1 0 0
$6 8 8 0 0 0
Advice to Roger: In the long run, a formal bookkeeping and accounting system may prove less costly than creating statements from informal records—and provide more reliance for Canada Revenue Agency as well.
P1-5C. 1.
LUNE CO. BALANCE SHEET DECEMBER 31, 2022 ASSETS
LIABILITIES AND OWNER’S EQUITY
Assets: Cash Accounts Receivable Land Building Desks Auto
Liabilities: $10 0 1 6 0 0 Accounts Payable 104 3 3 7 0 0 Notes Payable 72 9 3 5 0 0 Total Liabilities 44 6 0 0 0 0 6 8 2 5 0 0 Owner’s Equity: 14 2 6 8 0 0 J. Lune, Capital
Total Assets
Total Liabilities and $252 9 8 1 0 0 Owner’s Equity
127 6 0 4 0 0 $75 3 2 8 0 0 $202 9 3 2 0 0
50 0 4 9 0 0
$252 9 8 1 0 0
2. Abby Simpson does not seem to understand the basic accounting equation, the classification of accounts, or the double entry accounting system which would keep all of the accounts in balance (including the Capital account). If she stays in the position of bookkeeper, it is likely that the accounting records will not be accurate.
1-22
.
GROUP C PROBLEMS, Cont. P1-5C., Cont. 3.
LUNE CO. BALANCE SHEET REVISED JANUARY 4, 2023 LIABILITIES AND OWNER’S EQUITY
ASSETS Assets: Cash Accounts Receivable
Liabilities: $28 0 1 6 0 0 Notes Payable 104 3 3 7 0 0 Accounts Payable
Land Building Desks Auto
72 9 3 5 0 0 Total Liabilities 44 6 0 0 0 0 14 8 2 5 0 0 Owner’s Equity: 20 2 6 8 0 0 J. Lune, Capital
Total Assets
Total Liabilities and $284 9 8 1 0 0 Owner’s Equity
$79 3 2 8 0 0 127 6 0 4 0 0 $206 9 3 2 0 0
78 0 4 9 0 0
$284 9 8 1 0 0
Insight Cash 10,016 20,000
Desks 2,000
Auto
J. Lune
Notes Payable
6,825
14,268
50,049
75,328
8,000
6,000
28,000
4,000
SOLUTIONS TO ETHICAL CONSIDERATIONS EC1-1. Answers will vary but here are some points for discussion: 1.
If something at a yard sale is far more valuable than the posted price, do I have to let the seller know? A piece of antique furniture you've been searching for is marked at $225. You know that similar pieces in worse condition have sold for more than 10 times as much. You are under no obligation to correct the seller on her underpricing. One of the beauties of yard sales is such finds!
2.
Is it considered stealing to take pens from a bank? What about extra napkins from a fast-food restaurant? While grabbing a pen is not necessarily considered stealing, you should just ask the teller if you have any doubts. That said, one pen is OK, but enough to stock your home office isn’t (the same goes for napkins). A good rule of thumb: If you don’t feel comfortable about it, then it probably isn’t a good idea.
3.
Is it unfair to move into better (unoccupied) seats at a sporting event or a concert? There’s no harm in seeing if you can move into a better viewing position. But before you do, make sure there’s no posted policy against it. And if an usher asks to see your tickets, be prepared to move back to your original seats without argument as there could be late comers attending the event.
.
1-23
SOLUTIONS TO ETHICAL CONSIDERATIONS, Cont. EC1-1,. Cont. 4.
My boss gave me credit for a project on which a colleague did most of the work. Should I accept the praise? Fight the urge to accept the compliment wholeheartedly. It’s unfair for your colleague not to get the credit he or she deserves. But you don’t want to sell yourself too short, either. An appropriate response: “Thanks, but while all of us worked hard, it was Jane who did the bulk of the work on the project.”
5.
Am I obligated to lend money to friends and family? One of your oldest friends asks if you can lend her money to make her condo payment. You feel as if you should help her out, since she is a dear friend, but in actuality you have no such duty, particularly if doing so puts your own finances in a squeeze. If a family member calls seeking aid, again, there’s no requirement. But if he is truly in need and you have the money, concern about his wellbeing should trump any fears you have about his paying you back. If you do lend money to a family member or friend who has reoccurring financial problems, you should probably document the transaction and determine a payback date.
6.
My boss asked me to cover for him on his expense report by saying I was at a meal when I wasn’t. Should I do it? Your boss put you in a miserable position. Signing your name to the report makes you just as guilty should the misdeed be discovered. But if you stand up to him, you could find yourself out of a job. Bear in mind that a boss who would put you in such a predicament will probably do it again. The choice is yours
SOLUTIONS TO ANALYSIS OF FINANCIAL STATEMENTS AFS1-1. 1.
a. Cash Accounts receivable Inventories Prepaid expenses b. Accounts payable and accrued liabilities Deferred revenue Income taxes payable Current portion of long-term debt Derivative Obligation
2.
a. sales for the current period: $326,057,000 b. sales for the previous period: $281,886,000 c. sales increased by $44,171,000
3.
Roots Corporation sells merchandise to retail customers, so it would be classified as a merchandiser.
AFS1-2. Answers will vary depending on the company chosen,
1-24
.
CONTINUING PROBLEM 1., 2.
PRECISION COMPUTER CENTRE Assets
Cash
A.
+$4,500
B.
– 1,200
C.
– 600
+
Supplies
+
= Computer Shop Equipment
Liabilities
Office + Equipment =
Owner’s Equity
+
Accounts Payable
+
T. Freedman, Capital
−
T. Freedman, Withdrawals
+
Service Revenue
−
+1,200 +600
D.
+250
+250 +400 Rent
E.
– 400
F.
+250
+250
G.
+200
+200
H.
+85 Utilities
+85
I.
1,200
J.
−100
ENDING BALANCE
$3,850
Expenses
+$4,500
1,200 +100
+
$250
+
$1,200
+
$600
=
$335
$5,900
=
$5,900
+
−
$4,500
$100
+
$1,650
3. PRECISION COMPUTER CENTRE INCOME STATEMENT FOR THE MONTH ENDED MAY 31, 2022 Revenue: Service Revenue Operating Expenses: Rent Expense Utilities Expense
$1 6 5 0 0 0
$ 4 0 0 00 8 5 00
Total Operating Expenses
4 8 5 00
Net Income
$1 1 6 5 0 0
.
1-25
−
$485
CONTINUING PROBLEM, Cont.
PRECISION COMPUTER CENTRE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MAY 31, 2022 T. Freedman, Capital Contribution, May 1, 2022 Plus: Net Income for May Less: Withdrawals for May
$4 5 0 0 0 0 $1 1 6 5 0 0 1 0 0 00
Increase in Capital
1 0 6 5 00
T. Freedman, Capital, May 31, 2022
$5 5 6 5 0 0
3. PRECISION COMPUTER CENTRE BALANCE SHEET MAY 31, 2022 LIABILITIES AND OWNER’S EQUITY
ASSETS Assets: Cash Supplies Computer Shop Equipment Office Equipment
$3 8 2 1 2 6
Total Assets
$5 9 0 0 0 0
1-26
.
5 5 0 0
0 00 0 00 0 00 0 00
Liabilities: Accounts Payable
$ 3 3 5 00
Owner’s Equity T. Freedman, Capital
5 5 6 5 00
Total Liabilities and Owner’s Equity
$5 9 0 0 0 0
2 Debits and Credits: Analyzing and Recording Business Transactions
ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
A ledger is a group of accounts that record in monetary value data from business transactions. It is from the Latin word debere which means left side. False. Accounts with one entry will not need footings. The end product of the accounting process is preparing financial reports. The transaction analysis chart is a teaching device that is not used in the regular accounting process. , rules, update of T accounts. Accounts affected, category, The analysis of transactions results in the total of debits being equal to total of credits. A double-entry system provides a system of checks and balances. False. Informal report; does not have the same status as financial reports and is not shared with the public. The financial reports are prepared from the ending balances of the accounts (debit or credit) in the ledger. These ending balances are then used in financial reports. The inside columns in financial reports are for sub-totaling. It is easier to prepare the reports from the trial balance, because a list of all accounts and their balances is provided. The columns for revenue, expenses, etc., on the expanded accounting equation do not list specific titles and their balances. The question in this case is whether Audrey should be allowed to put fictitious figures into the trial balance. Although Audrey has good intentions, this type of behavior cannot be tolerated. Her actions are extremely unprofessional and go against all accounting standards (not to mention ethics!). Instead of putting in fictitious figures, Audrey should stay late and correct the trial balance (or perhaps engage an assistant to help her so she could catch the plane).
.
2-1
SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1. Cash C. Clark, Capital
$17,200
Debit Balance
$11,000
Credit Balance
CDE2. a. Asset, Dr. b. Liability, Cr. c. Owner’s Equity, Cr. d. Owner’s Equity, Dr. e. Asset, Dr.
f. g. h. i. j.
Revenue, Cr. Expense, Dr. Assets, Dr. Assets, Dr. Expense, Dr.
CDE3. Cash Accounts Receivable Bookkeeping Services
Asset Asset Revenue
Dr. Dr. Cr.
600
Cash
Accounts Receivable 1,900 Bookkeeping Fees 2,500
CDE4. Beginning balance, January 1 Add: Net profit Less: Withdrawals Ending balance, December 31
$24,100 10,500 2,500 $32,100
CDE5. During the year Davies Construction received $320,550 in cash and paid out $257,250 in cash. a. No, the data simply represents any cash transactions that were made; it does not include transactions recorded on account. b.
2-2
.
Beginning Cash Balance Add Cash received Less: Cash paid out Ending Cash Balance
$82,750 320,550 257,250 $146,050
SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES, Cont. CDE6. Cash Accounts Receivable
CDE8.
CDE7. A. B.
BS BS
Office Equipment
C.
BS
Accounts Payable
D.
BS
L. Bernie, Capital
E.
OE/BS
L. Bernie, Withdrawals
F.
OE
Hair Salon Fees Earned
G.
IS
Advertising Expense
H.
IS
Salary Expense
I.
IS
Utility Expense
J.
IS
K.
IS
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
The left side on the T Account is known as a Debit. A Trial Balance lists the ending balances of each account. The separate record for each asset and liability and the owner’s equity is called a/an Account. A Credit appears on the right side of the T Account A group of accounts that records data from business transactions are recorded in a Ledger. T Account is used for demonstration purposes to show the affects of entries on a standard account. The difference between the footings in a T Account is called Ending Balance. A compound entry is a transaction involving more than one debit or credit. A numbering system of accounts is used in the Chart of Accounts. When adding each side of the T account, the balance of each side represents footings.
.
2-3
SOLUTIONS TO EXERCISES—SET A E2-1A. Balance Sheet Accounts Assets 111 Cash 112 Accounts Receivable 121 Office Equipment Liabilities 211 Accounts Payable Owner’s Equity 311 L. Jones, Capital 312 L. Jones, Withdrawals Income Statement Accounts Revenue 411 Legal Fees Expenses 511 Advertising Expense 512 Repair Expense 513 Salary Expense
E2-2A. a. Liability, Cr. b. Owner’s Equity, Cr. c. Asset, Dr. d. Expense, Dr. e. Asset, Dr.
f. Owner’s Equity, Dr. g. Expense, Dr. h. Revenue, Cr. i. Asset, Dr. j. Asset, Dr.
E2-3A. ACCOUNT
CATEGORY
Supplies Legal Fees Earned
Asset Revenue Owner’s Equity (Withdrawals) Liability Expense Asset
P. Rey, Withdrawals Accounts Payable Salaries Expense Auto
2-4
.
FINANCIAL Dr. Cr. Dr.
Cr. Dr. Cr.
Balance Sheet Income Statement Statement of Owner’s Equity
Cr. Dr. Dr.
Dr. Cr. Cr.
Balance Sheet Income Statement Balance Sheet
SOLUTIONS TO EXERCISES—SET A, Cont. E2-4A. A. B. C. D. E. F. G. H. I.
Dr. 8 6 9 1 10 3 2 1 3
Cr. 1 1 4 7 1 5 7 2 4
E2-5A. HUGO’S CLEANERS INCOME STATEMENT FOR THE MONTH ENDED JULY 31, 2022 Revenue: Cleaning Fees Operating Expenses: Salaries Expense Utilities Expense Total Operating Expenses
$ 5 0 4 00 $ 1 7 5 00 7 5 00 2 5 0 00
Net Income
$ 2 5 4 00
.
2-5
SOLUTIONS TO EXERCISES—SET A, Cont. E2-5A., Cont. HUGO’S CLEANERS STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JULY 31, 2022 J. Hugo, Capital, July 1, 2022 Net Income for July Less: Withdrawals for July Decrease in Capital
$ 8 5 3 00 $ 2 5 4 00 1 1 5 00 1 3 9 00
J. Hugo Capital, July 31, 2022
$ 9 9 2 00
HUGO’S CLEANERS BALANCE SHEET JULY 31, 2022 ASSETS Cash Equipment
Total Assets
2-6
.
LIABILITIES AND OWNER’S EQUITY $ 6 0 0 00 6 9 2 00
$1 2 9 2 00
Liabilities: Accounts Payable Owner’s Equity J. Hugo Capital Total Liabilities and Owner’s Equity
$ 3 0 0 00 9 9 2 00 $1 2 9 2 00
SOLUTIONS TO EXERCISES—SET B E2-1B. Balance Sheet Accounts Assets 111 Cash 112 Accounts Receivable 121 Office Equipment Liabilities 211 Accounts Payable Owner’s Equity 311 L. Jones, Capital 312 L. Jones, Withdrawals Income Statement Accounts Revenue 411 Legal Fees Expenses 511 Cleaning Expense 512 Office Assistance Expense 513 Rent Expense
E2-2B. Increase
Decrease
Normal Balance
Asset
Debit
Credit
Debit
Liability
Credit
Debit
Credit
Capital
Credit
Debit
Credit
Withdrawls
Debit
Credit
Debit
Revenue
Credit
Debit
Credit
Expense
Debit
Credit
Debit
Balance Sheet Accounts
Owner’s Equity
Income Statement Accounts
E2-3B. ACCOUNT Supplies Legal Fees Earned P. Rey, Withdrawals Cash Accounts Receivable Rent Expense
CATEGORY Asset Revenue Owner’s Equity (Withdrawals) Asset Asset Expense
Dr. Cr. Dr.
Cr. Dr. Cr.
FINANCIAL Balance Sheet Income Statement Statement of Owner’s Equity
Dr. Dr. Dr.
Cr. Cr. Cr.
Balance Sheet Balance Sheet Income Statement
.
2-7
SOLUTIONS TO EXERCISES—SET B, Cont. E2-4B. A. B. C. D. E. F. G. H. I.
Dr. 8 6 9 1 10 3 2 1 3
Cr. 1 1 4 7 1 5 7 2 4
E2-5B. HALL’S CLEANERS INCOME STATEMENT FOR THE MONTH ENDED JULY 31, 2022 Revenue: Cleaning Fees Operating Expenses: Salaries Expense Utilities Expense Total Operating Expenses Net Income
2-8
.
$ 7 4 8 00 $ 2 5 0 00 8 3 00 3 3 3 00 $ 4 1 5 00
SOLUTIONS TO EXERCISES—SET B, Cont. E2-5B., Cont. HALL’S CLEANERS STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JULY 31, 2022 J. Hall, Capital, July 1, 2022 Net Income for July Less: Withdrawals for July Increase in Capital
$ 7 0 0 00 $ 4 1 5 00 2 4 5 00 1 7 0 00 $ 8 7 0 00
J. Hall, Capital, July 31, 2022
HALL’S CLEANERS BALANCE SHEET JULY 31, 2022 ASSETS Cash Equipment
Total Assets
LIABILITIES AND OWNER’S EQUITY $ 7 5 0 0 0 Liabilities: Accounts Payable 6 4 5 00 Owner’s Equity J. Hall, Capital Total Liabilities and $1 3 9 5 00 Owner’s Equity
$ 5 2 5 00 8 7 0 00 $1 3 9 5 00
.
2-9
GROUP A PROBLEMS P2-1A. Category
Accounts Affected A. Cash Bill O’Brien, Capital
Dec.
Rules
Asset
Dr.
Owner’s Equity
Cr.
Asset
Dr.
B. Delivery Trucks Accounts Payable
Liability Expense Liability
Cr
Asset
Dr.
Revenue
Cr.
Asset
Dr.
Revenue Owner’s Equity (Withdrawals)
Cr. Dr.
Asset
Cr.
Accounts Payable D. Cash Fees Earned E. Accounts Receivable
Cash
T-Account Update Bill O’Brien, Capital
Cash
21,000
21,000 Delivery Trucks
Accounts Payable 9,000
9,000
Cr. Dr.
C. Rent Expense
Fees Earned F. Bill O’Brien, Withdrawals
Inc.
Rent Expense 900
Accounts Payable
Cash 21,000 1,400
Fees Earned
Accounts Receivable 150
Fees Earned
900
1,400
Bill O’Brien, Withdrawals
Cash
400
21,000 1,400
P2-2A. Cash (A) 20,000 (C) 900
Office Equipment (B)
5,000
Accounts Payable (G) 1,000
Fatima Ramin, Withdrawals (D) 90
312
121
Consulting Fees Earned 900 (C)
411
211
Advertising Expense (E) 400
511
311
Rent Expense (F) 1,400
512
5,000 (B) 1,400 (F)
Fatima Ramin, Capital 20,000 (A)
2-10 .
111 90 (D) 400 (E) 1,000 (G)
1,400 150
400
GROUP A PROBLEMS, Cont. P2-3A. (a) Cash
111
(A) 7,000 (G) 3,500
10,500
Accounts Payable (D) 200
200 (D) 200 (E) 400 (F) 200 (H) 900 (I)
211
Fees Earned
1,300 (C)
411 8,000 (B)
1,100
1,900
8,600
Accounts Receivable
112
Barry Joy, Capital
311
Rent Expense
7,000 (A)
(B) 8,000 3,500 (G)
511
(F) 400
4,500
Office Equipment (C) 1,300 (H) 200
121
Barry Joy, Withdrawals
312
Utilities Expense
(I) 900
512
(E) 200
1,500
(b) BARRY’S CLEANING SERVICE TRIAL BALANCE MAY 31, 2022 Dr. Cash Accounts Receivable Office Equipment Accounts Payable Barry Joy, Capital Barry Joy, Withdrawals Fees Earned Rent Expense Utilities Expense Totals
Cr.
$8 6 0 0 0 0 4 5 0 0 00 1 5 0 0 00 $1 1 0 0 0 0 7 0 00 9 0 0 00 8 0 0 0 00
4 0 0 00 2 0 0 00 $16 1 0 0 0 0 $16 1 0 0 0 0
.
2-11
GROUP A PROBLEMS, Cont. P2-4A. (a) GRACE LANTZ, BARRISTER AND SOLICITOR INCOME STATEMENT FOR THE MONTH ENDED MAY 31, 2022 Revenue: Revenue from Legal Fees
$2 3 5 0 00
Operating Expenses: Utilities Expense Rent Expense Salaries Expense Total Operating Expenses
$ 3 0 0 00 4 5 0 00 1 1 5 0 00 1 9 0 0 00
Net Income
$ 4 5 0 00
(b) GRACE LANTZ, BARRISTER AND SOLICITOR STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED MAY 31, 2022 Grace Lantz, Capital, May 1, 2022 Net Income for May Less: Withdrawals for May Increase in Capital Grace Lantz, Capital, May 31, 2022
2-12 .
$1 2 7 5 00 $ 4 5 0 00 3 0 0 00 1 5 0 00 $1 4 2 5 0 0
GROUP A PROBLEMS, Cont. P2-4A., Cont. (c) GRACE LANTZ, BARRISTER AND SOLICITOR BALANCE SHEET MAY 31, 2022 ASSETS Assets: Cash Accounts Receivable Office Equipment
Total Assets
LIABILITIES AND OWNER’S EQUITY $5 0 0 000 6 5 000 7 5 000
$6 4 0 000
Liabilities: Accounts Payable Salaries Payable
$4 3 0 0 0 0 6 7 5 00
Total Liabilities
$4 9 7 5 00
Owner’s Equity Grace Lantz, Capital
1 4 2 5 00
Total Liabilities and Owner’s Equity
$6 4 0 0 0 0
.
2-13
GROUP A PROBLEMS, Cont. P2-5A. The first seven transactions of Brubacher's Gym have been posted to the company accounts as shown here: Cash 1
Accounts Receivable
5000
2
4000
2000 3 1000 5 6
3 2000 6
Balance
Supplies
Balance
Exercise Equipment
2000 2000
4 Balance
1500 1500
2000
2000 1000 7 7000
Balance
4000
3000
Accounts Payable
Gym Fees Earned 1500 4
5000 1
1500 Balance
4000 2
Rent Expense 7 Balance
9000 Balance
Required: Part 1: Indicate for each entry the nature of the transaction. Example: Transaction 1: Received cash for gym fees earned for $5,000. Transaction 2: Supplied gym fees and customer will pay $4,000 at a later date. Transaction 3: Purchased gym supplies paying cash of $2,000. Transaction 4: Purchased Exercise equipment on account for $1,500. Transaction 5: Paid wages of $1,000. Transaction 6: Received $2,000 from the customer from transaction 2 Transaction 7: Paid rent of $1,000. Part 2: Foot the T Accounts See Above
2-14 .
Wages Expense
1000 1000
5 Balance
1000 1000
GROUP A PROBLEMS, Cont. P2-6A. 1. 2. Cash (A) 30,000 (E) 2,400 (J) 600
33,000 28,750
111 1,500 (C) 500 (D) 900 (F) 1,100 (G) 250 (K) 4,250
Accounts Payable
G. Adler, Capital
G. Adler, Withdrawals (K) 250
Office Equipment (C) 1,500
Delivery Fees Earned
(3)
511
311
Gas Expense (G) 1,100
512
312
Salaries Expense (F) 900
513
Telephone Expense (I) 100
514
30,000 (A)
Accounts Receivable 112 (H) 900 600 (J) 300
Delivery Trucks (B) 14,000
Advertising Expense (D) 500
211 14,000 (B) 100 (I) 14,100
121
122
411
2,400 (E) 900 (H) 3,300
ADLER’S DELIVERY SERVICE TRIAL BALANCE JULY 31, 2023 Dr.
Cash Accounts Receivable Office Equipment Delivery Trucks Accounts Payable G. Adler, Capital G. Adler, Withdrawals Delivery Fees Earned Advertising Expense Gas Expense Salaries Expense Telephone Expense Totals
Cr.
28 7 5 0 00 3 0 0 00 1 5 0 0 00 14 0 0 0 0 0 14 1 0 0 0 0 30 0 0 0 0 0 2 5 0 00 3 3 0 0 00 5 00 1 1 0 0 00 9 0 0 00 1 0 0 00 47 4 0 0 0 0
.
2-15
47 4 0 0 0 0
GROUP A PROBLEMS, Cont. P2-6A, Cont. (4a)
ADLER’S DELIVERY SERVICE INCOME STATEMENT FOR THE MONTH ENDED JULY 31, 2023 Revenue: Delivery Fees Earned
$3 3 0 0 00
Operating Expenses: Advertising Expense Gas Expense Salaries Expense Telephone Expense Total Operating Exenses Net Income
$ 5 0 0 00 1 1 0 0 00 9 0 0 00 1 0 0 00
2 6 0 0 00 $ 7 0 0 00
(4b) ADLER’S DELIVERY SERVICE STATEMENT OF OWNER’S EQUITY FOR THE MONTH ENDED JULY 31, 2023 G. Adler, Capital, July 1, 2023 Investment in July Total investment for July Net Income for July Less: Withdrawals for July Increase in Capital G. Adler, Capital, July 31, 2023
(4c)
$ 7 0 0 00 2 5 0 00
$ 00 30 0 0 0 0 0 30 0 0 0 0 0
4 50 00 $30 4 5 0 0 0
ADLER’S DELIVERY SERVICE BALANCE SHEET JULY 31, 2023
ASSETS
LIABILITIES AND OWNER’S EQUITY
Cash Accounts Receivable
Liabilities $28 7 5 0 0 0 Accounts Payable 3 0 0 00
Office Equipment Delivery Trucks
1 5 0 0 0 0 Owner’s Equity 14 0 0 0 00 A. Adler, Capital
30 4 5 0 00
Total Liabilities and $44 5 5 0 0 0 Owner’s Equity
$44 5 5 0 0 0
Total Assets
2-16 .
$14 1 0 0 0 0
GROUP B PROBLEMS P2-1B. Accounts Affected
Category
A. Cash
Inc.
Asset
L. Saunders, Capital B. Delivery Trucks
Dec.
Rules Dr.
Capital
Cr. Dr.
Asset
T-Account Update L. Saunders, Capital 25,000 (A)
Cash (A) 25,000 Delivery Trucks
Accounts Payable
(B) 12,000
Accounts Payable
Liability
C. Rent Expense
Cr. Dr.
Expense
12,000 (B)
Rent Expense
Accounts Payable
(C) 1,100
Accounts Payable D. Cash
Liability Asset
Cr Dr.
Delivery Fees Earned
Revenue
Cr.
E. Accounts Receivable
Asset
Dr.
Delivery Fees Earned F. L. Saunders, Withdrawals
Revenue Withdrawals
Cr. Dr.
Cash
12,000 (B) 1,100 (C)
Cash
Delivery Fees Earned
(A) 25,000
1,500 (D)
(D) 1,500 Accounts Receivable (E) 600
1,500 (D) 600 (E)
L. Saunders, Withdrawals (F) 700
Asset
Delivery Fees Earned
Cr.
Cash (A) 25,000 (D) 1,500
700 (F)
P2-2B. SHAM'S CONSTRUCTION REPAIR SHOP BALANCE SHEET APRIL 30, 2023 Assets
Liabilities and Equity
Cash Accounts receivable
$12 6 0 0 0 0 94 5 0 0 0 0
Accounts payable Loan Payable
$69 3 0 0 0 0 56 7 0 0 0 0
Construction Supplies
28 3 5 0 0 0
Total Liabilites
126 0 0 0 0 0
Equipment
44 1 0 0 0 0
R. Bauman, Capital
53 5 5 0 0 0
Total Assets
$179 5 5 0 0 0
Total Liabilities and Equity
$179 5 5 0 0 0
.
2-17