Fundamental Accounting Principles 23rd Edition Wild Solutions Manual

Fundamental Accounting Principles
23rd Edition Wild Solutions Manual

Visit to Download in Full: https://testbankdeal.com/download/fundamental-accounting-
principles-23rd-edition-wild-solutions-manual/
Wild, Shaw & Chiappetta: Fundamental Accounting Principles, 23rd Edition
CHAPTER 7
ACCOUNTING INFORMATION SYSTEMS
Related Assignment Materials

Quick Beyond the
Student Learning Objectives Questions Studies* Exercises* Problems* Numbers
Conceptual objectives:
C1. Identify the principles and 1, 2, 3, 4, 7-1, 7-2 7-3
components of accounting 5, 6
information systems.
C2. Explain the goals and uses of 7, 9, 10, 11, 7-3, 7-4, 7-2, 7-4, 7-7, 7-4
special journals. 12 7-7, 7-10 7-9
C3. Describe the use of controlling 8, 9, 12 7-5 7-5 7-1, 7-2, 7-4, 7-6
accounts and subsidiary ledgers. 7-3, GL
Analytical objectives:
A1 Compute segment return on 13, 14, 15 7-9 7-11 7-1, 7-2,
assets and use it to evaluate 7-5, 7-8
segment performance.
Procedural objectives:
P1. Journalize and post transactions 7-6 7-1, 7-3, 7-6, 7-1, 7-2, 7-3, 7-6, 7-7
using special journals. 7-8, 7-9 SP, GL
P2. Prepare and prove the accuracy 7-8 7-10 7-1, 7-2, 7-6
of subsidiary ledgers. 7-3, GL
*See additional information on next page that pertains to these quick studies, exercises and problems.
SP refers to the Serial Problem
GL refers to the General Ledger problems
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
7-1
Additional Information on Related Assignment Material

Connect
Available on the instructor’s course-specific website) repeats all numerical Quick Studies, all Exercises
and Problems Set A. Connect also provides algorithmic versions for Quick Study, Exercises and
Problems. It allows instructors to monitor, promote, and assess student learning. It can be used in
practice, homework, or exam mode.
Connect Insight
The first and only analytics tool of its kind, Connect Insight is a series of visual data displays that are each framed
by an intuitive question and provide at-a-glance information regarding how an instructor’s class is performing.
Connect Insight is available through Connect titles.
The Serial Problem (SP) for Success Systems continues in this chapter.
General Ledger
Assignable within Connect, General Ledger (GL) problems offer students the ability to see how transactions post
from the general journal all the way through the financial statements. Critical thinking and analysis components are
added to each GL problem to ensure understanding of the entire process. GL problems are auto-graded and provide
instant feedback to the student.
Excel Simulations
Assignable within Connect, Excel Simulations allow students to practice their Excel skills—such as basic formulas
and formatting—within the context of accounting. These questions feature animated, narrated Help and Show Me
tutorials (when enabled). Excel Simulations are auto-graded and provide instant feedback to the student.
Synopsis of Chapter Revisions

NEW opener—Box and entrepreneurial assignment.
Streamlined section on System Principles.
Streamlined section on System Components.
New Exhibit 7.4 to show the relation between a general ledger account and its subsidiary ledger.
Streamlined section on Technology-Based Systems.
New image to show how Sage captures accounting basics.
Sustainability section shows how Box helps nonprofits succeed.
Updated segment return analysis using Callaway Golf.
7-2
Chapter Outline Notes

I. System Principles—Accounting information systems (AIS) collect
and process data from transactions and events, organize them in
reports and communicate results to decision makers. The five
fundamental principles of accounting information systems are:
A. Control Principle
Prescribes that AIS has internal controls—methods and
procedures allowing managers to control and monitor activities.
B. Relevance Principle
Prescribes that AIS report useful, understandable, timely and
pertinent information for effective decision making.
C. Compatibility Principle
Prescribes that AIS conform with a company's activities, personnel
and structure. It also must adapt to the company’s unique
characteristics.
D. Flexibility Principle
Prescribes that AIS be able to adapt to changes in the company,
business environment, and needs of decisions makers.
E. Cost-Benefit Principle
Requires that the benefits from an activity in AIS outweigh the
costs of that activity. Decisions regarding the other system
principles are affected by this principle.
II. System Components—Five components of accounting systems are:
A. Source Documents
Documents (paper and electronic) provide the information
processed by an accounting system.
B. Input Devices
Capture information from source documents and transfer it to the
information processing component.
C. Information Processors
Transform and summarize information for use in analysis and
reporting.
D. Information Storage
Keeps data accessible to information processors.
E. Output Devices
Take information out of an accounting system and make available
to users.
7-3

III. Special Journals in Accounting
A. Basics of Special Journals
1. Special journals are used to record and post transactions of
similar type.
2. Their use reduces recording and posting labor by grouping
similar transactions and periodically posting column totals.
3. Use allows an efficient division of labor—an effective control
procedure.
B. Subsidiary Ledgers
List of individual accounts with a common characteristic. Contains
detailed information on specific general ledger accounts which are
referred to as the control account.
1. Two of the most important subsidiary ledgers are:
a. Accounts receivable ledger—stores transaction data of
individual customers; controlled by Accounts Receivable
in General Ledger.
b. Accounts payable ledger—stores transaction data of
individual suppliers; controlled by Accounts Payable in
General Ledger.
2. Subsidiary ledgers are common for other general ledger
accounts such as equipment, inventory, and investments.
C. Sales Journal
Used to record sales of inventory on credit.
1. Contains an Accounts Receivable Dr. / Sales Cr. column.
Used to record each sale. Column total is posted to Accounts
Receivable (debit) and to Sales (credit) in the General Ledger
at the end of the month.
2. Contains a Cost of Goods Sold Dr. / Inventory Cr. Column.
Used to record the cost of sales in a perpetual inventory
system. Column total is posted to Cost of Goods Sold (debit)
and Inventory (credit).
2. Debits to the accounts of particular customers are individually
posted to the customer’s account in a subsidiary accounts
receivable ledger at the same time the transaction is recorded
in the special journal.
3. A schedule (list) of accounts receivable is used to prove the
accuracy of the subsidiary ledger. The total of this schedule
must equal the balance of the Accounts Receivable controlling
account in the general ledger.
D. Cash Receipts Journal
Multicolumn journal used to record all receipts of cash.
1. Every transaction increases Cash and is recorded in special
Cash Dr. column. The total of this column is posted at period
end to the Cash account in the General Ledger.
7-4

2. Credit columns are usually established for Accounts
Receivable and Sales. A special debit column is used for Sales
Discounts. A column named Cost of Goods Sold Dr. /
Inventory Cr. is established to record tracking of the perpetual
inventory cost. Amounts in this column are debits to Cost of
Goods Sold and credits to Inventory. Only the totals of
special columns are posted to the General Ledger.
3. A column titled "Other Accounts – Cr." is used to record all
types of receipts that are not frequent enough to justify having
special columns. Each credit in the Other Accounts column
must be posted individually.
4. Credits to the accounts of particular customers are individually
posted to the customer’s account in a subsidiary Accounts
Receivable Ledger.
E. Purchases Journal
Multicolumn journal used to record all purchases on credit.
1. In addition to a special column for Inventory Dr. and Accounts
Payable Cr., separate debit columns may be established for
frequent credit purchases, such as Store Supplies and Office
Supplies.
2. Only the totals of special columns are posted to the General
Ledger. Amounts in “Other Accounts” columns are posted
individually.
3. Credits to the accounts of particular creditors are individually
posted to the subsidiary Accounts Payable Ledger.
4. A schedule (list) of accounts payable is used to prove the
accuracy of the subsidiary ledger. The total of this schedule
must equal the balance of the Accounts Payable controlling
account in the general ledger
F. Cash Disbursements (Cash Payments) Journal
Used to record all payments of cash.
1. A Check Register is a cash disbursements journal that includes
a column for entering the number of each check.
2. A special Cash credit column is established. Only the total of
this column is posted.
3. Special columns are usually established for Accounts Payable
debit and Inventory credit (for purchase discounts received).
Only the totals of special columns are posted to the General
Ledger.
4. A column titled "Other Accounts -Debit" is used to record all
types of payments that are not frequent enough to justify
special columns. Each debit in the Other Accounts column
must be posted individually.
7-5

5. Debits to the accounts of particular creditors are individually
posted to the supplier’s account in a subsidiary Accounts
Payable Ledger.
G. General Journal Transactions
Used to record transactions that do not fit in any of the special
journals. Examples:
1. Adjusting entries.
2. Closing entries.
3. Correcting entries.
4. Other transactions may include sales returns, purchases
returns, and purchases of plant assets by issuing a note and
receipt of notes from customers.
IV. Technology-Based Accounting Systems
A. Computer Technology in Accounting—provides accuracy, speed,
efficiency, and convenience in performing accounting tasks.
1. Multipurpose off-the-shelf software programs are designed to
be user friendly and menu driven (Examples: Sage50 and
QuickBooks).
2. Some software can operate efficiently as an integrated
system—actions in one part of the system automatically affect
related parts (For example: recording automatically results in
posting).
3. Technology has reduced recordkeeping time and thereby
allows more time for analysis and managerial decision
making.
B. Data Processing in Accounting—systems differ with regard to
how input is entered and processed.
1. Online processing—enters and processes data as soon as
source documents are available. Updates databases
immediately. Examples: airline reservations, credit card
records, and rapid mail-order processing.
2. Batch processing accumulates source documents for a period
of time and then processes them all at once such as daily,
weekly, or monthly.
C. Computer Networks in Accounting
Links among computers giving different users and different
computers access to a common database and programs.
1. Local area network (LAN)—links computers with hard-wire
hookups.
2. Large computer networks extending over long distances often
rely on modem or wireless communication.
D. Enterprise-Resource Planning (ERP) Software
7-6
Programs that manage a company's operations. Largest suppliers

of these programs are SAP and Oracle.
E. Cloud Computing
1. Delivery of computing as a service rather than a product.
2. Uses applications via the web instead of installing them on
individual computers.
V. Decision Analysis—Segment Return on Assets
A. A segment is a part of a company that is separately identified by
its products or services or by the geographic market it serves.
B. Segment return on assets ratio—one measure of success for a
business segment.
C. Segment return on assets ratio equals the segment operating
income divided by segment average assets.
7-7
Chapter 7 Alternate Demonstration Problem
Bedrock Company completed these transactions during February of the

current year:
Feb 1 Owner, F. Stone invested $100,000 cash in the business.
1 Sent Flint Company check No. 413 for a cash purchase of

inventory $ 75,000.
2 Sold inventory costing $500 on credit to Dale Dent for $800,

Invoice No. 711. (Terms of all credit sales are 2/10, n/60.)
3 Received inventory and an invoice dated January 30, terms

2/10, n/60, from Able Company, $1,750.
4 Sold inventory costing $850 on credit to Gary Glen for $1,250,

Invoice No. 712.
5 Purchased on credit from Best Company inventory, $1,855;

store supplies, $75; and office supplies, $35. Invoice dated
February 4, terms n/10, EOM.
7 Borrowed $5,000 by giving First National Bank a promissory

note payable.
9 Purchased office equipment on credit from More Company,

invoice dated February 6, terms n/10, EOM, $625.
9 Sent Able Company Check No. 414 in payment of its January

30 invoice less the discount.
11 Sold inventory costing $1,000 on credit to Carl Cole for $ 1,650

Invoice No. 713.
12 Received payment from Dale Dent of the February 2 sale less

the discount.
14 Received payment from Gary Glen of the February 4 sale less 1

the discount. 4
14 Received inventory and an invoice dated February 11, terms

2/10, n/60, from Old Company, $1,985.
Feb. 14 Issued Check No. 415, payable to Payroll, in payment of sales
7-8
salaries for the first half of the month, $855. Cashed the check
and paid the employees.
14 Cash sales for the first half of the month, $18,460. Cost of this
merchandise was $ 9,500. (Normally, cash sales are recorded
daily; they are recorded only twice in this problem to reduce
the number of repetitive entries.)
14 Post to the customer and creditor accounts and also post any
amounts that should be posted as individual amounts to the
general ledger accounts. (Normally, such items are posted
daily; but you are asked to post them only twice in this
problem.)
16 Purchased inventory on credit from Best Company, $410;
store supplies, $45; and office supplies, $30. Invoice dated
February 12, terms n/10, EOM.
17 Received a credit memorandum from Old Company for
unsatisfactory inventory received on February 14 and returned
for credit, $85.
18 Received a credit memorandum from More Company for office
equipment received on February 9 and returned for credit,
$130.
21 Received payment from Carl Cole for the sale of February 11
less the discount.
21 Issued Check No. 416 to Old Company in payment of its
invoice of February 11 less the return and the discount.
24 Sold inventory costing $475 on credit to Carl Cole for $835,
Invoice No. 714.
26 Sold inventory costing $375 on credit to Gary Glen for $775,
Invoice No. 715.
28 Issued Check No. 417, payable to Payroll, in payment of sales
salaries for the last half of the month, $855. Cashed the check
and paid the employees.
28 Cash sales for the last half of the month, $20,215. Cost of this
merchandise was $ 11,500.
Feb 28 Post to the customer and creditor accounts and post any
amounts that should be posted as individual amounts to
7-9
general ledger accounts.
28 Foot and crossfoot the journals and make the month-end

postings.
Required:
1. Open the following general ledger accounts: Cash, Accounts

Receivable, Inventory, Store Supplies, Office Supplies, Office
Equipment, Notes Payable, Accounts Payable, F. Stone, Capital,
Sales, Sales Discounts, Cost of Goods Sold, and Sales Salaries
Expense.
2. Open the following accounts receivable ledger accounts: Carl Cole,
Dale Dent, and Gary Glen.
3. Open the following accounts payable ledger accounts: Able
Company, Best Company, More Company, and Old Company.
4. Enter the transactions in a Sales Journal, a Purchases Journal, a
Cash Receipts Journal, a Cash Disbursements Journal, and a General
Journal similar to the ones illustrated in this chapter. Post when
instructed to do so.
5. Prepare a trial balance and prove the subsidiary ledgers by preparing
schedules of accounts receivable and payable.
7-10
Chapter 7 Solution: Alternate Demonstration Problem
SALES JOURNAL
Invoice Accts Rec Dr Cost of Goods Sold Debit
Date Account Debited Number PR Sales Cr Inventory Credit
Feb. 2 Dale Dent 711  800.00 500.00
4 Gary Glen 712  1,250.00 850.00
11 Carl Cole 713  1,650.00 1,000.00
24 Carl Cole 714  835.00 475.00
26 Gary Glen 715  775.00 375.00
28 Totals .... 5,310.00 3,200.00
(112/411) (511/113)
PURCHASES JOURNAL
Accounts Store Office
Date of P Payable Inventory Supplies Supplies
Date Amount Credited Invoice Terms R Credit Debit Debit Debit
Feb. 3 Able Company 1/30 2/10, n/60  1,750.00 1,750.00 . . . . . .....
5 Best Company 2/4 n/10, EOM  1,965.00 1,855.00 75.00 35.00
14 Old Company 2/11 2/10, n/60  1,985.00 1,985.00 . . . . . .....
16 Best Company 2/12 n/10, EOM  485.00 410.00 45.00 30.00
28 Totals ..... ........ 6,185.00 6,000.00 120.00 65.00
(212) (113) (115) (116)
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
7-11
CASH RECEIPTS JOURNAL

Other Cost of
Account Cash Sales Accts. Sales Accts. Goods Sold
Date Credited Explanation PR Debit Disc. Rec. Credit Credit Debit
Debit Credit Inventory
Credit
Feb.1 F.Stone, Investment 311 100,000.00 ................ ............... ............... 100,000.00 ...............
Capital
7 Notes Note to bank 211 5,000.00 ................ ............... ............... 5,000.00 ...............
Payable
12 Dale Dent Sale of 2/2  784.00 16.00 800.00 ............... ................ ...............
14 Gary Glen Sale of 2/4  1,225.00 25.00 1,250.00 ............... ................ ...............
14 Sales Cash sales  18,460.00 ................ ............... 18,460.00 ................ 9,500.00
21 Carl Cole Sale of 2/11  1,617.00 33.00 1,650.00 ............... ................ ...............
28 Sales Cash sales  20,215.00 ................ ............... 20,215.00 ................ 11,500.00
28 Totals ...........
........................ 147,301.00 74.00 3,700.00 38,675.00 105,000.00 21,000.00
(111) (413) (112) (411) () (511/113)
CASH DISBURSEMENTS JOURNAL

Ch. Cash Inventory Accts. Other
Date No. Payee Account Debited PR Credit Credit Pay Accts.
Debit Debit
Feb.1 413 Flint Company Inventory 113 75,000.00 ................ ............... 75,000.00
9 414 Able Company Invoice of 1/30  1,715.00 35.00 1,750.00 ...............
14 415 Payroll Sales Salaries Exp. 612 855.00 ................ ............... 855.00
21 416 Old Company Invoice of 2/11  1,862.00 38.00 1,900.00 ...............
28 417 Payroll Sales Salaries Exp. 612 855.00 ................ ............... 855.00
28 Totals ........... ................................... 80,287.00 73.00 3,650.00 76,710.00
(111) (113) (212) ()
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
7-13
GENERAL JOURNAL
Feb 9 Office Equipment 133 625.00

Accounts Payable/ More Company 212/ 625.00
17 Accounts Payable/ Old Company 212/ 85.00

Inventory 113 85.00
18 Accounts Payable/ More Company 212/ 130.00

Office Equipment 133 130.00
GENERAL LEDGER
Cash Acct. No. 111
Date Explanation PR Debit Credit Balance
Feb. 28 R2 147,301 147,301
28 D2 80,287 67,014
Accounts Receivable Acct. No. 112
Feb. 28 S2 5,310 5,310
28 R2 3,700 1,610
Inventory Acct. No. 113
Feb. 2 D2 75,000 75,000
17 G2 85 74,915
28 P2 6,000 80,915
28 S2 3,200 77,715
28 R2 21,000 56,715
28 D2 73 56,642
Store Supplies Acct. No. 115

Feb. 28 P2 120 120
Office Supplies Acct. No. 116
Feb. 28 P2 65 65
Office Equipment Acct. No. 133
Feb. 9 G2 625 625
18 G2 130 495
7-14
Notes Payable Acct. No. 211

Feb. 7 R2 5,000 5,000
Accounts Payable Acct. No. 212
Feb. 9 G2 625 625
17 G2 85 540
18 G2 130 410
28 P2 6,185 6,595
28 D2 3,650 2,945
F. Stone, Capital Acct. No. 311
Feb. 1 R2 100,000 100,000
Sales Acct. No. 411

Feb. 28 S2 5,310 5,310
28 R2 38,675 43,985
Sales Discounts Acct. No. 413
Feb. 28 R2 74 74
Cost of Goods Sold Acct. No. 511
Feb. 28 R2 21,000 21,000
28 SJ 3,200 24,200
Sales Salaries Expense Acct. No. 612
Feb. 14 D2 855 855
28 D2 855 1,710
7-15
ACCOUNTS RECEIVABLE LEDGER

Carl Cole
Feb. 11 S2 1,650 1,650
21 R2 1,650 -0-
24 S2 835 835
Dale Dent
Feb. 2 S2 800 800
12 R2 800 -0-
Gary Glen
Feb. 4 S2 1,250 1,250
14 R2 1,250 -0-
26 S2 775 775
ACCOUNTS PAYABLE LEDGER

Able Company
Feb. 3 P2 1,750 1,750
9 D2 1,750 -0-
Best Company
Feb. 5 P2 1,965 1,965
16 P2 485 2,450
More Company
Feb. 9 G2 625 625
18 G2 130 495
Old Company
Feb. 14 P2 1,985 1,985
17 G2 85 1,900
21 D2 1,900 -0-
7-16
BEDROCK COMPANY
Trial Balance
February 28, 2017
Cash ........................................................................... $67,014

Accounts Receivable ................................................ 1,610
Inventory .................................................................... 56,642
Store supplies ............................................................ 120
Office supplies ........................................................... 65
Office equipment ....................................................... 495
Notes payable ............................................................ $ 5,000
Accounts payable ...................................................... 2,945
F. Stone, Capital ........................................................ 100,000
Sales ........................................................................... 43,985
Sales discounts ......................................................... 74
Cost of Goods Sold ................................................... 24,200
Sales salaries expense ............................................. 1,710 ______
Totals ................................................................ $151,930 $151,930
BEDROCK COMPANY
Schedule of Accounts Receivable
February 28, 2017
Carl Cole ..................................................................... $ 835

Gary Glen ................................................................... 775
Total .................................................................. $1,610
BEDROCK COMPANY
Schedule of Accounts Payable
February 28, 2017
Best Company ........................................................... $2,450

More Company .......................................................... 495
Total ................................................................. $2,945
7-17

Fundamental Accounting Principles 23rd Edition Wild Solutions Manual

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Fundamental Accounting Principles 23rd Edition Wild Solutions Manual

Uploaded by

Copyright:

Available Formats

Fundamental Accounting Principles

23rd Edition Wild Solutions Manual

Related Assignment Materials

Additional Information on Related Assignment Material

Synopsis of Chapter Revisions

Chapter Outline Notes

Chapter Outline Notes

Chapter Outline Notes

Chapter Outline Notes

Programs that manage a company's operations. Largest suppliers

Chapter 7 Alternate Demonstration Problem

Bedrock Company completed these transactions during February of the

Feb 1 Owner, F. Stone invested $100,000 cash in the business.

1 Sent Flint Company check No. 413 for a cash purchase of

2 Sold inventory costing $500 on credit to Dale Dent for $800,

3 Received inventory and an invoice dated January 30, terms

4 Sold inventory costing $850 on credit to Gary Glen for $1,250,

5 Purchased on credit from Best Company inventory, $1,855;

7 Borrowed $5,000 by giving First National Bank a promissory

9 Purchased office equipment on credit from More Company,

9 Sent Able Company Check No. 414 in payment of its January

11 Sold inventory costing $1,000 on credit to Carl Cole for $ 1,650

12 Received payment from Dale Dent of the February 2 sale less

14 Received payment from Gary Glen of the February 4 sale less 1

14 Received inventory and an invoice dated February 11, terms

Feb. 14 Issued Check No. 415, payable to Payroll, in payment of sales

general ledger accounts.

28 Foot and crossfoot the journals and make the month-end

1. Open the following general ledger accounts: Cash, Accounts

Chapter 7 Solution: Alternate Demonstration Problem

CASH RECEIPTS JOURNAL

CASH DISBURSEMENTS JOURNAL

Feb 9 Office Equipment 133 625.00

17 Accounts Payable/ Old Company 212/ 85.00

18 Accounts Payable/ More Company 212/ 130.00

Store Supplies Acct. No. 115

Notes Payable Acct. No. 211

Sales Acct. No. 411

ACCOUNTS RECEIVABLE LEDGER

ACCOUNTS PAYABLE LEDGER

Cash ........................................................................... $67,014

Carl Cole ..................................................................... $ 835

Best Company ........................................................... $2,450

You might also like