Skip to content
Textbook Guides

Solution Manual For Accounting Principles, 13th Edition

Solution Manual For Accounting Principles, 13th Edition makes studying stress-free with clear and concise explanations.

Preview 16 of 1555 pages

See the first 16 pages exactly as they appear in the document.

  1. Page 1
    Read page 1 as text

    Weygandt, Accounting Princ iples, 1 3 /e, Solutions Manual 1 - 1 CHAPTER 1 Accounting in Action ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises Do It! Exercises A Problems 1. Identify the activities and users associated with accounting . 1, 2, 3, 4, 5 1 1 , 2 2 . Explain the building blocks of accounting: ethics, principles, and assumptions . 6, 7, 8, 9, 10 2 3 , 4 3 . State the accounting equation, and define its components. 11, 12, 13, 22 1, 2, 3, 4, 5 , 6 , 3 5 1A 4 . Analyze the effects of business transactions on the accounting equation. 14, 15, 16, 18 7 , 8, 9 4 6, 7, 8 1A, 2A, 4A , 5A 5 . Describe the four financial statements and how they are prepared. 17, 19, 20, 21 10, 11 5 9, 10, 11, 12, 13, 14, 15, 16 , 17, 18 2A, 3A, 4A, 5A *6 Explain the career Opportunities in accounting.

  2. Page 2
  3. Page 3
    Read page 3 as text

    1 - 2 Weygandt, Accounting Principles, 1 3 /e, Solutions Manual ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Analyze transactions and compute net income. Moderate 40 – 50 2A Analyze transactions and prepare income statement, owner’s equity statement, and balance sheet. Moderate 50 – 60 3A Prepare income statement, owner’s equity statement, and balance sheet. Moderate 50 – 60 4A Analyze transactions and prepare financial statements. Moderate 40 – 50 5A Determine financial statement amounts and prepare owner’s equity statement. Moderate 40 – 50

  4. Page 4
    Read page 4 as text

    Weygandt, Accounting Principle s, 1 3 /e, Solutions Manual 1 - 3 ANSWERS TO QUESTIONS 1. Yes, this is correct. Virtually every organization and person in our society uses accounting information. Businesses, investors, creditors, government agencies, and not - for - profit organizations must use accounting information to operate effectively. LO 1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting 2. Accounting is the process of identifying, recording, and communicating the economic events of an organization to interested users of the information. The first step of the acco unting process is therefore to identify economic events that are relevant to a particular business. Once identified and measured, the events are recorded to provide a history of the financial activities of the organization. Recording consists of keeping a chronological diary of these measured events in an orderly and systematic manner. The information is communicated through the preparation and distribution of accounting reports, the most common of which are called financial statements. A vital element in the communication process is the accountant’s ability and responsibility to analyze and interpret the reported information. LO1 BT: C Difficulty: Easy TOT: 4 min. AACSB: None AICPA FC: Reporting 3. (a) Internal users are those who plan, organize, a nd run the business and therefore are officers and other decision makers. (b) To assist management, managerial accounting provides internal reports. Examples include financial comparisons of operating alternatives, projections of income from new sales campaigns, and forecasts of cash needs for the next year. LO1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting 4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell owner - ship shares of a company. (b) Creditors use accounting information to evaluate the risks of granting credit or lending money. LO1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting 5. No, this is incorrect. Bookkeeping usually involves only the recording of economic events and therefore is just one part of the entire accounting process. Accounting, on the other hand, involves the enti re process of identifying, recording, and communicating economic events. LO1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting 6. Benton Travel Agency should report the land at $90,000 on its December 31, 20 20 balance sheet. This i s true not only at the time the land is purchased, but also over the time the land is held. In determining which measurement principle to use (cost or fair value) companies weigh the factual nature of cost figures versus the relevance of fair value. In general, companies use cost. Only in situations where assets are actively traded do companies apply the fair value principle. An important concept that accountants follow is the historical cost principle. LO2 BT: C Difficulty: Easy TOT: 4 min. AACSB: Non e AICPA FC: Reporting 7. The monetary unit assumption requires that only transaction data that can be expressed in terms of money be included in the accounting records. This assumption enables accounting to quantify (measure) economic events. LO2 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting 8. The economic entity assumption requires that the activities of the entity be kept separate and distinct from the activities of its owners and all other economic entities. LO2 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting

  5. Page 5
    Read page 5 as text

    1 - 4 Weygandt, Accounting Principles, 1 3 /e, Solutions Manual Questions Chapter 1 (Continued) 9. The three basic forms of business organizations are: (1) proprietorship, (2) partnership, and (3) corporation. LO2 BT: K Difficulty: Easy TOT:1 min. AACSB: None AICPA FC: Reporting 10. One of the advantages Helen Rupp would enjoy is that ownership of a corporation is repre sented by transferable shares of stock. This would allow Helen to raise money easily by selling a part of her ownership in the company. Another advantage is that because holders of the shares (stockholders) enjoy limited liability; they are not personally liable for the debts of the corporate entity. Also, because ownership can be transferred without dissolving the corporation, the corporation enjoys an unlimited life. LO2 BT: K Difficulty: Easy TOT: 4 min. AACSB: None AICPA FC: Reporting 11. The basic accounting equation is Assets = Liabilities + Owner’s Equity. LO3 BT: C Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Measurement 12. (a) Assets are resources owned by a business. Liabilities are claims against assets. Put more simply, liabilities are existing debts and obligations. Owner’s equity is the ownership claim on total assets. (b) Owner’s equity is affected by owner’s investments, drawings, revenues, and expenses. LO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting 13. The liabilities are: (b) Accounts payable and (g) Salaries and wages payable. LO3 BT: C Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Reporting 14. Yes, a business can enter into a transaction in which only the left side of the accounting equation is affected. An example would be a transaction where an increase in one asset is offset by a decrease in another asset. An increase in the Equipment account which is offset by a decrease in the Cash account is a specific example. LO4 BT: C Difficulty: Moderate TOT: 3 min. AACSB: None AICPA FC: Reporting 15. Business transactions are the economic events of the enterprise recorded by accountants because they affect the basic accounting equation. (a) The death of the owner of the company is not a business transaction as it does not affect the basic accounting equation. (b) Supplies purchased on account is a business transaction as it affects the basic accounting equation. (c) An employee being fired is not a business transaction as it does not affect the basic accounting equation. (d) A withdrawal of cash from the business is a business transaction as it affects the basic accounting equation. LO4 BT: C Difficulty: Moderate TOT: 4 min. AACSB: None AICPA FC: Reporting 16. (a) Decrease assets and decrease owner’s equity. (b) Increase assets and decrease assets. (c) Increase assets and increase owner’s equity. (d) Decrease assets and decrease liabilities. LO4 BT: C Difficulty: Moderate TOT: 3 min. AACSB: None AICPA FC: Reporting

  6. Page 6
    Read page 6 as text

    Weygandt, Accounting Principle s, 1 3 /e, Solutions Manual 1 - 5 Questions Chapter 1 (Continued) 17. (a) Income statement. (d) Balance sheet. (b) Balance sheet. (e) Balance sheet and owner’s equity statement. (c) Income statement. (f) Balance sheet. LO5 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting 18. No, this treatment is not proper. While the transaction does involve a receipt of cash, it does not represent revenues. Revenues are the gross increase in owner’s equity resulting from business activities entered into for the purpose of earning income. This transaction is simply an additional investment made by the owner in the business. LO4 BT: C Difficulty: Moderate TOT: 3 min. AACSB: None AICPA FC: Reporting 19. Yes. Net income does appear on the income statement — it is the result of subtracting expenses from revenues. In addition, net income appears in the owner’s equity statement — it is shown as an addition to the beginning - of - period capital. Indirectly, the net income of a company is also included in the balance sheet. It is included in the capital account which appears in the owner’s equity section of the balance sheet. LO5 BT: C Diffic ulty: Moderate TOT: 4 min. AACSB: None AICPA FC: Reporting 20. (a) Ending capital balance ................................ ................................ ..................... $ 189 ,000 Less: Beginning capital balance ................................ ................................ ....... 1 86 ,000 Net income ................................ ................................ ................................ ....... $ 3 ,000 ($ 189 ,000 – $ 18 6 ,000 = $3,000 ) (End. cap. bal. – Beg. cap. bal. = Net inc. ) (b) En ding capital balance ................................ ................................ ..................... $ 1 89 ,000 Less: Beginning capital balance ................................ ................................ ....... 1 86 ,000 3,000 Deduct: Investment ................................ ................................ ......................... 13,000 Net loss ................................ ................................ ................................ ............ $ ( 1 0 ,000 ) ($ 189 ,000 – $ 186 ,000 – $13,000 = ($10,000) ) (End. cap. bal. – Beg. cap. bal. – Invest. = Net. Loss) LO5 BT: AP Difficulty: Moderate TOT: 4 min. AACSB: Analytic AICPA FC: Measurement 21. (a) Total revenues ($20,000 + $70,000) ................................ ................................ $90,000 ($20,000 + $70,000 = $90,000 ) (Cash rev. + Rev. on acct. = Tot. rev. ) (b) Total expenses ($26,000 + $40,000) ................................ ................................ $66,000 ($26,000 + $40,000 = $66,000 ) (Cash exp. + Exp. on acct. = Tot. exp. ) (c) Total revenues ................................ ................................ ................................ . $90,000 Total expenses ................................ ................................ ................................ 66,000 Net income ................................ ................................ ................................ ....... $24,000 ($90,000 – $66,000 = $24,000 ) (Tot. rev. – Tot. exp. = Net inc. ) LO5 BT: AP Difficulty: Moderate TOT: 4 min. AACSB: Analytic AICPA FC: Measurement 22. Apple’s accounting equation (in millions) at September 2 6 , 201 5 was $ 290,479 = $ 171,124 + $ 119,355 . ($290,479= $171,124+ $119,355) (Tot. assets = Tot. liabl. + Tot. stkhldrs. equity) LO3 BT: AP Difficulty: Moderate TOT: 3 min. AACSB: Analytic AICPA FC: Measurement

  7. Page 7
    Read page 7 as text

    1 - 6 Weygandt, Accounting Principles, 1 3 /e, Solutions Manual SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 1 - 1 (a) $90,000 – $50,000 = $40,000 (Owner’s Equity). ($90,000 - $50,000 = $40,000) (Assets – Liabl. = Owner’s equity) (b) $ 4 4 ,000 + $70,000 = $ 11 4 ,000 (Assets). ($44,000 + $70,000 = $114,000) (Liabl. + Owner’s equity = Assets) (c) $94,000 – $53,000 = $41,000 (Liabilities). ($94,000 - $53,000 = $41,000) (Assets – Owner’s equity = Liabl.) LO3 BT: AP Difficulty: Easy TOT: 3 min. AACSB: Analytic AICPA FC: Measurement BRIEF EXERCISE 1 - 2 (a) $120,000 + $ 23 0 ,000 = $ 35 0 ,000 (Total assets). ($120,000 + $ 230 ,000 = $ 350 ,000) (Liabl. + Owner’s equity = Assets) (b) $190,000 – $ 89 ,000 = $ 101 ,000 (Total liabilities). ($190,000 - $ 89 ,000 = $ 101 ,000) (Assets – Owner’s equity = Liabl.) (c) $ 9 00 ,000 – 0.5 ($ 9 00 ,000) = $ 4 5 0 ,000 (Owner’s equity). [$ 900 ,000 – ($ 900 ,000 x .5) = $ 450 , 000] [Assets – (Assets x .5) = Owner’s equity] LO3 BT: AP Difficulty: Easy TOT: 3 min. AACSB: Analytic AICPA FC: Measurement BRIEF EXERCISE 1 - 3 (a) ($800,000 + $150,000) – ($300,000 – $ 6 0 ,000) = $ 7 1 0 ,000 (Owner’s equity). [($800,000 + $150,000) – ($300,000 - $60,000) = $710,000] [(Beg. assets + Incr. in assets) – (Beg. liabl. – Decr. in liabl) = End. owner’s equity] (b) ($300,000 + $100,000) + ($800,000 – $300,000 – $70,000) = $830,000 (Assets). [($300,000 + $100,000) + ($800,000 - $300,000 - $70,000) = $830,000 ] [(Beg. liabl. + Incr. in liabl.) + (Beg. assets – Beg. liabl. – Decr. in owner’s equity) = End. assets ] (c) ($800,000 – $80,000) – ($800,000 – $300,000 + $120,000) = $100,000 (Liabilities). [($800,000 - $80,000) – ($800,000 - $300,000 + $120,000) = $100,000] [(Beg. assets – Decr. in assets) – (Beg. assets – Beg. liabl. + Incr. in owner’s equity) = End. liabl. ] LO3 BT: AP Difficulty: Moderate TOT: 4 min. AACSB: Analytic AICPA FC: Measurement

  8. Page 8
    Read page 8 as text

    Weygandt, Accounting Principle s, 1 3 /e, Solutions Manual 1 - 7 BRIEF EXERCISE 1 - 4 Owner’s Equity Assets = Liabilities + Owner’s Capital – Owner’s Drawings + Revenues – Expenses (a) X = $90,000 + $150,000 – $40,000 + $450,000 – $ 3 4 0 ,000 X = $90,000 + $ 2 2 0 ,000 X = $ 3 1 0 ,000 (Assets = $90,000 + $150,000 - $40,000 + $450,000 - $ 340 ,000) (Assets = Liabl. + Owner’s cap. – Owner’s draw. + Rev. – Exp.) (b) $57,000 = X + $ 3 5 ,000 – $7,000 + $52,000 – $35,000 $57,000 = X + $ 4 5 ,000 X = $ 1 2 ,000 ($57,000 – $ 4 5 ,000) ($57,000 = Liabl. + $ 35 ,000 - $7,000 + $52,000 - $35,000) (Assets = Liabl. + Owner’s cap. – Owner’s draw. + Rev. – Exp.) (c) $ 6 6 0 ,000 = ($ 6 6 0 ,000 x 2/3) + X (Owner’s equity) $ 6 6 0 ,000 = $ 4 4 0 ,000 + X X = $ 2 2 0 ,000 [$ 660 ,000 = ($ 660 ,000 x 2/3) + Owner’s equity] [Assets = (Assets x 2/3) + Owner’s equity] LO3 BT: AP Difficulty: Moderate TOT: 5 min. AACSB: Analytic AICPA FC: Measurement BRIEF EXERCISE 1 - 5 A (a) Accounts receivable A (d) Supplies L (b) Salaries and wages payable OE (e) Owner’s capital A (c) Equipment L (f) Notes payable LO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting BRIEF EXERCISE 1 - 6 E (a) Advertising expense D (e) Owner’s drawings R (b) Service revenue R (f) Rent revenue E (c) Insurance expense E (g) Utilities expense E (d) Salaries and wages expense LO3 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Reporting

  9. Page 9
    Read page 9 as text

    1 - 8 Weygandt, Accounting Principles, 1 3 /e, Solutions Manual BRIEF EXERCISE 1 - 7 Assets Liabilities Owner’s Equity (a) + + NE (b) + NE + (c) – NE – LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement BRIEF EXERCISE 1 - 8 Assets Liabilities Owner’s Equity (a) + NE + (b) – NE – (c) NE NE NE LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement BRIEF EXERCISE 1 - 9 R (a) Received cash for services performed NOE (b) Paid cash to purchase equipment E (c) Paid employee salaries LO 4 BT: C Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Reporting

  10. Page 10
    Read page 10 as text

    Weygandt, Accounting Principle s, 1 3 /e, Solutions Manual 1 - 9 BRIEF EXERCISE 1 - 10 SMYTH COMPANY Balance Sheet December 31, 20 20 Assets Cash ................................ ................................ ................................ .. $ 49,000 Accounts receivable ................................ ................................ ........ 6 2 ,500 Total assets ................................ ................................ .............. $ 1 1 1 ,500 Liabilities and Owner’s Equity Liabilities Accounts payable ................................ ................................ .... $ 90,000 Owner’s equity Owner’s capital ................................ ................................ ........ 2 1 ,500 Total liabilities and owner’s equity ................................ $ 1 1 1 ,500 [($49,000 + $ 62 ,500) = $90,000 + $ 21 ,500] [(Cash + Accts. rec.) = Accts. pay. + Owner’s cap.] LO5 BT: AP Difficulty: Easy TOT: 4 min. AACSB: Analytic AICPA FC: Reporting BRIEF EXERCISE 1 - 11 BS (a) Notes payable IS (b) Advertising expense OE, BS (c) Owner’s capital BS (d) Cash IS (e) Service revenue LO5 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Reporting SOLUTIONS FOR DO IT! EXERCISES DO IT! 1 - 1 1. False. The three steps in the accounting process are identification, recording, and communication. 2. True. 3. False. Financial accounting provides reports to help investors and creditors evaluate a company. 4. True. 5. True. LO1 BT: K Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement

  11. Page 11
    Read page 11 as text

    1 - 10 Weygandt, Accounting Principles, 1 3 /e, Solutions Manual DO IT! 1 - 2 1 . False. Congress passed the Sarbanes - Oxley Act to reduce unethical behavior and decrease the likelihood of future corporate scandals. 2. False. The standards of conduct by which actions are judged a s right or wrong, honest or dishonest, fair or not fair, are ethics. 3 . False. The primary accounting standard - setting body in the United States is the Financial Accounting Standards Board (FASB). 4 . True. 5. True. LO2 BT: K Difficulty: Easy TOT: 4 min . ACSB: None AICPA FC: Measurement DO IT! 1 - 3 1. Drawings is owner’s drawings (D); it decreases owner’s equity. 2. Rent Revenue is revenue (R); it increases owner’s equity. 3. Advertising Expense is an expense (E); it decreases owner’s equity. 4. When the owner puts personal assets into the business, it is investment by owner (I); it increases owner’s equity. LO3 BT: AP Difficulty: Easy TOT: 6 min. AACSB: Analytic AICPA FC: Measurement DO IT! 1 - 4 Assets = Liabilities + Owner’s Equity Cash + Accounts Receivable = Accounts Payable + Owner’s Capital – Owner’s Drawings + Revenues – Expenses (1) +$20,000 +$20,000 (2) +$20,000 – $20,000 (3) +$ 3 , 2 00 – $ 3 , 2 00 (4) – $ 2 , 5 00 – $ 2 , 5 00 LO4 BT: AP Difficulty: Moderate TOT: 8 min. AACSB: Analytic AICPA FC: Measurement

  12. Page 12
    Read page 12 as text

    Weygandt, Accounting Principle s, 1 3 /e, Solutions Manual 1 - 11 DO IT! 1 - 5 (a) The total assets are $ 4 9 ,000, comprised of Cash $ 6 ,500, Accounts Receivable $13,500, and Equipment $29,000. ($ 6 , 5 00 + $13,500 + $29,000 = $49,000) (Cash + Accts. rec. + Equip. = Tot. assets) (b) Net income is $ 20 ,500, computed as follows: Revenues Service revenue ................................ ................... $ 5 3 ,500 Expenses Salaries and wages expense ............................. $16,500 Rent expense ................................ ....................... 10,500 Advertising expense ................................ ........... 6,000 Total expenses ................................ ............ 33,000 Net income ................................ ................................ ... $ 20 ,500 [$53,500 – ($16,500 + $10,500 + $6,000) = $20,500] [Serv. rev. – (Sal. & wages exp. + Rent exp. + Advert. exp) = Net inc.] (c) The ending owner’s equity balance of Kirby Company is $ 21 ,000. By rewriting the accounting equation, we can compute Owner’s Equity as Assets minus Liabilities, as follows: Total assets [as computed in (a)] .............................. $ 4 9 ,000 Less: Liabilities Notes payable ................................ ...................... $25,000 Accounts payable ................................ ............... 3,000 28,000 Owner’s equity ................................ ............................ $ 21 ,000 Note that it is not possible to determine the company’s owner’s equity in any other way, because the beginning balance for owner’s equity is not provided. [$49,000 – ($25,000 + $3,000) = $21,000] [Tot. assets – (Notes pay. + Accts. pay.) = Owner’s equity] LO 5 BT: AP Difficulty: Moderate TOT: 10 min. AACSB: Analytic AICPA FC: Measurement, Reporting

  13. Page 13
    Read page 13 as text

    1 - 12 Weygandt, Accounting Principles, 1 3 /e, Solutions Manual SOLUTIONS TO EXERCISES EXERCISE 1 - 1 C Analyzing and interpreting information. R Classifying economic events. C Explaining uses, meaning, and limitations of data. R Keeping a systematic chronological diary of events. R Measuring events in dollars and cents. C Preparing accounting reports. C Reporting information in a standard format. I Selecting economic activities relevant to the company. R Summarizing economic events. LO1 BT: C Difficulty: Moderate TOT: 6 min. AACSB: None AICPA FC: Measurement 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 company’s 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? LO1 BT: C Difficulty: Simple TOT: 6 min. AACSB: None AICPA FC: Reporting

  14. Page 14
    Read page 14 as text

    Weygandt, Accounting Principle s, 1 3 /e, Solutions Manual 1 - 13 EXERCISE 1 - 3 Angela Duffy , president of Duffy Company, instructed Jana Barth , the head of the accounting department, to report the company’s land in its accounting reports at its fair value of $170,000 instead of its cost of $100,000, in an effort to make the company appear to be a better investment. The historical cost principle requires that assets be recorded and reported at their cost, because cost is faithfully representative and can be objectively measured and verified. In this case, the historical cost principle should be used and Land reported at $100,000, not $170,000. The stakeholders include stockholders and creditors of Duffy Company, potential stockholders and creditors, other users of Duffy ’s accounting reports, Angela Duffy , and Jana Barth . All users of Duffy ’s accounting reports could be harmed by relying on information that may be unreliable. Angela Duffy could benefit if the company is able to attract more investors, but would be harmed if the inappropriate reporting is discovered. Similarly, Jana Barth could benefit by pleasing her boss, but would be harmed if the inappropriate reporting is discovered. Jana ’s 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 may mislead many people who rely on Duffy ’s accounting reports to make finan - cial decisions. Jana should report the land at its cost of $100,000. She should try to convince Angela Duffy that this is the appropriate course of action, but be prepared to resign her position if Duffy insists. LO2 BT: C Difficulty: Moderate TOT: 8 min. AACSB: None AICPA FC: Measurement, Reporting EXERCISE 1 - 4 1. Incorrect. The historical cost principle requires that assets (such as buildings) be recorded and reported at their cost. 2. Correct. The monetary unit assumption requires that companies include in the accounting records only transaction data that can be expressed in terms of money. 3. Incorrect. The economic entity assumption requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities. LO2 BT: C Difficulty: Moderate TOT: 6 min. AACSB : None AICPA FC: Measurement

  15. Page 15
    Read page 15 as text

    1 - 14 Weygandt, Accounting Principles, 1 3 /e, Solutions Manual EXERCISE 1 - 5 Asset Liability Owner’s Equity Cash Accounts payable Owner’s capital Equipment Notes payable Supplies Accounts receivable Salaries and wages payable LO3 BT: C Difficulty: Easy TOT: 4 min. AACSB: None AICPA FC: Reporting EXERCISE 1 - 6 1. Increase in assets and increase in owner’s equity. 2. Decrease in assets and decrease in owner’s equity. 3. Increase in assets and increase in liabilities. 4. Increase in assets and increase in owner’s equity. 5. Decrease in assets and decrease in owner’s equity. 6. Increase in assets and decrease in assets. 7. Increase in liabilities and decrease in owner’s equity. 8. Increase in assets and decrease in assets. 9. Increase in assets and increase in owner’s equity. LO4 BT: C Difficulty: Easy TOT: 7 min. AACSB: None AICPA FC: Measurement EXERCISE 1 - 7 1. (c) 5. (d) 2. (d) 6. (b) 3. (a) 7. (e) 4. (b) 8. (f) LO4 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement EXERCISE 1 - 8 (a) 1. Owner invested $15,000 cash in the business. 2. Purchased equipment for $5,000, paying $2,000 in cash and the balance of $3,000 on account. 3. Paid $750 cash for supplies. 4. Performed $8,500 of services , receiving $4, 0 00 cash and $ 4 , 5 00 on account. 5. Paid $1,500 cash on accounts payable.

  16. Page 16
    Read page 16 as text

    Weygandt, Accounting Principle s, 1 3 /e, Solutions Manual 1 - 15 EXERCISE 1 - 8 (Continued) 6. Owner withdrew $2,000 cash for personal use. 7. Paid $ 56 0 cash for rent. 8. Collected $450 cash from customers on account. 9. Paid salaries and wages of $4,800. 10. Incurred $ 4 00 of utilities expense on account. (b) Investment ................................ ................................ ................. $15,000 Service revenue ................................ ................................ ........ 8,500 Drawings ................................ ................................ .................... (2,000 ) Rent expense ................................ ................................ ............. ( 56 0 ) Salaries and wages expense ................................ ................... (4,800 ) Utilities expense ................................ ................................ ........ ( 4 00 ) Increase in owner’s equity ................................ ....................... $15, 74 0 ($15,000 + $8,500 - $2,000 - $ 560 - $4,800 - $400 = $15, 740 ) (Invest. + Serv. rev. – Owner’s draw. – Rent exp. – Sal. & wages exp. – Util. exp. = Incr. in owner’s equity) (c) Service revenue ................................ ................................ ........ $8,500 Rent expense ................................ ................................ ............. ( 56 0 ) Salaries and wages expense ................................ ................... (4,800) Utilities expense ................................ ................................ ........ ( 4 00 ) Net income ................................ ................................ ................. $2, 740 [$8,500 – ($ 560 + $4,800 + $400) = $2, 740 ] [Serv. rev. – (Rent exp. + Sal. & wages exp. + Util. exp.) = Net inc.] LO4 BT: AP Difficulty: Moderate TOT: 15 min. AACSB: Analytic AICPA FC: Measurement, Reporting EXERCISE 1 - 9 PEAT DELOITTE & CO. Income Statement For the Month Ended August 31, 20 20 Revenues Service revenue ................................ .......................... $8,500 Expenses Salaries and wages expense ................................ ..... $4,800 Rent expense ................................ ............................... 56 0 Utilities expense ................................ .......................... 4 00 Total expenses ................................ .................... 5, 76 0 Net income ................................ ................................ .......... $2, 74 0

1539 more pages in the full document

Unlock it once and it stays in your library, ready to chat with or turn into flashcards.

Unlock the full document

More Accounting study materials

See all

Study this document with CramX

Once it is in your library, every tool can work from it.