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$5,320 $ 8,600 $2,460 (m)

4,810
(a)
7,000
(g)
2,010
$ 510 $ 1,600 (h) $ 450 (n)
$1,780 $15,400 $ 200
510 (b) 1,600 (i) 450
190
(c)
1,000 ( 1250)
(o)
$2,100 (d) $16,000 $ 1900 (p)
$2,100 (e) $16,000 (j) $1,900
$ 600 (f) $ 2,000 $1,300
2,100 16,000
(k)
1900
(q)
$2,700 $18,000 (l) $3,200 (r)
2. User insight: Income statement discussed
Owner's capital
Total liabilities and owner's equity
Set C
Revenues
Set A Set B
Chapter 1, P 2.
1. Financial statements completed
Income Statement
Expenses
Statement of Owner's Equity
Net income
Beginning balance
Net income
Less withdrawals
Ending balance
It's important to prepare the income statement before the balance sheet because the income statement
includes all transactions that impact a business. A balance sheet just shows the position of a company on a
specific date.
Total assets
Balance Sheet
Liabilities
Owner's equity
Ch1 P2
Amount
$ 750
400
600
750
$2,500
Amount
$ 300
750
400
600
$2,050
b july 15
c
july
Total July purchases
5
july 22
d july 30
a
Date Received
2. Purchases recognized on date received
Order Date Shipped
Total July purchases
c july 16
d july 23
e july 27
Date Shipped
july 10
Date Received
Chapter 2, E 4.
1. Purchases recognized on date shipped
Order
b
Ch2 E4
= +
= $ $
$ $ $
M. Powell,
Withdrawals
+ Revenues
Chapter 2, E 5.
Assets = Liabilities
Expenses
+
Owner's Equity
M. Powel, Capital
Ch2 E5
[Pg 10]
Post.
Ref. Debit Credit
14 6,000
2,000
4,000
28 3,000
3,000
Ref. Debit Debit Credit
13 8,000
14 J10 6,000
28 J10 3,000
Ref. Debit Debit Credit
14 J10 6,000 6,000
Ref. Debit Debit Credit
14 J10 4,000
28 J10 3,000 1,000
Credit
Dec 4,000
2011
Accounts Payable
Payable 212
Post.
Date Item
Balance
2011
Dec
Balance
Date Item Credit
Post.
Office Equipment 146
Dec. Balance
3,000
2011
Post.
2,000
Balance
Date Item Credit
General Ledger
Cash 111
Date Description
Accounts payable
Cash
Equipment
Made partial payment on purchased
equipment.
Chapter 2, E 18.
Cash
2011
Dec
General Journal
Accounts payable
Purchase of equipment on account
with downpayment.
Ch2 E18
f 2,040 j 1,380 e 330
1,380 c 190 2,040 1,380
Bal. 660
i 40
k 90
l 440
m 300
7,080 1,650
5,430
5,000 a 3,600 h 330 e 330
480 g 380 g 860
5,480 Bal. 3,980 330 1,190
Bal. 860
a 14,300 m 300 f 2,040
440 k 90 b 260
40 c 190
Repair Expense Advertising Expense
Salaries Expense Utilities Expense Rent Expense
l
C. Dahlen, Capital C. Dahlen, Withdrawals
i
Cash Supplies
a 5,700 b
Tuition Revenue
a
g
Computers Office Equipment Accounts Payable
Bal.
h 330
Accounts Receivable
Chapter 2, P 3.
1. T accounts set up
2.
Transactions recorded in the accounts (be sure to put the transaction letter beside the amounts
for easy identification)
Bal.
260
j
Ch2 P3 (1)
$ 5,430
660
330
5,480
3,980
$ 860
14,300
300
2,040
440
90
260
40
190
$17,200 $17,200
4. User Insight: Transactions "f" and "j" examined
The total revenues recognized is $ 2,040. This is based on accrual basis. However the cash received
from the revenue is only $ 1,380. There is a difference in the revenue recognized and the revenue
collected. Financial reporting is based on accrual basis and revenue is recognized when earned and
not during collection. There are really times when the business would report high net income but
would still have problems with its cash flows. This is because revenues are recognized even if not yet
collected. If the business can't collect payments from its customers right at the right time, it may
report high income but will have cash problems.
Cash
Accounts Receivable
Supplies
Computers
Office Equipment
Accounts Payable
Tuition Revenue
Salaries Expense
Utilities Expense
Rent Expense
Repair Expense
Advertising Expense
Chapter 2, P 3. (Continued)
3. Trial balance prepared
C. Dahlen, Withdrawals
C. Dahlen, Capital
Star Office Training
Trial Balance
May 31, 2012
Ch2 P3 (2)
$14,620
$5,680
1,350
580
380
2,920
320
720
11,950
$ 2,670
$15,034
2,670
$17,704
2,000
$15,704
Chapter 3, E 10.
For the Month Ended August 31, 2011
Alvin Cleaning Company
Income Statement
Net income
Revenue
Janitorial Revenue
Expenses
Wages Expense
Rent Expense
Less: A. Wish, Withdrawals
For the Month Ended August 31, 2011
A. Wish, Capital , August 1, 2011
Alvin Cleaning Company
Statement of Owner's Equity
Subtotal
A. Wish, Capital , August 31, 2011
Net Income
Total expenses
Gas, Oil, and Other Truck Expenses
Insurance Expense
Supplies Expense
Depreciation Expense- Cleaning Equipment
Depreciation Expense- Truck
Ch3 E10 (1)
$ 4,750
2,592
380
200
152
$ 3,875
320
3,555
$ 7,200
720 6,480
$18,109
$ 420
295
1,690
$ 2,405
$15,704
15,704
$18,109
Accounts Receivable
Cash
Total Owner's Equity
Chapter 3, E 10. (Continued)
Accounts Payable
Total Assets
Truck
Assets
Alvin Cleaning Company
Less: Accumulated Depreciation-Truck
Prepaid Rent
Cleaning Supplies
Balance Sheet
August 31, 2011
Wages Payable
Total Liabilities and Owner's Equity
A. Wish, Capital , August 31, 2011
Less: Accumulated Depreciation-Cleaning Equipment
Total Liabilities
Prepaid Insurance
Cleaning Equipment
Owner's Equity
Liabilities
Unearned Janitorial Revenue
Ch3 E10 (2)
$ 2,400
3,800
$ 6,200
2,900
$ 3,300
$ 2,200
19,500
$21,700
1,200
$20,500
$ 4,200
8,900
$13,100
1,900
$11,200
[Subtotal]
Chapter 3, E 13.
Cash payments for insurance during 2010
Less: Unearned fees, beginning
Cash receipts from fees during 2010
Cash payments for wages during 2010
Prepaid insurance, ending
Wages payable, beginning
Add: Wages expense
Add: Insurance expense
[Subtotal]
Less: Prepaid insurance, beginning
Add: Fees earned
[Subtotal]
Less: Wages payable, ending
Unearned fees,ending
Ch3 E13
Debit Credit Debit Credit Debit Credit Debit Credit
10,072 10,072 10,072
29,314 29,314 29,314
5,340 h 816 1 3,060 3,096 3,096
14,700 2 13,270 1,430 1,430
2,460 3 2,274 186 186
15,000 15,000 15,000
196,000 196,000 196,000
53,400 4 14,400 67,800 67,800
103,800 103,800 103,800
30,900 5 15,450 46,350 46,350
15,900 15,900 15,900
10,800 6 2,700 13,500 13,500

9,396 9,396 9,396
8,340 7 2,980 5,360 5,360
72,000 72,000 72,000
128,730 128,730 128,730
30,000 30,000 30,000
283,470 283,470 283,470
28,800 7 2,980 31,780 31,780
h 816 816 816
120,600 i 1,920 122,520 122,520
44,400 44,400 44,400
31,050 31,050 31,050
7,200 7,200 7,200

1 3,060 3,060 3,060


2 13,270 13,270 13,270
3 2,274 2,274 2,274
4 14,400 14,400 14,400
5 15,450 15,450 15,450
6 2,700 2,700 2,700
i 1,920 1,920 1,920
59,742 59,742
625,836 625,836 56,870 56,870 661,122 661,122 316,066 316,066 404,798 404,798
Building
Accumulated DepreciationBuilding
Unearned Lockbox Fees
Mortgage Payable
Depreciation ExpenseTrucks
Depreciation ExpenseOffice Equipment
Wages Payable
Net Income
Accumulated DepreciationTrucks
Office Equipment
Accumulated DepreciationOffice
Equipment
N. Reed, Capital
Trial Balance Adjustments Trial Balance Income Statement Balance Sheet
Adjusted
Office Supplies Expense
N. Reed, Withdrawals
Depreciation ExpenseBuilding
Delivery Service Revenue
Lockbox Fees Earned
Truck Drivers' Wages Expense
Delivery Supplies Expense
Insurance Expense
Office Salaries Expense
Gas, Oil, and Truck Repairs Expense
Interest Expense
Chapter 4, P 4.
1. Work sheet completed
Land
Credit
Office Supplies
Account Name Debit
Accounts Payable
Reed Delivery ServiceWork SheetFor the Year Ended August 31, 2010
Cash
Accounts Receivable
Prepaid Insurance
Delivery Supplies
Trucks
$283,470
32,596
$316,066
122,520
44,400
31,050
7,200
3,060
13,270
2,274
14,400
15,450
2,700
256,324
$ 59,742
$ 128,730
( 30,000)
$ 98,730
59,742
$ 158,472
Beginning Balance
Withdrawls
Subtotal
Net Income
N. Reed, Capital, August 31, 2010
Reed Delivery Service
Statement of Owner's Equity
For the Year Ended August 31, 2010
Chapter 4, P 4. (Continued)
2. Income statement, statement of owner's equity, and balance sheet prepared
Reed Delivery Service
Total expenses
Expenses
Truck Driver Wages
Office Salaries
Gas Oil and Repairs
Income Statement
For the Year Ended August 31, 2010
Revenues
Delivery Service Revenue
Lockbok Fees
Total revenues
Interest Expense
Insurance
Delivery Service Revenue
Office Supplies
Depreciation-Building
Depreciation-Tuck
Depreciation-Office Equipment
Net income
Ch4 P 4 (2)
$ 10,072
$ 29,314
$ 3,096
$ 1,430
$ 186
$ 15,000
$196,000
67,800
128,200
$103,800
46,350
57,450
$15,900
13,500
2,400
$247,148
$ 9,396
$ 5,360
$ 72,000
$ 1,920
$ 88,676
$158,472
158,472
$247,148
Total liabilities
Office Equipment
Owner's Equity
Capital
Total owner's equity
Total liabilities and owner's equity
August 31, 2010
A/D Building
Trucks
A/D-Office Equipment
Total assets
Liabilities
Accounts Payable
Unearned Lockbox Fees
Delivery Supplies
Office Supplies
Mortgage Payable
Wages Payable
Reed Delivery Service
Balance Sheet
Cash
A/R
Prepaid Insurance
Land
Building
Chapter 4, P 4. (Continued)
Assets
A/D Trucks
Ch4 P 4 (3)
Debit Credit
31 3,060
3,060
31 13,270
13,270
$14,700 $1,430 = $13,270
31 2,274
2,274
=
31 14,400
14,400
31 15,450
15,450
31 2,700
2,700
31 2,980
2,980
31 816
816
31 1,920
1,920
Wages
Wages Payable
To record wages owed
Lockbox Fees Earned
To record Lockbox fees earned
Lockbox Fees Earned
Unearned Lockbox Fees
To record unearned fees.
Unearned Lockbox Fees
Acc. Depreciation-Building
Depreciation
Acc Depreciation- Office Equipment
Depreciation
To record Estimated Depreciation
Acc. Depreciation Truck
To record Estimated Depreciation
Delivery Supplies
To record Inv of Unused Delivery Supplies
Office Supplies Expense
Office Supplies
To record Estimated Depreciation
Chapter 4, P 4. (Continued)
2010
General Journal
Adjusting entries:
Prepaid Insurance
Office supplies remaining
3. Adjusting, closing, and reversing entries prepared
Delivery Expense
Aug. Insurance Expense
Expired Insurance
Date Description
Depreciation
Ch4 P 4 (4)
Debit Credit
31 283,470
32,596
316,066
31 256,324
122,520
44,400
31,050
7,200
3,060
13,270
2,274
14,400
15,450
2,700
31 59,742
59,742
31 30,000
30,000
Income Summary
N. Reed, Capital
N. Reed, Withdrawals
To close withdrawals to capital.
To close income summary to capital.
N. Reed, Capital
Depreciation
To record Closing Entries to Inc Summary
Office Supplies
Depreciation
Depreciation
Interest
Insurance
Delivery
Wages
Salaries
Gas, Oil
To record Closing Entries to Inc Summary
Income Summary
Income Summary
2010
Aug. Delivery Service Revenue
Lockbox Fees
General Journal
Date Description
Chapter 4, P 4. (Continued)
Closing entries:
Ch4 P 4 (5)
$ 32,000
33,000
10,000
276,000
145,000
Prepaid Rent 1,600
Prepaid Insurance 4,800
Sales Supplies 1,280
Office Supplies 440
Deposits for future advertising
3,680
$507,800
49,600
$ 23,400
$ 41,200
28,400 12,800
36,200
4,000
$597,600
Short-term investments
Cash
Notes Receivable
Investments
Chapter 5, P 3.
Assets
Mike's Hardware Company
Balance Sheet
Merchandise Inventory
Accounts Receivable
Current assets
Property, plant, and equipment
Land
Building, not in use
Intangible assets
(continued)
Acc. Depreciation- Delivery Equipment
June 30, 2011
Total current assets
Delivery Equipment
Total assets
Trademark
Total property, plant, and equipment
Ch5 P3 (1)
$114,600
5,200
840
$120,640
80,000
$200,640
$396,960
396,960
$597,600
Liabilities
Total current liabilities
Long-term liabilities
Accounts Payable
Interest Payable
Owner's Equity
Chapter 5, P 3. (Continued)
Long-Term Notes Payable
Current liabilities
M. Logan, Capital
Total liabilities and owner's equity
Total liabilities
Total owner's equity
Salaries Payable
Ch5 P3 (2)
Current liabilities
=
Current assets
=
Total Liabilities
Debt to Equity
Ratio
50.5% =
Chapter 5, P 3. (Continued)
2. Liquidity and profitability measures computed
=
Total Equity
a.
$507,800
$120,640
4.2
=
b.
=
Current Ratio
$200,640
$396,960
As to liquidity, the company is very liquid. It has a very high current ratio. This indicates
greater ability of the company to pay current maturing obligations. The debt to equity
ratio is 50.5%. This means that the company is financed more by equity than debt. Debt is
only 33.6% of the total assets.
3. User insight: Ratios discussed
Ch5 P3 (3)
1 1,000
1,000
3 400
400
10 588
12
600
$1,000 $400
$600 x 2%
$600 $12
11 1,600
1,600
31 1,600
1,600
+ $1,600 =
Record Collection-no discount
The total amount received from Penkas Company (debits to the Cash account):
$588
Cash
Accounts Receivable
$2,188
Accounts Receivable
Sales-Penkas Co
To record Sales 2/10 n 30 FOB Shipping
= $600
Discount:
= $12
= $588
Payment:
To record return of items-Penkas
Accounts Receivable:
Cash
Sales Discounts
To record net amount collected Penkas
Returns and Allowances
Accounts Receivable
Chapter 6, E 6.
Mar. Accounts Receivable
Accounts Receivable
Sales-Penkas Co
To record Sales 2/10 n 30 FOB Shipping
Ch6 E6
Year 1 Year 2 Year 3
$ 21,000 $ 24,000
$117,600 144,000 150,000
$117,600 $165,000 $174,000
21,000 24,000 30,000
$ 96,600 $141,000 $144,000
Year 1 Year 2 Year 3
$ 21,000 $ 21,000
$117,600 144,000 150,000
$117,600 $165,000 $171,000
21,000 21,000 21,000
$ 96,600 $144,000 $150,000
Purchases
Beginning inventory
Cost of goods available for sale
Ending inventory
Cost of goods sold
Chapter 8, E 8.
1. Cost of goods sold computed by FIFO method
2. Cost of goods sold computed by LIFO method
Ending inventory
Cost of goods sold
In a period of rising prices, the FIFO method could give a lower cost of goods sold and higher
cost of ending inventory. The LIFO give a higher cost of goods sold but lower cost of ending
inventory.
Beginning inventory
Purchases
Cost of goods available for sale
Ch8 E8
+ / 2
days
times 9.0
=
365
= 40.6 days
times
$80,000
Receivable Turnover
=
$720,000
= 9.0
Days' Sales
Uncollected
=
number of days
$70,000 $90,000
Chapter 9, SE 2.
Receivable Turnover =
Net sales
Average Receivables
=
$720,000
Ch9 SE2
$69,800 $65,000
6,400 2,400
$63,400 $62,600
a. x x =
b. x x =
c. x x =
d. x x =
e. x x =
$102,000.00 $5,100.00
$457.50
90/360
60/360
30/360
120/360
$1,088.00
.1
.12
.09
.15
.06
$ 77,520.00 $1,938.00
$ 36,720.00 $367.20
$ 54,400.00
60/360
$ 61,000.00
Chapter 9, E 13.
Before
Write-off
After
Write-off
Accounts receivable
Allowance for uncollectible accounts
Net accounts receivables
Bal. 65,000
Bal. 2,400
Allowance for Uncollectible Accounts
Write-off 4,800 Bal. 6,400
7,200
Bal. 69,800 Write-off 4,800
Chapter 9, E 12.
Accounts Receivable
Bal. 65,000 Collection 2,400
Sale
Ch9 E12 to E13
$ 5,200.00 annual net cash flow
12.060 factor from present value table
Chapter 10, E 14.
$62,753.00 present value of net cash flows
30,000.00
less machine purchase price
$ 32,753.00 net present value of transaction
To find the present value of the purchase transaction:
yes, good investment
x

Ch10 E14
1.
$ 9,000.00
2,500.00
2,310.00
( $44,270 x 5% 2,213.50
( $18,200 x 6.20% 1,128.40
( $18,200 x 6.20% 1,128.40
( $18,200 x 1.45% 263.90
( $18,200 x 1.45% 263.90
( $14,000 x 5.40% 756.00
( $14,000 x 0.80% 112.00
476.00
$20,152.10
follows:
Accounts payable
Notes payable
Property taxes payable
Chapter 10, P 4.

Current liabilities determined
The current liabilities of Garcia Repair Shop as of December 31, 2010, are as
Federal income tax withholding
Total current liabilities
Sales tax payable
)
Social Security tax payable - employees
)
Social Security tax payable - employer
Medicare tax payable - employees
)
2. User insight: Additional information identified
)
Medicare tax payable - employer
)
State unemployment tax payable
)
Federal unemployment tax payable
)
Maybe there a need to reconcile the subsidiary legder for payables and its control account.
The names in the checks paid to suppliers should have a corresponding subsidiary account.
A check payment that could not be matched with a subsidiary account would mean that the
account for that supplier is may have not been recorded in the books.
Ch10 P4 (1)
=
= $16,300 =
$31,125 +
$49,325
$9,000
365 days
5.5 times
Current Assets - Current Liabilities
$20,152 ($3,852)
Average Accounts Payable
times
=
$18,200
= 66.6
Chapter 10, P 4. (Continued)
3. User insight: Liquidity ratios computed and evaluated (cents omitted)
Working Capital
Payables Turnover =
Cost of goods sold
$9,000
= = 5.5
Days' Payable =
Number of days
= days
The net working capital is negative. It means current assets is lesser than current liabilities.
This would indicate a possible problem on liquidity. The payables turnover indicates that the
business pays its payables 5.5 times every period. It takes the business almost 67 days to pay
its suppliers.
Payables Turnover
Ch10 P4 (2)
$175,000
* ( 5 =
Intangible assets
Software*
The cost of $ 250,000 should not be capitalized but will form part of the research and
development costs. Only the $ 175,000 are recorded as assets and capitalized.
$175,000 $175,000 years ) $140,000
Chapter 11, SE 10.
Ch11 SE10
May 17 May 5 64,000 May 5 64,000 May 17 24,000
May 21 May 21 16,000
May 28 May 28 24,000
Bal. Bal.
May 28 1,200 May 17 2,400
Bal. 1,200
1
$40 =
2
$44 =
3
$40 =
4
$38 =
5
=
6
=
1,200
26,400
16,000
22,800
Paid-in Capital, Treasury Stock
Chapter 12, E 13.
Cash Treasury Stock, Common
shares $
shares $26,400
1,600 shares $64,000
$
600
600 shares $22,800
shares
400 shares $16,000
Ch12 E13
1 Mar 2 Mar 1 60,000
10 Apr 15 Apr 10 26,000
Bal. 86,000
Mar 1 Mar 2 12,000
Bal. 12,000
Bal.
31 May 31 3,800
Bal. 3,800
15
1
shares =
2
shares =
3
shares =
12,000 Mar 100,000
25,000
Bal. 3,800
$10,000
Start-up and Organization Costs
25,000
128,000
40,000
Cash
79,000
Apr
Common Stock
65,000
Additional Paid-in Capital
Apr
165,000 37,000
May 3,800
Bal.
15,000 $4 par value $60,000

1. Transactions recorded in T accounts
Apr 10 39,000
Treasury Stock, Common
Chapter 12, P 1.
Dividends Dividends Payable
par value
6,500 $4 par value $26,000
2,500 $4.00
Bal. 25,000
Ch12 P1
$86,000
79,000
$165,000
11,200
$176,200
25,000
$151,200
* $15,000 $3,800 =
Additional Capital
Total contributed capital and retained earnings
Less: Treasury stock, Common
Contributed capital
Dora Corporation
Common Stock
Declaration of cash dividend will not affect the net income and cash flows. It will only reduce
the retained earnings balance.
3. User insight: Effects of cash dividend declaration discussed.
$11,200
Total stockholders' equity
Chapter 12, P 1. (Continued)
2. Stockholders' equity section of balance sheet prepared
Balance Sheet
May 31, 2011
Stockholders' Equity
Total contributed capital
Retained earnings*
Ch12 P1(2)
2011
Mar. 1 439,600
39,600
400,000
Aug. 31 17,584
416
18,000
( 6 / )
( 6 / )
=

=
Sept. 1 18,000
18,000
Premium on Bonds Payable
Bonds Payable
Issuance of Bonds Payable
Bond Interest Expense
Premium on Bonds Payable
Bond Interest Payable
Chapter 13, SE 6.
Cash
To record Interest Expense and amtz of premium
$400,000 0.09 12
$439,600 0.08 12
Cash
To reflect payment of Interest 3/1-8/31 on 9/1
$18,000 $17,584 $416
Bond Interest Payable
Ch13 SE6
$95,132

159,740
$254,872
4% 6 / 12 =
$350,000
254,872
$ 95,128
** $350,000 $7,000
Face value
Cash paid
Gain
(from Table 2*): $7,000 13.5903
Present value of a single payment at the end of 20 periods
with interest compounded semiannually at 4% (8% 2)
* From the appendix on present value tables.
Chapter 13, E 16.

1. Current market value of the bonds calculated.
Present value of 20 periodic payments at 4% (8% 2)
(from Table 1*): $350,000 0.4564
2. Gain or loss determined.
Market value (total present value) of bond issue
** **
Ch13 E16