...1-24. a. BS d. BS g. SCF and SE b. IS e. SCF h. SCF and SE c. BS f. BS and SE i. IS, SE, and SCF E1-28. ($ millions) a. Using the accounting equation: ($ millions) | Assets | = | Liabilities | + | Equity | Intel | $63,186 | | $13,756 | | $49,430 | b. Starting with the accounting equation at the beginning of the year: ($ millions) | Assets | = | Liabilities | + | Equity | JetBlue | $6,549 | | $5,003 | | $1,546 | Using the accounting equation at the end of the year: ($ millions) | Assets | = | Liabilities | + | Equity | JetBlue | $6,549+$44 | | $5,003-$64 | | $1,654 | c. Starting with the accounting equation at the end of the year: ($ millions) | Assets | = | Liabilities | + | Equity | Walt Disney | $72,124 | | $29,864+$2,807 | | $39,453 | Using the accounting equation at the beginning of the year: ($ millions) | Assets | = | Liabilities | + | Equity | Walt Disney | $72,124-$2,918 | | $29,864 | | $39,342 | Alternative approach to solving part (b): Assets($425) = Liabilities($200) + Equity(?) where “” refers to “change in.” Thus: Ending Equity = $44 + $64 = $108 and Ending equity = $1,546 + 108 = $1,654 P1-35. a. ------------------------------------------------- General Mills, Inc. ------------------------------------------------- Income Statement ------------------------------------------------- For Year Ended May 29...
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...CHAPTER 3 ADJUSTING THE ACCOUNTS SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM’S TAXONOMY Item | SO | BT | Item | SO | BT | Item | SO | BT | Item | SO | BT | Item | SO | BT | Exercises | 1. | 1 | AP | 10. | 2 | AP | 19. | 2,3 | AP | 28. | 2,3 | AP | *37. | 5 | AP | 2. | 1 | AP | 11. | 2 | AP | 20. | 2,3 | AP | 29. | 2,3,4 | AP | *38. | 5 | AP | 3. | 1 | AP | 12. | 2 | AP | 21. | 2,3 | AP | 30. | 2,3,4 | AP | *39. | 5 | AP | 4. | 1 | AP | 13. | 2,3 | C | 22. | 2,3 | AP | 31. | 3 | AP | *40. | 5 | AP | 5. | 1 | AP | 14. | 2,3 | C | 23. | 2,3 | AP | 32. | 3 | AP | *41. | 5 | AP | 6. | 1 | AP | 15. | 2,3 | AN | 24. | 2,3 | AP | 33. | 3 | AP | | | | 7. | 1,2 | AP | 16. | 2,3 | AN | 25. | 2,3 | AP | 34. | 3 | AP | | | | 8. | 1,2 | AP | 17. | 2,3 | AP | 26. | 2,3 | AP | 35. | 4 | AP | | | | 9. | 1,2 | AP | 18. | 2,3 | AP | 27. | 2,3 | AP | 36. | 4 | AP | | | | Note: C = Comprehension AN = Analysis AP = Application * This topic is dealt with in an Appendix to the chapter. SUMMARY OF QUESTIONS BY LEVEL OF DIFFICULTY (LOD) Item | SO | LOD | Item | SO | LOD | Item | SO | LOD | Item | SO | LOD | Item | SO | LOD | Exercises | 1. | 1 | M | 10. | 2 | E | 19. | 2,3 | E | 28. | 2,3 | H | *37. | 5 | M | 2. | 1 | E | 11. | 2 | M | 20. | 2,3 | E | 29. | 2,3,4 | H | *38. | 5 | H | 3. | 1 | M | 12. | 2 | H | 21. | 2,3 | E | 30. | 2,3,4 | H | *39. | 5 | H | 4. | 1 | E | 13. | 2,3 | H | 22. | 2,3 | M | 31. | 3 | E | *40....
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...Chapter 3 Accrual Accounting and the Financial Statements Questions 1. Under accrual accounting, the accountant recognizes the impact of a business transaction on an entity when the transaction occurs, whether or not cash is received or paid. Revenues are recognized when they are earned, and expenses are recognized when they are incurred—not necessarily when the cash changes hands. The cash basis of accounting recognizes revenues only when cash is received and expenses only when cash is paid. 2. The revenue principle provides guidance on (a) when to record revenue. (b) the amount of revenue to record. 3. The matching principle directs the accounting for expenses. Accountants identify all the expenses incurred during the period, measure those expenses, and match them against the revenue earned during the period. Matching expenses against revenues means to subtract the expenses from the revenues to compute net income or net loss for the period. Chapter 3 Accrual Accounting and the Financial Statements 153 4. Five categories of adjusting entries, with examples, are: a. Prepaid expenses — prepaid rent, prepaid insurance, and supplies b. Amortization — amortization of buildings, furniture, and equipment c. Accrued expenses — accrued salary expense and accrued interest expense d. Accrued revenues — accrued service revenue and accrued interest revenue e. Unearned revenues — unearned service revenue and unearned subscription revenue 5. Yes, all adjusting entries affect...
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...Chapter 3 The Balance Sheet and Financial Disclosures Questions for Review of Key Topics Question 3-1 The purpose of the balance sheet, also known as the statement of financial position, is to present the financial position of the company on a particular date. Unlike the income statement, which is a change statement that reports events occurring during a period of time, the balance sheet is a statement that presents an organized array of assets, liabilities, and shareholders’ equity at a point in time. It is a freeze frame or snapshot picture of financial position at the end of a particular day marking the end of an accounting period. Question 3-2 The balance sheet does not portray the market value of the entity (number of common stock shares outstanding multiplied by price per share) for a number of reasons. Most assets are not reported at fair value, but instead are measured according to historical cost. Also, there are certain resources, such as trained employees, an experienced management team, and a good reputation, that are not recorded as assets at all. Therefore, the assets of a company minus its liabilities, as shown in the balance sheet, will not be representative of the company’s market value. Question 3-3 Current assets include cash and other assets that are reasonably expected to be converted to cash or consumed during one year, or within the normal operating cycle of the business if the operating cycle is longer than...
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...Appendix A Pricing Products and Services Solutions to Questions A-1 In cost-plus pricing, prices are set by adding a markup to a product’s cost. The markup is usually a percentage. A-2 The price elasticity of demand measures the degree to which a change in price affects unit sales. The unit sales of a product with inelastic demand are relatively insensitive to the price charged for the product. In contrast, the unit sales of a product with elastic demand are sensitive to the price charged for the product. A-3 The profit-maximizing price should depend only on the variable (marginal) cost per unit and on the price elasticity of demand. Fixed costs do not enter into the pricing decision. Fixed costs are relevant in a decision of whether to offer a product or service at all, but are not relevant in deciding what to charge for the product or service once the decision to offer it has been made. Because price affects unit sales, total variable costs are affected by the pricing decision and therefore are relevant. A-4 The markup over variable cost depends on the price elasticity of demand. A product whose demand is elastic should have a lower markup over cost than a product whose demand is inelastic. If demand for a product is inelastic, the price can be increased without as drastically reducing unit sales. A-5 The markup in the absorption costing approach to pricing is supposed to cover selling and administrative expenses as well as providing for an adequate return...
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...Exercises: E 12-1 Advantages: limited liability of the shareholders can raise capital from a large number of investor through issuing shares or bonds its existence is not limited by the withdrawal of its owners central control over the operations by the board of directors not bound by the contract of one of the owners Disadvantages: legal fees paid in formation subject to various regulations owners may not control the organization even if they don't like managements' decisions both the organization and the owners are taxed E 12-2 Scissors Company |21 April 2008 | | | | |Unpaid Capital | |5,000 | | | | | | | | Share Capital | |5,000 | | | | | | | | | | | |If the shares are issued at the market price of TL 1,75 | | | | | | |04 May 2008 | | | | |Cash | |8.750 | | | Unpaid Capital | |5.000 | | Additional Paid-in Capital | ...
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...CHAPTER 4 Accrual Accounting Concepts Study Objectives 1. Explain the revenue recognition principle and the matching principle. 2. Differentiate between the cash basis and the accrual basis of accounting. 3. Explain why adjusting entries are needed, and identify the major types of adjusting entries. 4. Prepare adjusting entries for deferrals. 5. Prepare adjusting entries for accruals. 6. Describe the nature and purpose of the adjusted trial balance. 7. Explain the purpose of closing entries. 8. Describe the required steps in the accounting cycle. 9. Understand the causes of differences between net income and cash provided by operating activities. 10. Describe the purpose and the basic form of a worksheet. Summary of Questions by Study Objectives and Bloom’s Taxonomy |Item | | 1. | | 1. | | 1. | | 1. ...
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...Tutorial Chapter 3 Solution Accounting Cycle II Question 1 Selected transactions for Anna, an interior decorator, in her first month of business, are as follows. Jan 2 Invested RM25,000 cash in business. 3 Purchased used car for RM6,000 cash for use in business. 9 Purchased supplies on account for RM1,000. 12 Billed customer RM2,000 for service performed. 16 Paid RM250 cash for advertising expenses. 18 Received RM1,000 cash from customers billed on January 12. 24 Paid creditor RM500 cash on balance owed. 28 Withdrew RM1,500 cash for personal use of owner. 29 Paid salary RM1,000 cash. 29 Paid RM200 cash for utilities. 31 Received RM2,000 cash for the service performed. Instruction Journalize the above transactions. Answer 1 Anna, General Journal |Date |Account Titles and Explanation |Ref |Debit |Credit | |Jan 2 |Cash | |25,000 | | | |Anna, Capital | | |25,000 | |3 |Car | |6,000 | | | |Cash | | |6,000...
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...Chapter 7 Consolidated Financial Statements - Ownership Patterns and Income Taxes Chapter Outline I. Indirect subsidiary control A. Control of subsidiary companies within a business combination is often of an indirect nature; one subsidiary possesses the stock of another rather than the parent having direct ownership. 1. These ownership patterns may be developed specifically to enhance control or for organizational purposes. 2. Such ownership patterns may also result from the parent company's acquisition of a company that already possesses subsidiaries. B. One of the most common corporate structures is the father-son-grandson configuration where each subsidiary in turn owns one or more subsidiaries. C. The consolidation process is altered somewhat when indirect control is present. 1. The worksheet entries are effectively doubled by each corporate ownership layer but the concepts underlying the consolidation process are not changed. 2. Calculation of the accrual-based income of a subsidiary recognizing the consolidated relationships is an important step in an indirect ownership structure. a. The determination of accrual-based income figures is needed for equity income accruals as well as for the computation of noncontrolling interest balances. b. Any company within the business combination that is in both a parent and a subsidiary position must recognize the equity...
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...Solutions to Problems and Exercises Table of Contents Chapter 1 5 CA 1-4 5 CA 1-6 5 CA 1-8 6 CA 1-10 7 CA 1-12 8 CA 1-17 9 Chapter 2 10 CE2-2 10 CE2-3 10 EXERCISE 2-2 11 EXERCISE 2-3 12 EXERCISE 2-4 13 CA 2-4 13 Chapter 3 15 EXERCISE 3-6 15 EXERCISE 3-10 16 EXERCISE 3-13 19 EXERCISE 3-15 19 EXERCISE 3-20 20 Chapter 4 22 PROBLEM 4-1 22 PROBLEM 4-3 25 PROBLEM 4-5 27 PROBLEM 4-7 29 Chapter 5 31 PROBLEM 5-2 31 PROBLEM 5-4 34 Chapter 6 37 EXERCISE 6-3 37 EXERCISE 6-6 38 Chapter 7 39 PROBLEM 7-2 39 PROBLEM 7-4 41 PROBLEM 7-9 43 PROBLEM 7-11 46 EXERCISE 7-25 48 EXERCISE 7-26 50 Chapter 8 52 EXERCISE 8-23 52 EXERCISE 8-25 53 PROBLEM 8-5 55 PROBLEM 8-11 59 Chapter 9 62 PROBLEM 9-1 62 EXERCISE 9-7 64 EXERCISE 9-9 66 PROBLEM 9-4 67 PROBLEM 9-6 68 Chapter 17 70 EXERCISE 17-6 70 Chapter 18 71 PROBLEM 18-1 71 PROBLEM 18-4 74 PROBLEM 18-6 76 PROBLEM 18-7 79 PROBLEM 18-8 81 EXERCISE 18-20 82 EXERCISE 18-21 82 Chapter 22 84 EXERCISE 22-2 84 EXERCISE 22-8 84 EXERCISE 22-11 84 Chapter 23 86 EXERCISE 23-11 86 EXERCISE 23-13 88 EXERCISE 23-15 90 Chapter 1 CA 1-4 It is not appropriate to abandon mandatory accounting rules and allow each company to voluntarily disclose the type of information it considered important. Without a coherent body of accounting theory and standards, each accountant or enterprise would have to develop its own theory structure and set of practices, and readers of financial...
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...asset, “Equipment,” because the computer is an economic resource of the business. The computer will provide benefit over more than one fiscal period. (5 min.) S 2-2 a. $12,000 (Cash $10,000–$5,000; Supplies $2,000, Computer $5,000) b. $2,000 Accounts Payable Chapter 2 Transaction Analysis Copyright © 2012 Pearson Canada Inc. 65 (5-10 min.) Cash 25,000 2,000 23,000 Supplies 9,000 S 2-3 4,000 Accounts Receivable 6,000 Bal. Accounts Payable 9,000 Rent 4,000 Service Revenue 8,000 Common Shares 25,000 (5 min.) S 2-4 Increased total assets: May 1 (Cash) May 1 (Medical supplies) May 3 (Cash, Accounts receivable) Decreased total assets: May 2 (Cash) 66 Financial Accounting Fourth Canadian Edition Instructor’s Solutions Manual Copyright © 2012 Pearson Canada Inc. (10 min.) S 2-5 CREDIT Journal DATE ACCOUNT TITLES AND EXPLANATION DEBIT June 15 Cash ................................................. Note Payable ............................... Borrowed money from the bank. 25,000 25,000 22 Accounts Receivable ...................... 9,000 Service Revenue ......................... Delivered portrait to be paid on account. 28 Cash ................................................. Accounts Receivable .................. Received cash on account. 29 Utilities Expense ............................. Accounts Payable ....................... Received utility bill. 30 Salary Expense ............................... Cash .....
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...CHAPTER 21 Accounting for Leases SOLUTIONS TO EXERCISES EXERCISE 21-1 (15–20 minutes) (a) This is a capital lease to Adams since the lease term (5 years) is greater than 75% of the economic life (6 years) of the leased asset. The lease term is 831/3% (5 ÷ 6) of the asset’s economic life. (b) Computation of present value of minimum lease payments: $9,968 X 4.16986* = $41,565 *Present value of an annuity due of 1 for 5 periods at 10%. (c) 1/1/12 Leased Equipment................................... Lease Liability.................................. Lease Liability.......................................... Cash................................................... 12/31/12 Depreciation Expense............................. Accumulated Depreciation— Capital Leases.............................. ($41,565 ÷ 5 = $8,313) Interest Expense...................................... Interest Payable................................ [($41,565 – $9,968) X .10] 1/1/13 Lease Liability.......................................... Interest Payable....................................... Cash................................................... 41,565 41,565 9,968 9,968 8,313 8,313 3,160 3,160 6,808 3,160 9,968 21-1 EXERCISE 21-2 (20–25 minutes) (a) To Brecker, the lessee, this lease is a capital lease because the terms satisfy the following criteria: 1. 2. The lease term is greater than 75% of the economic life of the leased asset; that is, the lease term is 831/3 % (50/60) of the economic life. The...
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...Why Accounting Fraud? & Possible Solutions Brian Faanes Rasmussen College Author Note This research is being submitted on 9-12-2011 for Wendell Ellis A140 Financial Accounting 1 course at Rasmussen College by Brian Faanes Most accountants and auditors want to be accurate and honest when it comes to the recording of financial records and statements of the company or firm they work for. However, because of tight relationships between accounting firms and their clients, auditors may unintentionally distort the numbers. In this research paper let us examine some of the conflicts with current accounting practices and possible solutions to improve the corporate accountability and the financial reports they convey to the public and investors. There have been a number of accounting fraud sandals in the last decade, some of these companies include; Enron 2001, Worldcom 2002, Tyco International 2002 and locally, Tom Peters Company 2008. As a result of these most recent accounting frauds, congress passed the Sarbanes-Oxley act in 2002. The Sarbanes-Oxley Act * Applies to publicly traded companies * Established the Public Company Accounting Oversight Board (PCAOB). The PCAOB is a private sector, nonprofit corporation that oversees the auditors of public companies. The PCAOB protects the interests of investors by helping ensure fair, independent audit reports. * Requires that external auditors report to an audit committee, rather than to an organization’s management...
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...Chapter 1 Environment and Theoretical Structure of Financial Accounting AACSB assurance of learning standards in accounting and business education require documentation of outcomes assessment. Although schools, departments, and faculty may approach assessment and its documentation differently, one approach is to provide specific questions on exams that become the basis for assessment. To aid faculty in this endeavor, we have labeled each question, exercise and problem in Intermediate Accounting, 7e with the following AACSB learning skills: Questions 1–1 1–2 1–3 1–4 1–5 1–6 1–7 1–8 1–9 1–10 1–11 1–12 1–13 1–14 1–15 1–16 1–17 1–18 1–19 1–20 1–21 1–22 1–23 1–24 1–25 1–26 1–27 1–28 1–29 AACSB Tags Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking Reflective thinking 1–30 1–31 1–32 Reflective thinking Reflective thinking Reflective thinking Brief Exercises 1–1 1–2 1–3 1–4 1–5 1–6 AACSB Tags Analytic Reflective thinking Reflective thinking Reflective thinking...
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...between several modules Alternative solutions: i. Buy new software ii. Develop in-house accounting system iii. Outsourcing the system Problem: Documents are not properly pre numbered, recorded and documented -Sales invoice are manually produces and not pre-numbered -Monthly statement of account not periodically prepare Alternative solutions: i. Adopted auto pre numbered system ii. Implement manual pre numbered system Problem: Lean organization -Organization chart was drawn with simple structure -Directors makes all major decisions and monitor all activities Alternative solution: i. Adopted concept of functional structure En. Zayed CEO Pn. Hashimah COO En. Salam HR & Admin Manager Pn. Balqis Operation Manager (Vacant) Account & Finance Manager (Vacant) Admin Executive (Vacant) Project Manager Cik Amy Finance Executive Project Team (Contract basis) Problem: Timesheet are manually prepared by employees -They’re record time in & out by themselves -Wrongly calculate and paid over Alternative solutions: i. Use access card ii. Use time clock machine @ thumbprint iii. Should hire an additional employee who can monitor the attendance and timesheet iv. Use CCTV Problem: No SOP adopted by Delima Enterprise Sdn Bhd -All decision are authorized by En. Zayed and Pn. Hashimah -No reconciliation was performed for each accounts Withdrawals are made from the Company without proper documentation Alternative solution: i. Each department should implement...
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