Professional Documents
Culture Documents
Assets
+
+
Liabilities
+
NE
NE
Stockholders Equity
NE
+
EXERCISE 1-2
(a)
Internal users
Marketing manager
Production supervisor
Store manager
Vice-president of finance
External users
Customers
Internal Revenue Service
Labor unions
Securities and Exchange Commission
Suppliers
(b)
I
Can we afford to give our employees a pay raise?
E
Did the company earn a satisfactory income?
I
Do we need to borrow in the near future?
E
How does the companys profitability compare to other
companies?
I
What does it cost us to manufacture each unit
produced?
I
Which product should we emphasize?
E
Will the company be able to pay its short-term debts?
EXERCISE 1-3
Larry Smith, president of Smith Company, instructed Ron Rivera, the
head of the accounting department, to report the companys land in
their accounting reports at its market value of $170,000 instead of its
cost of $100,000, in an effort to make the company appear to be a
better investment. Although we have an accounting system that
permits various measurement approaches cost should be used
whenever there are questions regarding the reliability of a market
value. In this case, valuation of land is too subjective and therefore
the cost principle should be used.
The stakeholders include stockholders and creditors of Smith
Company, potential stockholders and creditors, other users of Smiths
accounting reports, Larry Smith, and Ron Rivera. All users of Smiths
accounting reports could be harmed by relying on information which
violates accounting principles. Larry Smith could benefit if the
company is able to attract more investors, but would be harmed if the
fraudulent reporting is discovered. Similarly, Ron Rivera could benefit
by pleasing his boss, but would be harmed if the fraudulent reporting
is discovered.
Rons alternatives are to report the land at $100,000 or to report it at
$170,000. Reporting the land at $170,000 is not appropriate since it
would mislead many people who rely on Smiths accounting reports to
make financial decisions. Ron should report the land at its cost of
$100,000. He should try to convince Larry Smith that this is the
appropriate course of action, but be prepared to resign his position if
Smith insists.
EXERCISE 1-8
(a) 1.
2.
3.
4.
5.
(b) Investment.................................................................................
$15,000.......................................................................................
Service revenue........................................................................
Dividends..................................................................................
)
Rent expense............................................................................
)
Salaries expense......................................................................
)
Utilities expense.......................................................................
(500 )
Increase in stockholders equity.............................................
$15,250
(c) Service revenue........................................................................
Rent expense............................................................................
)
Salaries expense......................................................................
)
Utilities expense.......................................................................
)
Net income................................................................................
8,300
(2,000
(650
(4,900
$8,300
(650
(4,900
(500
$2,250
EXERCISE 1-11
(a) Total assets (beginning of year)...........................................
95,000.............................................................................................
Total liabilities (beginning of year).......................................
Total stockholders equity (beginning of year)...................
85,000
$ 10,000
$ 40,000
10,000
$ 30,000
Total revenues.......................................................................
Total expenses.......................................................................
Net income.............................................................................
$215,000
175,000
$ 40,000
$(40,000)
24,000)
$ 30,000
$ 14,000
$129,000
80,000
$ 49,000
$130,000
80,000
$ 50,000
Total revenues.......................................................................
Total expenses.......................................................................
Net income.............................................................................
$100,000
55,000
$ 45,000
$(45,000)
(25,000)
P1-2A
(a)
Cash
Bal.
1.
2.
3.
4.
5.
6.
7.
Accounts
Office
Notes
Accounts
Common
Retained
+ Receivable + Supplies + Equipment = Payable + Payable +
Stock
+ Earnings + Revenues Expenses Dividends
$9,000 +
$1,700
2,900
00,000
6,100 +
1,700
+1,300
1,300
7,400 +
400
800
00,000
6,600 +
400
+2,500
+5,500
9,100 +
5,900
1,000
00,000
8,100 +
5,900
2,900
00,000
5,200 +
5,900
000,000
00,000
5,200 +
8.
5,900
$600
0000
+
600
600
600
600
600
600
600
6,000
8,100
8,100
8,100
8,100
8,100
+10,000
$15,200 +
700
$700
0
+
13,000
700
13,000
700
13,000
700
+1,300
=
2,000
00,000
2,000
(a)
+$8,000
+
13,000
700
8,000
00,000
=
2,000
$1,000
+
13,000
700
8,000
2,000
13,000
700
2,170
$1,700
(c)
900
(d)
300
(e)
2,900
8,000
+170
=
1,000
(f)
170
+
13,000
700
+ $13,000
$700
8,000
3,070
1,000
+$10,000
$5,900
$600
$29,800
$8,100
= +$10,000 + $2,170
$29,800
$8,000
(b)
1,000
00,000
000,000
+
00,000
000,000
0000
+
700
000,000
0000
+
000,000
0000
+
6,000
+ $13,000
2,900
+2,100
0000
+
$3,600
000,000
0000
+
000,000
0000
+
$6,000
$ 3,070
$1,000
Revenues
Service revenue..................................................
$8,000
Expenses
Salaries expense.................................................
Rent expense.......................................................
Advertising expense...........................................
Utilities expense..................................................
Total expenses.............................................
3,070
Net income..................................................................
$4,930
$1,700
900
300
170
$ 700
4,930
5,630
1,000
$4,630
Copyright 2010 John Wiley & Sons, Inc.Weygandt, Financial Accounting, 7/e, Solutions Manual (For Instructor Use Only)
10
$15,200
5,900
8,100
$29,800
Liabilities
Notes payable.......................................................
$10,000
Accounts payable................................................
2,170
Total liabilities...............................................
12,170
Stockholders equity
Common stock..................................................... $13,000
Retained earnings................................................
4,630
17,630
Total liabilities and stockholders equity. . .
$29,800
Copyright 2010 John Wiley & Sons, Inc.Weygandt, Financial Accounting, 7/e, Solutions Manual (For Instructor Use Only)
11
PROBLEM 1-3A
(a)
$7,500
$2,500
1,200
500
400
400
5,000
$2,500
0
2,500
2,500
1,500
$1,000
12
7,200
Equipment.................................................................................
64,000
Total assets.......................................................................
$76,800
Copyright 2010 John Wiley & Sons, Inc.Weygandt, Financial Accounting, 7/e, Solutions Manual (For Instructor Use Only)
13
$8,400
$4,000
1,200
500
400
400
6,500
$1,900
Copyright 2010 John Wiley & Sons, Inc.Weygandt, Financial Accounting, 7/e, Solutions Manual (For Instructor Use Only)
14
1,900
1,900
1,500
$ 400
Copyright 2010 John Wiley & Sons, Inc.Weygandt, Financial Accounting, 7/e, Solutions Manual (For Instructor Use Only)
15
P1-4A (a)
MILLER DELIVERIES
Assets
Liabilities
Accounts
Date
June 1
Cash
Delivery
+ Receivable + Supplies +
Van
Notes
= Payable
Stockholders Equity
Accounts
+ Payable
Common
+
$10,000
Stock
Retained Earnings
+ Revenues Expenses Dividends
+$10,000
June 2 +2,000
+$12,000
8,000 +
12,000
+$10,000
=
10,000 +
10,000
June 3 + 500
$ 500
+ 7,500 +
June 5
+12,000
10,000 +
10,000
+$4,400
+7,500 +
4,400
+0012,000
10,000 +
(a)
500
+
$4,400
10,000 +
4,400
(b)
500
June 9 + 200
7,3000+
$200
4,400
June 12
+050
+ 12,000
7,300 +
June 15 ++1,250
8,550 +
4,400
150
4,400
500
200
10,000 +
4,400
500
200
10,000 +
4,400
500
200
+$150
+
12,000
10,000 +
1,250
3,150
10,000 +
10,000 +
+$150
+150
+00
150
12,000
10,000 +
June 17
+150
+100
+ 8,550 +
3,150
150
12,000
10,000 +
+250
100
+
June 20 ++1,500
10,050 +
June 23
150
+12,000
500
+
9,550 +
10,000 +
9,300 +
100
June 30
1,000
9,200 +
$ 8,200 +
4,400
600
(d)
200
1,500
(e)
+250
10,000 +
5,900
600
200
+0250
10,000 +
5,900
600
200
500
3,150
150
12,000
9,500 +
10,000 +
+
3,150
(c)
+0
3,150
150
12,000
9,500 +
250
+0250
(f)
850
200
5,900
850
200
1,000
$5,900
$1,850
10,000 +
5,900
10,000 +
100
3,150
$3,150
+
+
150
$150
$23,500
+
+
12,000
$12,000
=
=
9,500 +
$ 9,500 +
150
$150
$10,000 +
$23,500
Copyright 2010 John Wiley & Sons, Inc.Weygandt, Financial Accounting, 7/e, Solutions Manual (For Instructor Use Only)
1-16
(g)
$200
(e)
(f)
(g)
Service revenue
Utilities expense
Salaries expense
(c)
$5,900
1,850
$4,050
MILLER DELIVERIES
Balance Sheet
June 30, 2011
Assets
Cash..............................................................................
Accounts receivable....................................................
Supplies.......................................................................
Delivery Van.................................................................
Total assets..........................................................
$ 8,200
3,150
12,000
$23,500
Liabilities
Notes payable.......................................................
Accounts payable................................................
Total liabilities..............................................
Stockholders equity
Common stock..................................................... $10,000
$ 9,500
150
9,650
Copyright 2010 John Wiley & Sons, Inc.Weygandt, Financial Accounting, 7/e, Solutions Manual (For Instructor Use Only)
17
Retained earnings................................................
13,850
Total liabilities and stockholders equity...
$23,500
3,850
Copyright 2010 John Wiley & Sons, Inc.Weygandt, Financial Accounting, 7/e, Solutions Manual (For Instructor Use Only)
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