Student Workbook To Accompany Introduction To Financial Accounting

Student Workbook to Accompany
Introduction to
Financial Accounting
Second Edition
Based on International Financial Reporting

Standards
Prepared by David Annand

Copyright 2014 David Annand
Published by David Annand
4910C 58 St., Athabasca AB T9S 1L5
ISBN 978-0-9936701-1-4
Library and Archives Canada Cataloguing in Publication
Annand, David, 1954
This student workbook is licensed under a Creative Commons License,

AttributionNon-commercialShare Alike 4.0 Canada: see
www.creativecommons.org. This material may be reproduced for non-
commercial purposes and changes may be used by others provided that
credit is given to the original author.
To obtain permission for uses beyond those outlined in the Creative

Commons license, please contact David Annand, at
davida@athabascau.ca.
Latest version available at http://business.athabascau.ca/faculty/david-

annand-edd/
Please forward suggested changes to davida@athabascau.ca.
December 8, 2014
TABLE OF CONTENTS
CHAPTER ONE Introduction to Financial Accounting ......................................................... 1
CHAPTER TWO The Accounting Process ............................................................................ 39
CHAPTER THREE Financial Accounting and the Use of Adjusting Entries .......................... 139
CHAPTER FOUR The Classified Balance Sheet and Related Disclosures ........................... 207
CHAPTER FIVE Accounting for the Sale of Goods ........................................................... 301
CHAPTER SIX Assigning Costs to Merchandize ............................................................. 395
CHAPTER SEVEN Cash and Receivables .............................................................................. 491
CHAPTER EIGHT Long-lived Assets..................................................................................... 549
CHAPTER NINE Debt Financing: Current and Non-current Liabilities .............................. 609
CHAPTER TEN Debt Financing: Bonds ............................................................................ 663
CHAPTER ELEVEN Equity Financing ...................................................................................... 725
CHAPTER TWELVE Proprietorships and Partnerships ........................................................... 779
CHAPTER THIRTEEN Financial Statements Analysis ................................................................. 833
CHAPTER FOURTEEN The Statement of Cash Flows ................................................................. 931
CHAPTER ONE
Introduction to Financial Accounting Name
Concept Self-check
CHAPTER ONE / Introduction to Financial Accounting 1

CHAPTERONE
IntroductiontoFinancialAccounting Name
ConceptSelfcheck(continued)
2 CHAPTERONE/IntroductiontoFinancialAccounting
CHAPTER ONE
CP 11
A = L + S/E
Issued share capital for cash
Purchased a truck for cash
Received a bank loan to pay for equipment
Made a deposit for electricity service to be provided in the future
Paid rent for the month just ended
Signed a new union contract that provides for increased wages in the
future
Hired a messenger service to deliver letters during a mail strike
Received a parcel; paid the delivery service
Billed customers for services performed
Made a cash payment to satisfy an outstanding obligation
Received a payment of cash in satisfaction of an amount owed by a
customer
Collected cash from a customer for services rendered
Paid cash for truck expenses (gas, oil, etc.)
Made a monthly payment on the bank loan; this payment included a
payment on part of the loan and also an amount of interest expense.
issued shares in the company to pay off a loan
Paid a dividend.

CHAPTERONE
IntroductiontoFinancialAccounting Name
CP12
Issuedsharecapitalforcash
Paidanaccountpayable
Borrowedmoneyfromabank
Collectedanaccountreceivable
Collectedacommissiononasalemadetoday
Paidforanadvertizementinanewspaper
Repaidmoneyborrowedfromabank
Signedacontracttopurchaseacomputer
Receivedabillforsuppliesusedduringthemonth
Receivedacashpaymentinsatisfactionofanamountowedbya
customer
Sentabilltoacustomerforrepairsmadetoday
Soldequipmentforcash
Purchasedatruckoncredit,tobepaidinsixmonths
Requestedpaymentfromacustomerofanaccountreceivablethatis
overdue
Increasedvacationsforemployeesfromfourweekstosixweeks
Recordedtheamountduetothelandlordasrent
Receivedthemonthlytelephoneansweringservicebill

CP13

A B C D E
Cash $3,000 $1,000 $6,000 $2,500
Equipment 8,000 6,000 4,000 7,000
Accountspayable 4,000 1,500 3,000 4,500
Sharecapital 2,000 3,000 3,000 4,000 500
Retainedearnings 1,000 500 1,000

4 CHAPTERONE/IntroductiontoFinancialAccounting
CHAPTER ONE
CP 14
CP 15
Accounts payable
Accounts receivable
Bank loan
Cash
Equipment
Insurance expense
Loan payable
Prepaid insurance
Rent expense
Repair revenue
Share capital
Truck operating expense
Unused office supplies
Dividends

CHAPTER ONE
CP 16
CP 17
Income Statement
6 CHAPTER ONE / Introduction to Financial Accounting

CHAPTER ONE
CP 17 continued
Statement of Changes in Equity
Balance Sheet

CHAPTER ONE
CP 18
Income Statement

CHAPTER ONE
CP 18 continued
Balance Sheet

CHAPTER ONE
CP 19
a.
b.
c.
d.
e.
f.
g.

CHAPTER ONE
P 11
ASSETS = LIABILITY + S/H EQUITY
Acct. Ppd. Unused Acct. Share Ret.

Cash + Rec. + Exp. + Supp. = Pay. + Cap. + Earn.
Opening 1,400 3,600 1,000 350 2,000 4,350
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
+ + + = + +

CHAPTER ONE
P 12
1.
ASSETS = LIABILITIES + S/H EQUITY
Acct. Ppd. Unused Bank Acct. Unearn. Share Retained
Cash + Rec. + Exp. + Supp. + Truck = Loan + Pay + Rev. + Capital + Earnings
Aug. 1
1
1
4
5
7
9
12
15
16
20
25
28
29
31
31
+ + + + = + + + +

CHAPTER ONE
P 12 continued
2.
Income Statement

CHAPTER ONE
P 12 continued
Balance Sheet

CHAPTER ONE
P 13
Income Statement

CHAPTER ONE
P 13 continued
Balance Sheet

CHAPTER ONE
P 14
Income Statement

CHAPTER ONE
P 14 continued
Balance Sheet

CHAPTER ONE
P 15
1.
2. and 3.
Income Statement

CHAPTER ONE
P 15 continued
Balance Sheet

CHAPTER ONE
P 16 1.
ASSETS = LIABILITIES + S/H EQUITY
Accts. Ppd. Unused Acct. Loan Share Ret.
Cash + Rec. + Exp. + Supp. + Equip. = Pay. + Pay. + Cap. + Earn.
Jun. 1
1
2
3
4
5
8
10
15
18
20
22
23
25
27
30
30
30
30

CHAPTER ONE
P 16 continued
2.
Income Statement

CHAPTER ONE
P 16 continued
Balance Sheet

CHAPTER ONE
P 1-7
S/H
ASSETS LIABILITIES EQUITY
Acct. Un. Acct. Loans Share
Cash + Rec. + Supp. + Land + Bldg. + Furn. + Equip. + Truck = Pay. + Payable + Capital
Sep 30
Oct. 2
10
11
15
20a.
20b.
31

CHAPTER ONE
AP 11
Snider Truck Rentals Corporation

Transaction Worksheet
At May 31,2015
ASSETS LIABILITIE S/H EQUITY

S
Ppd. Ppd. Acct. Share Retained
Cash + Ins. + Supp. + Equip. + Truck = Pay. + Cap. + Earnings
Op.
Bal.
a.
b.
c.
d.
e.
f.
g.
h.
I.
j.

CHAPTER ONE
AP 1-2 1.
Jewell Contractors Corporation
Income Statement
For the Month Ended May 31, 2015
ASSETS LIABILITIES S/H EQUITY
Acc. Ppd. Ppd. Bank Acct. Un. Share Ret.

Cash + Rec. + Rent + Supp. + Equip. = Loan + Pay. + Rev. + Cap. + Earn.
May 1
10
15
18
22
25
27
31
31
31

CHAPTER ONE
AP 1-2 continued
2.
Income Statement

CHAPTER ONE
AP 12 continued
Balance Sheet

CHAPTER ONE
AP 13
Income Statement

CHAPTER ONE
AP 13 continued
Balance Sheet

CHAPTER ONE
AP 14
Income Statement

CHAPTER ONE
AP 14 continued
Balance Sheet

CHAPTER ONE
AP 15
1. and 2.
Income Statement

CHAPTER ONE
AP 15 continued
Balance Sheet

CHAPTER ONE
AP 1-6
1.
Acct. Ppd. Un. Acct. Wages Share Ret.
Cash + Rec. + Exp. + Supp. + Truck = Pay. + Pay. + Cap. Earn.
Dec. 1
1
2
5
6
7
14
16
20
24
24
27
28
28
30
31
31
31
31
31

CHAPTER ONE
AP 1-6 continued
2.
Income Statement

CHAPTER ONE
AP 16 continued
Balance Sheet

CHAPTER ONE

CHAPTER TWO
The Accounting Process Name
Concept Self-check
CHAPTER TWO / The Accounting Process 39

CHAPTER TWO
Concept Self-check continued
40 CHAPTER TWO / The Accounting Process

CHAPTER TWO
CP 21
Trans. Any Asset Any Liability Share Capital Any Revenue Any Expense
Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
(inc.) (dec.) (dec.) (inc.) (dec.) (inc.) (dec.) (inc.) (inc.) (dec.)
1
2
3
4
5
6
7
8
9
10
11
12
13

CHAPTER TWO
CP 22
A B C D
Cash $100 $ 72 $ $ 20
Truck 200 130 71 200
Accounts payable 50 10 5 10
Bank loan 75 25 61
Share capital 175 50 100
Net income 20 6 10
CP 23
Trans. Any Asset Any Liability Share Capital

Debit Credit Debit Credit Debit Credit
(inc.) (dec.) (dec.) (inc.) (dec.) (inc.)
2. Borrowed $5,000 from the bank
3. Paid $2,000 of the bank loan
4. Paid $600 in advance for a oneyear insurance
policy
5. Received $500 in advance for next months rental of
office space.
42 CHAPTER 2 / The Accounting Process

CHAPTER TWO
CP 24
Debit Credit
2. Purchased equipment on credit

3. Paid for a oneyear insurance policy
4. Billed a customer for repairs completed today
5. Paid for this months rent
6. Collected the amount billed in transaction 4
above
7. Collected cash for repairs completed today
8. Paid for the equipment purchased in transaction
2 above
9. Signed a union contract
10. Collected cash for repairs to be made for
customers next month
11. Transferred this months portion of prepaid
insurance to expenses

CHAPTER TWO
CP 2-5
Cash Bank Loan Share Capital Repair Revenue
Accounts Receivable Accounts Payable Electricity Expense
Prepaid Rent Rent Expense
Unused Supplies Supplies Expense

CHAPTER TWO
CP 26
Date
Description Folio Debit Credit

CHAPTER TWO
CP 26 continued
Date

CHAPTER TWO
CP 27
Date

CHAPTER TWO
CP 27 continued
Date

CHAPTER TWO
CP 2-8
Trial Balance
Acct. Account balances

No. Account Debit Credit

CHAPTER TWO
CP 29
Date

CHAPTER TWO
CP 29 continued
Date

CHAPTER TWO
CP 2-9 continued
2. Schulte Corporation
Cash No. 101 Accounts Payable No. 210 Share Capital No. 320 Service Revenue No. 470
Accounts Rec. No. 110 Rent Expense No. 654
Prepaid Rent No. 162 Supplies Expense No. 668
Equipment No. 183 Truck Operating

Expense No. 670

CHAPTER TWO
CP 29 continued
3.
Trial Balance


CHAPTER TWO
CP 29 continued
4.
Income Statement

CHAPTER TWO
CP 29 continued
Balance Sheet

CHAPTER TWO
CP 210
Trial Balance


CHAPTER TWO
CP 211
Date

CHAPTER TWO
CP 211 continued
Date

CHAPTER TWO
CP 211 continued
2.
Trial Balance


CHAPTER TWO
CP 211 continued
3.
Income Statement

CHAPTER TWO
CP 211 continued
Balance Sheet

CHAPTER TWO
CP 212
1.
Trial Balance


CHAPTER TWO
CP 212 continued
2.
Income Statement

CHAPTER TWO
CP 212 continued
Balance Sheet

CHAPTER TWO
CP 2-13
1. Elgert Corporation
Cash Accounts Payable Share Capital Service Revenue
Dividends
Rent Expense
Accounts Receivable Truck Operating Expense
Unused Supplies Salaries Expense
Supplies Expense

CHAPTER TWO
CP 213 continued
2.
Trial Balance


CHAPTER TWO
CP 213 continued
3.
Income Statement

CHAPTER TWO
CP 213 continued
Balance Sheet

CHAPTER TWO
P 21
1.
Trial Balance


CHAPTER TWO
P 21 continued
2.
Income Statement

CHAPTER TWO
P 21 continued
3.
Balance Sheet

CHAPTER TWO
P 22
1.
Date

CHAPTER TWO
P 22 continued
Date

CHAPTERTWO
TheAccountingProcess Name
P22continued
Accounts Share Service

Cash No.101 Payable No.210 Capital No.320 Revenue No.460

Advertizing
Expense No.610

Accounts Commissions
Receivable No.110 Expense No.615

Rent
Expense No.654
Prepaid
Advertizing No.160
Salaries
Expense No.656

Unused
Supplies No.173 Supplies
Expense No.668

Telephone
Equipment No.183 Expense No.669

74 CHAPTER2/TheAccountingProcess
CHAPTERTWO
P22continued
2.

TrialBalance

Acct. Accountbalances

CHAPTERTWO/TheAccountingProcess 75
CHAPTER TWO
P 23
1.
Trial Balance


CHAPTER TWO
P 23 continued
2.
Income Statement

CHAPTER TWO
P 23 continued
3.
Balance Sheet

CHAPTER TWO
P 2-4
1. and 3.
Fenton Table Rentals Corporation

Cash No. 101 Payable No. 210 Capital No. 320 Revenue No. 470
Dividends No. 350 Advertizing

Accounts Expense No. 610
Receivable No. 110
Rent
Expense No. 654
Salaries
Prepaid Expense No. 656
Rent No. 162
Supplies
Expense No. 668
Unused
Supplies No. 173
Telephone
Expense No. 669
Truck Operating
Expense No. 670

CHAPTER TWO
P 2-4 continued
2.
Date

CHAPTER TWO
P 24 continued
4.
Trial Balance


CHAPTER TWO
P 24 continued
5.
Income Statement

CHAPTERTWO
P24continued

BalanceSheet

CHAPTERTWO/TheAccountingProcess 83
CHAPTERTWO
P25
1.and3.
ThornAccountingServicesInc.
Cash No.101 Bank Share Fees Salaries

Loan No.201 Capital No.320 Earned No.420 Expense No.656

Accounts Supplies
Payable No.210 Expense No.668

Advertizing
Expense No.610

Accounts Unused Telephone
Receivable No.110 Supplies No.173 Insurance Expense No.669
Expense No.631

TruckOperating
Rent Expense No.670
Prepaid Expense No.654
Insurance No.161

Truck No.184
84 CHAPTER2/TheAccountingProcess
CHAPTER TWO
P 25 continued
2.
Date

CHAPTER TWO
P 25 continued
Date

CHAPTER TWO
P 25 continued
4.
Trial Balance


CHAPTER TWO
P 2-5 continued
5.
Income Statement

CHAPTER TWO
P 2-5 continued
Balance Sheet

CHAPTER TWO
P 2-6
1. and 3.
Chan Renovations Corporation

Accounts Share Repair Telephone
Cash No. 101 Payable No. 210 Capital No. 320 Revenue No. 450 Expense No. 669
Accounts Advertizing Truck Operating

Receivable No. 110 Expense No. 610 Expense No. 670
Prepaid Rent Utilities

Rent No. 162 Expense No. 654 Expense No. 676
Unused Supplies Wages

Supplies No. 173 Expense No. 668 Expenses No. 677
Equipment No. 183

CHAPTER TWO
P 2-6 continued
2.
Date

CHAPTER TWO
P 2-6 continued
Date

CHAPTER TWO
P 2-6 continued
Date

CHAPTER TWO
P 2-6 continued
4.
Trial Balance


CHAPTER TWO
P 2-6 continued
5.
Income Statement

CHAPTER TWO
P 2-6 continued
Balance Sheet

CHAPTER TWO
AP 21
1.
Trial Balance


CHAPTER TWO
AP 21 continued
2. and 3.
Income Statement

CHAPTER TWO
AP 21 continued
Balance Sheet

CHAPTER TWO
AP 22
1.
Date

CHAPTER TWO
AP 22 continued
Date

CHAPTER TWO
AP 22 continued
Date

CHAPTER TWO
AP 22 continued
2.
McRann Auto Repairs Corporation
Accounts Share Repair Advertizing

CashNo. 101 Payable No. 210 Capital No. 320 Revenue No. 450 Expense No. 610
Insurance
Expense No. 631
Rent
Expense No. 654
Accounts
Receivable No. 110 Salaries
Expense No. 656
Supplies
Expense No. 668
Prepaid
Insurance No. 161 Truck Operating
Expense No. 760
Unused
Supplies No. 173
Truck No. 184

CHAPTER TWO
AP 22 continued
3.
Trial Balance


CHAPTER TWO
AP 23
1.
Trial Balance


CHAPTER TWO
AP 23 continued
2.
Income Statement

CHAPTER TWO
AP 23 continued
3.
Balance Sheet

CHAPTER TWO
AP 2-4
1. and 3.
Owens Truck Rentals Incorporated
Accounts Share Rent Advertizing

Cash No. 101 Payable No. 210 Capital No. 320 Earned No. 440 Expense No. 610
Dividends No. 350 Insurance

Expense No. 631
Prepaid Rent
Insurance No. 161 Expense No. 654
Salaries
Unused Expense No. 656
Supplies No. 173
Supplies
Expense No. 668
Equipment No. 183 Telephone

Expense No. 669
Rental Truck Operating

Trucks No. 184 Expense No. 670

CHAPTER TWO
AP 24 continued
2.
Date

CHAPTER TWO
AP 24 continued
Date

CHAPTER TWO
AP 24 continued
4.
Trial Balance


CHAPTER TWO
AP 24 continued
5.
Income Statement

CHAPTER TWO
AP 24 continued
Balance Sheet

CHAPTER TWO
AP 2-5 1. and 3. Oneschuk Contractors Corporation
Bank Share Repair Advertizing

Cash No. 101 Loan No. 201 Capital No. 320 Revenue No. 450 Expense No. 610
Accounts Rent
Payable No. 210 Expense No. 654
Supplies
Accounts Expense No. 668
Receivable No. 110
Telephone
Expense No. 669
Prepaid
Rent No. 162 Utilities
Expense No. 676
Unused Wages
Supplies No. 173 Expense No. 677
Equipment No. 183

CHAPTER TWO
AP 25 continued
2.
Date

CHAPTER TWO
AP 25 continued
Date

CHAPTER TWO
AP 25 continued
Date

CHAPTER TWO
AP 25 continued
4.
Trial Balance


CHAPTER TWO
AP 25 continued
5.
Income Statement

CHAPTER TWO
AP 25 continued
Balance Sheet

CHAPTER TWO
AP 2-6 1. and 3. Sandul Snow Removal Corporation
Bank Share Service Advertizing

Cash No. 101 Loan No. 201 Capital No. 320 Revenue No. 470 Expense No. 610
Accounts Insurance
Payable No. 210 Expense No. 631
Supplies
Expense No. 668
Accounts
Receivable No. 110
Wages Truck Operating
Payable No. 237 Expense No 670
Prepaid
Insurance No. 161
Wages
Unused Expense No. 677
Supplies No. 173
Truck No. 184

CHAPTER TWO
AP 26 continued
2.
Date

CHAPTER TWO
AP 26 continued
Date

CHAPTER TWO
AP 26 continued
Date

CHAPTER TWO
AP 26 continued
4.
Trial Balance


CHAPTER TWO
AP 26 continued
5.
Income Statement

CHAPTER TWO
AP 26 continued
Balance Sheet

CHAPTER TWO
AP 2-7 1.and 3. John Saul Corporation

Cash No. 101 Building No. 181 Payable No. 210 Capital No. 320 Revenue No. 470
Furniture No. 182 Rent

Expense No. 654
Equipment No. 183 Bank

Loan No. 201 Salaries
Expense No. 656
Unearned
Accounts Truck No. 184 Revenue No. 249
Receivable No. 110 Telephone
Expense No. 669
Utilities
Prepaid Expense No. 676
Rent No. 162
Land No. 180

CHAPTER TWO
AP 27 continued
2.
V

CHAPTER TWO
AP 2-7 continued
Date

CHAPTER TWO
AP 27 continued
Date

CHAPTER TWO
AP 27 continued
4.
Trial Balance


CHAPTER TWO
AP 27 continued
5.
Income Statement

CHAPTER TWO
AP 27 continued
Balance Sheet

CHAPTER TWO
DP 21f
1. (Alternate account names are acceptable if reasonable.)
SSS Corporation
Accounts Share Repair Advertizing

Cash Payable Capital Revenue Expense
Equipment Rental
Expense
Unused MIsc. General

Supplies Expense
Repair Supplies
Expense
Truck Operating
Expense
Wages
Expense

CHAPTER TWO
DP 21 continued
2.
Income Statement

CHAPTER TWO
DP 21 continued
Balance Sheet

CHAPTER TWO
DP 21 continued
3.

CHAPTER THREE
Financial Accounting and the Use of Adjusting Entries Name
Concept Self-check
CHAPTER THREE / Financial Accounting and the Use of Adjusting Entries 139
CHAPTER THREE
140 CHAPTER THREE / Financial Accounting and the Use of Adjusting Entries
CHAPTER THREE
CHAPTER THREE
CHAPTER THREE
CP 3-1
A B
a. Insurance Expense
b. Rent Earned
c. Prepaid Rent
d. Interest Payable
e. Interest Receivable
f. Fees Earned
g. Unused Supplies
h. Unearned Commissions Revenue
i. Salaries Payable
j. Depreciation Expense
CP 3-2
Date
CP 3-3
Date
CHAPTER THREE
CP 3-4
GENERAL JOURNAL Page
Date
CHAPTERTHREE
FinancialAccountingandtheUseofAdjustingEntries Name
CP35
1.and3.
GrahamCorporation
GeneralLedger

ASSETS = LIABILITIES + SHAREHOLDERSEQUITY

RentReceivable InterestPayable RentEarned

PrepaidInsurance

2.
GENERALJOURNAL Page
Date

CHAPTERTHREE/FinancialAccountingandtheUseofAdjustingEntries 145
CHAPTER THREE
CP 35 continued
4.
Account Amount
CHAPTER THREE
CP 3-6
1.
Date
2. Assets would be overstated by

Liabilities would be understated by
Revenue would be understated by
Expenses would be understated by
Shareholders equity would be overstated by
CHAPTER THREE
CP 3-7
Date
CHAPTER THREE
CP 3-8 1.
Accounts Share
Cash 101 Payable 210 Capital 320
750 50 70 145 400
950 150
90 50 Unearned Repair Ret. Earn. 340
24 Revenue 247 350
20 500
70 400 Repair Rev. 450
950
228
Accounts 400
Receivable 110
228 90 Interest Payable 222 Rent Earned 440
12 40
Rent
Receivable 125
40 Depn Exp.
- Furniture 621
Prepaid Insurance 161 2
24 2 Income Taxes Pay.260
400 Insurance Exp. 631
Unused Office 2
Supplies 170
50 25
Interest Office Supplies
Expense 632 Exp. 650
Unused Repair 12 25
Supplies 171
145 80
Income Taxes Rent
Expense 830 Expense 654
Furniture 182 400 50
150
Repair Supplies
Expense 655
Acc. Depn 80
Furniture 191
2 Telephone
Expense 669
20
CHAPTER THREE
CP 3-8 continued
2.
Date
CHAPTER THREE
CP 3-9
1.
Acct. Unadjusted Adjusted
No. Account Trial Balance Adjustments Trial Balance
101 Cash $ 4,000 $ 4,000
110 Accounts receivable 5,000 5,000
161 Prepaid insurance 3,600 3,300
162 Prepaid rent 1,000 500
184 Truck 6,000 6,000
194 Acc. dep. truck $1,500
210 Accounts payable $7,000 7,000
222 Interest payable 400
226 Salaries payable 1,000
248 Unearned rent revenue 1,200 600
320 Share capital 2,700 2,700
440 Rent earned 25,000 25,600
610 Advertizing expense 700 700
615 Commissions expense 2,000 2,000
624 Dep. expense truck 1,500
631 Insurance expense 300
632 Interest expense 100 500
654 Rent expense 5,500 6,000
656 Salaries expense 8,000 9,000
Totals $35,900 $35,900 $38,800 $38,800
CHAPTER THREE
CP 3-9 continued
2.
Date
CHAPTER THREE
CP 3-10
1.
Date
CHAPTER THREE
CP 3-10 continued
2. and 4.
Wolfe Corporation
Cash 101 Accounts Share Repair

Bal. 2,700 Payable 210 Capital 320 Revenue 450
Bal. 3,800 Bal. 7,750
Accounts
Receivable 110 Retained
Bal. 2,000 Earnings 340 Advertizing
Expense 610
Prepaid Bal. 200
Insurance 161
Bal. 1,200 Income
Summary 360 Insurance
Expense 631
Unused
Supplies 173
Bal. 700
Rent
Expense 654
Bal. 250
Salaries
Expense 656
Bal. 4,500
Supplies
Expense 668
CHAPTER THREE
CP 310 continued
3.
Date
CHAPTER THREE
P 31
Date
CHAPTER THREE
P 32
Date
CHAPTER THREE
P 33
Date
CHAPTER THREE
P 34
Date
CHAPTER THREE
P 35
1.
Date
CHAPTER THREE
P 35 continued
2.
Acct. Unadjusted Adjusted

Trial Balance Adjustments Trial Balance
No. Account Debit Credit Debit Credit Debit Credit
101 Cash 3,300
110 Accounts receivable 4,000
161 Prepaid insurance 1,200
173 Unused supplies 500
184 Truck 8,000
194 Acc. dep. truck -0-
210 Accounts payable 5,000
226 Salaries payable -0-
248 Unearned rent revenue 2,400
260 Income taxes payable -0-
320 Share capital 7,000
350 Dividends 1,000
410 Commissions earned 16,100
440 Rent earned -0-
610 Advertizing expense 200
615 Commissions expense 1,000
624 Dep. expense truck -0-
631 Insurance expense -0-
632 Interest expense 400
654 Rent expense 3,600
656 Salaries expense 7,000
668 Supplies expense -0-
669 Telephone expense 300
830 Income taxes expense -0-
30,500 30,500
CHAPTER THREE
P 35 continued
3.
Income Statement
CHAPTER THREE
P 35 continued
Balance Sheet
CHAPTER THREE
P 35 continued
4.
Date
CHAPTER THREE
P 35 continued
5.
Adjusted Post-closing
Acct. Trial Balance Closing Entries Trial Balance
101 Cash
110 Accounts receivable
161 Prepaid insurance
173 Unused supplies
184 Truck
194 Acc. dep. truck
210 Accounts payable
226 Salaries payable
248 Unearned rent revenue
260 Income taxes payable
320 Share capital
340 Retained earnings
350 Dividends
360 Income summary
410 Commissions earned
440 Rent earned
610 Advertizing expense
615 Commissions expense
624 Dep. expense truck
631 Insurance expense
632 Interest expense
654 Rent expense
656 Salaries expense
668 Supplies expense
669 Telephone expense
830 Income taxes expense
CHAPTER THREE
P 3-6 1., 3., 4., and 6. Roth Contractors Corporation

Cash Accounts Share Repair Rent
Payable Capital Revenue Expense
Supplies
Expense
Wages
Accounts Payable
Receivable Advertizing Telephone
Expense Expense
Unearned Repair
Revenue
Truck Operating
Expense
Prepaid Income Taxes Depreciation
Insurance Payable Expense-Truck
Insurance Utilities
Prepaid Rent Expense Expense
Interest Wages
Unused Expense Expense
Supplies
Accum. Depn Income Taxes

Truck Truck Expense
CHAPTER THREE
P 36 continued
2.
Date
CHAPTER THREE
P 36 continued

Date
CHAPTER THREE
P 36 continued
7 and 9.
Trial Balance Closing Entries Trial Balance
Account Debit Credit Debit Credit Debit Credit
Cash
Accounts receivable
Prepaid insurance
Prepaid rent
Unused supplies
Truck
Acc. dep. truck
Accounts payable
Wages payable
Unearned revenue
Share capital
Retained earnings
Income summary
Repair revenue
Advertizing expense
Dep. expense truck
Insurance expense
Interest expense
Rent expense
Supplies expense
Telephone expense
Truck operating expense
Utilities expense
Wages expense
Income taxes expense
CHAPTER THREE
P 36 continued
8.
Income Statement
CHAPTER THREE
P 36 continued
Balance Sheet
CHAPTER THREE
P 36 continued
9.
Date
P 3-7
1., 3., 4., and 6. Snow Services Corporation
Cash Accounts Share Other Depreciation Expense -
Payable Capital Revenue Equipment
Wages Depreciation Expense-

Payable Interest Truck
Earned
Unearned Advertizing Insurance

Short-term Revenue Expense
Investments
Unearned Fees Rent Supplies

Interest Revenue Earned Expense
Receivable
Unearned Interest
Prepaid Revenue Service Wages
Insurance Revenue Expense
Unearned Rent
Revenue
Unused
Supplies Acc. Depn. -
Equip.
Equipment
Acc. Depn -
Truck Truck
CHAPTER THREE
P 37 continued
2.
Date
174 CHAPTER 3 / Financial Accounting and the Use of Adjusting Entries

CHAPTER THREE
P 37 continued
5.
Date
CHAPTER THREE
P 37 continued
7. Snow Services Corporation

Adjusted Trial Balance
January 31, 2016
Account Balances
Debit Credit
Cash
Short-term investments
Interest receivable
Prepaid insurance
Unused supplies
Equipment
Truck
Accumulated depreciationequipment
Accumulated depreciationtruck
Accounts payable
Wages payable
Unearned advertizing revenue
Unearned fees revenue
Unearned interest revenue
Unearned rent revenue
Share capital
Other revenue
Interest earned
Rent earned
Service revenue
Depreciation expenseequipment
Depreciation expensetruck
Insurance expense
Supplies expense
Wages expense

CHAPTER THREE
AP 31
Date
CHAPTER THREE
AP 32
Date

CHAPTER THREE
AP 33
Date
CHAPTER THREE
AP 34
Date

CHAPTER THREE
AP 35
1.
Date
CHAPTER THREE
AP 35 continued
2.
Acct. Unadjusted Adjustments Adjusted

101 Cash
162 Prepaid rent
173 Unused supplies
183 Equipment
193 Acc. dep. equip.
222 Interest payable
237 Wages payable
242 Unearn. commis. rev.
320 Share capital
350 Dividends
360 Income summary
623 Dep. expense equip.
654 Rent expense
677 Wages expense

CHAPTER THREE
AP 35 continued
3.
Income Statement
CHAPTER THREE
AP 35 continued
Balance Sheet

CHAPTER THREE
AP 3-5 continued
4.
Date
CHAPTER THREE
AP 35 continued
5.
Acct. Adjusted Closing entries Post-closing

101 Cash
162 Prepaid rent
173 Unused supplies
183 Equipment
193 Acc. dep. equip.
222 Interest payable
237 Wages payable
242 Unearn. commis. rev.
320 Share capital
350 Dividends
360 Income summary
623 Dep. expense equip.
654 Rent expense
677 Wages expense

CHAPTER THREE
AP 3-6
1., 3., 4., and 6.
Scuttlebutt Publishers Corporation
Cash Accounts Share Other Rent

. Payable Capital Revenue Expense
Retained Subscriptions Salaries

Earnings Revenue Expense
Income Advertizing
Prepaid Advertizing Salaries Summary Expense
Expense Payable
Supplies
Commissions Expense
Unearned Subscriptions Expense
Unused Revenue
Supplies
Depreciation Expense-
Equipment Telephone
Expense
Equipment
Accumulated Depn -
Equipment Utilities
Expense
CHAPTER THREE
AP 36 continued
2.
Date

CHAPTER THREE
AP 36 continued
5.
Date
CHAPTER THREE
AP 36 continued
7 and 9.
Scuttlebutt Publishers Corporation

Post-closing Trial Balance
June 30, 2016
Cash
Prepaid advertizing
Unused supplies
Equipment
Acc. dep. equip.
Accounts payable
Salaries payable
Income taxes payable
Unearn. subs. rev.
Share capital
Retained earnings
Income summary
Subscription revenue
Other revenue
Advertizing expense
Commissions expense
Dep. expense equip.
Rent expense
Salaries expense
Supplies expense
Telephone expense
Utilities expense

CHAPTER THREE
AP 36 continued
8.
Income Statement
CHAPTER THREE
AP 36 continued
Balance Sheet

CHAPTER THREE
AP 36 continued
9.
Date
CHAPTER THREE
AP 3-7
1., 3., 4., and 6.
Rigney Productions Corporation
Cash Unused Accounts Share Interest Salaries
Bal. 50,000 Supplies Payable Capital Earned Expense
50,000 Bal.
Salaries Rent
Equipment Payable Earned
Supplies
Expense
Truck Unearned Rent Subscription
Revenue Revenue
Short-term
Investments Accumulated
Depreciation- Depreciation Expense
Equipment Unearned Subscriptions Equipment
Interest Revenue
Receivable
Accumulated Depreciation Expense
Depreciation- Truck
Prepaid Truck
Insurance
Insurance
Expense
Prepaid
Rent Rent
Expense

CHAPTER THREE
AP 37 continued
2.
Date
CHAPTER THREE
AP 37 continued
4 and 7
Rigney Productions Corporation

Post-closing Trial Balance
January 31, 2016
Cash
Interest receivable
Prepaid insurance
Prepaid rent
Unused supplies
Equipment
Truck
Acc. dep. equip.
Acc. dep. truck
Accounts payable
Salaries payable
Unearned rent revenue
Unearn. subs. rev.
Share capital
Retained earnings
Income summary
Interest revenue
Rent earned
Dep. expense equip.
Dep. expense truck
Insurance expense
Rent expense
Salaries expense
Supplies expense

CHAPTER THREE
AP 37 continued
5.
Date
CHAPTER THREE
RP 3-1 1., 3., 6., and 8.

Packer Corporation
Cash 101 Furniture 182 Accounts Share Commissions Insurance
7,000 3,000 Payable 210 Capital 320 Earned 410 Expense 631
4,400 53,100 37,900 1,800
Accounts Equipment 183
Receivable 110 20,000 Interest Retained
3,600 Payable 222 Earnings 340
Accumulated
Prepaid Depreciation- Subscription Interest
Insurance 161 Building 191 Salaries Income Revenue 480 Expense 632
Payable 226 Summary 360 32,700 2,365
Unused Accumulated
Supplies 173 Depreciation- Unearned Commissions
2,500 Furniture 192 Revenue 242
1,200 Advertizing
Dividends 350 Expense 610 Salaries
Accumulated 1,000 2,300 Expense 656
Land 180 Depreciation- Unearned Subscriptions 33,475
15,000 Equipment 193 Revenue 250
800 Interest Earned 430 Depreciation Expense-
Building 181 Building 621
60,000
Short-term Inv. 106 Bank Loan 201 Income Taxes Expense 830 Depreciation Expense- Supp. Exp. 668
5,000 47,600 2,000 Furniture 622 15,800
Interest
Receivable 116 Income Taxes
Payable 260 Depreciation Expense- Utilities
Equipment 623 Expense 676
2,860

CHAPTER THREE
RP 31 continued
2.
Date
CHAPTER THREE
RP 31 continued
Date

CHAPTER THREE
RP 31 continued 4 and 7
Adjusted Closing Entries Post-closing
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Unused supplies
Land
Building
Furniture
Acc. dep. bldg.
Acc. dep. equip.
Acc. dep. furniture
Bank loan
Accounts payable
Salaries payable
Interest payable
Unearn. commiss. rev.
Unearn. subs. rev.
Share capital
Retained earnings
Dividends
Income summary
Commissions earned
Interest earned
Advertising expense
Dep. expense bldg.
Dep. expense equip.
Dep. expense furn.
Insurance expense
Interest expense
Salaries expense
Supplies expense
Utilities expense
CHAPTER THREE
RP 31 continued
5.
Income Statement

CHAPTER THREE
RP 31 continued
Balance Sheet
CHAPTER THREE
RP 31 continued
6.
Date

CHAPTER THREE
DP 31
CHAPTER THREE
DP 31 continued

CHAPTER FOUR
The Classified Balance Sheet and Related Disclosures Name
Concept Self-check
CHAPTER FOUR/ The Classified Balance Sheet and Related Disclosures 207
CHAPTER FOUR
208 CHAPTER FOUR/ The Classified Balance Sheet and Related Disclosures
CHAPTER FOUR
CHAPTER FOUR
CHAPTER FOUR
P 41
Balance Sheet
CHAPTER FOUR
P 42
Balance Sheet
CHAPTER FOUR
P 4-3
1. and 3.
CHAPTER FOUR
P 4-3 continued
2.
Balance Sheet
CHAPTER FOUR
P 4-4
1. Calculation of net income
2016 2015
Notes (if any)
CHAPTER FOUR
P 4-4 continued
2.
Balance Sheet
CHAPTER FOUR
P 4-4 continued
3.
4. The balance sheet would show:
Note X might state:
2016 2015
Land Bldg. Equip. Total Total
CHAPTER FOUR
P 4-5
b 1. The significant accounting policies, which management believes are appropriate for
the company, are described in Note X to the financial statements.
2. The financial statements of Acme Supplies Ltd. have been prepared in accordance
with International Financial Reporting Standards (IFRS) as issued the International
Accounting Standards Boards (IASB).
3. Management has established systems of internal control that are designed to
provide reasonable assurance that assets are safeguarded from loss or unauthorized
use [. . .]
4. The board of directors is responsible for ensuring that management fulfils its
responsibilities for financial reporting and internal control.
5. When preparing the financial statements, management undertakes a number of
judgments, estimates, and assumptions about the recognition and measurement of
assets, liabilities, income, and expenses. Information about estimates and
assumptions that have the most significant effect on recognition and measurement
of assets, liabilities, income, and expenses is provided below. Actual results may be
substantially different.
6. The mortgage is payable to Last Chance Bank. It bears interest at 5% per year and is
amortized over 20 years.
7. [. . . ] the accompanying financial statements of Acme Supplies Ltd., which comprise
the balance sheet as at December 31, 2018, the income statement, statement of
changes in equity, and statement of cash flows for the year then ended, and a
summary of significant accounting policies and other explanatory information.
8. An [. . .] involves performing procedures to obtain [. . .] evidence about the amounts
and disclosures in the financial statements. The procedures selected depend on the
[. . .] judgment, including assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error.
9. The accompanying financial statements of the company are the responsibility of
management.
10. Revenue arises from the rendering of service. It is measured by reference to the fair
value of consideration received or receivable.
CHAPTER FOUR
P 4-5 continued
11. The bank loan is due on demand and bears interest at 4% per year. It is secured by
real estate of the company.
12. The audit committee reviews the annual financial statements and reporting to the
board, and makes recommendations with respect to their acceptance.
13. Management recognizes its responsibility for conducting the companys affairs in
compliance with established financial standards and applicable laws, and maintains
proper standards of conduct for its activities.
14. My responsibility is to express an opinion on the financial statements based on my
audit.
15. Estimates are necessary in the preparation of these statements and, based on
careful judgments, have been properly reflected.
16. I believe that the [. . .] evidence I have obtained is sufficient and appropriate to
provide a basis for my [. . .].
17. Land held for use in production or administration is stated at cost. Other property,
plant, and equipment are initially recognized at acquisition cost plus any costs
directly attributable to bringing the assets to the locations and conditions necessary
to be employed in operations. They are subsequently measured using the cost
model: cost less subsequent depreciation.
18. In making those risk assessments, [. . .]considers internal control relevant to the
entitys preparation and fair presentation of the financial statements in order to
design [. . .]procedures that are appropriate in the circumstances
19. The share capital of Acme Supplies Ltd. consists of fully-paid common shares with a
stated value of $1 each.
20. The principal activity of Acme Supplies Ltd. is the retail sale of merchandize.
CHAPTER FOUR
AP 41
Balance Sheet
CHAPTER FOUR
AP 42
Balance Sheet
CHAPTER FOUR
AP 43
1.
Balance Sheet
CHAPTER FOUR
AP 43 continued
2. a. Proportion of shareholder claims to total assets:
b. Proportion of creditor claims to assets:
3.
CHAPTER FOUR
AP 44
1. a.
Income Statement
1. b.
CHAPTER FOUR
AP 44 continued
1. c
Balance Sheet
CHAPTER FOUR
AP 44 continued
2.
3.
4.
CHAPTER FOUR
AP 4-5
c 1. Calculation of current taxes is based on tax rates and tax laws that have been enacted
or substantively enacted by the end of the reporting period.
2. The financial statements were prepared by management in accordance with
accounting principles generally accepted in Canada, applied on a consistent basis, and
conform in all material respects with International Accounting Standards.
3. The financial statements for the year ended December 31, 2018 were approved and
authorized for issue by the board of directors on April 17, 2019.
4. Management is responsible for the preparation and fair presentation of these financial
statements in accordance with Canadian generally accepted accounting principles, and
for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
5. Borrowing costs directly attributable to the acquisition, construction, or production of
property, plant, and equipment are capitalized during the period of time that is
necessary to complete and prepare the asset for its intended use or sale. Other
borrowing costs are expensed in the period in which they are incurred and reported as
interest expense.
6. The audit committee of the board, which is comprised solely of directors who are not
employees of the company, is appointed by the board of directors annually.
7. Details of the companys property, plant, and equipment and their carrying amounts
at December 31 are as follows:
8. I conducted my audit in accordance with Canadian generally accepted auditing
standards. Those standards require that I comply with ethical requirements, and plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
9. Share capital represents the nominal value of shares that have been issued.
10. In my opinion, the financial statements present fairly, in all material respects, the
financial position of Acme Supplies Ltd. as at December 31, 2018, and its financial
performance and its cash flows for the year then ended in accordance with Canadian
generally accepted accounting principles.
CHAPTER FOUR
AP 4-5 continued
11. The shareholder loan is due on demand, non-interest bearing, and unsecured.
12. An audit also includes evaluation of the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statement.
13. The financial statements have been prepared using the significant accounting policies
and measurement bases summarized below.
14. Management is responsible for the integrity and objectivity of the financial
statements, and for producing reliable accounting records for the preparation of
financial information.
15. Acme Supplies Ltd. is a limited liability company incorporated and domiciled in
Canada.
16. Depreciation is recognized on a straight-line basis to write down the cost, net of
estimated residual value.
17. The independent shareholders auditor has unrestricted access to the audit
committee. The audit committee also makes recommendations to the board with
respect to the appointment and remuneration of the companys auditor.
18. Current income tax liabilities comprise those obligations to fiscal authorities relating
to the current or prior reporting periods that are unpaid at the reporting date.
19. The audit committee of the board meets regularly with financial management of the
company and with the shareholders independent auditor to discuss internal controls,
audit matters, including audit scope and auditor remuneration, and financial reporting
issues.
20. Operating expenses are recognized in the income statement upon utilization of the
service or at the date of their origin.
21. All shares are eligible to receive dividends, have their capital repaid, and represent
one vote at the annual shareholders meeting. There were no shares issued during
2017 or 2018.
CHAPTER FIVE
Accounting for the Sale of Goods Name
Concept Self-check
CHAPTER FIVE/ Accounting for the Sale of Goods 301

CHAPTER FIVE
302 CHAPTER FIVE / Accounting for the Sale of Goods

CHAPTER FIVE

CHAPTER FIVE

CHAPTER FIVE
CP 51
1.
2019 2018 2017 2016

Sales $10,000 $9,000 $7,000
Cost of goods sold 6,840 6,160
Gross profit 2,500 1,840
Gross profit percentage 22%
2.

CHAPTER FIVE
CP 52

Date

CHAPTER FIVE
CP 53

Date

CHAPTER FIVE
CP 54

Date

CHAPTER FIVE
CP 55
1.
Income Statement
2.

CHAPTER FIVE
CP 56

Date

CHAPTER FIVE
CP 57

CHAPTER FIVE
CP 58
CP 59
1.

CHAPTER FIVE
CP 510 continued
2.
3.
Income Statement
4.

CHAPTER FIVE
CP 511
1.
Income Statement
2.

CHAPTER FIVE
CP 512

Date

CHAPTER FIVE
CP 513
1. Sherman Stores Ltd:

Date
2. Morris Wholesalers Corp.:

Date

CHAPTER FIVE
P 51
1.

Date

CHAPTER FIVE
P 51 continued

Date

CHAPTER FIVE
P 51 continued

Date

CHAPTERFIVE
AccountingfortheSaleofGoods Name
P51continued
2.TheunadjustedendinginventorybalanceatJuly31is_____________,calculatedasfollows:
MerchandizeInventory

GENERALJOURNAL Page
Date

320 CHAPTERFIVE/AccountingfortheSaleofGoods
CHAPTER FIVE
P 52
1.

Date

CHAPTER FIVE
P 52 continued

Date

CHAPTER FIVE
P 52 continued

Date

CHAPTER FIVE
P 52 continued

Date

CHAPTER FIVE
P 52 continued

Date

CHAPTERFIVE
P53
1.
WhirlybirdProductsInc.
GeneralLedger

Retained
Earnings No.340 Sales No.510
37,800

Income SalesReturns
Summary No.360 &Allowances No.508
690

SalesDiscounts No.509
310

CostofGoodsSold No.570
26,800

SalariesExpense No.656
5,000

2.
CHAPTER FIVE
P 54
1.
Income Statement

CHAPTER FIVE
P 54 continued

Date

CHAPTER FIVE
P 55
1.

Date

CHAPTER FIVE
P 55 continued
2.
Income Statement

CHAPTER FIVE
P 55 continued

CHAPTER FIVE
P 55 continued
Balance Sheet

CHAPTER FIVE
P 55 continued
3.

Date

CHAPTER FIVE
P 55 continued

Date

CHAPTER FIVE
P 56

Date

CHAPTER FIVE
P 56 continued

Date

CHAPTER FIVE
P 56 continued

Date

CHAPTER FIVE
P 57

Date

CHAPTER FIVE
P 57 continued

Date

CHAPTER FIVE
P 57 continued

Date

CHAPTER FIVE
P 57 continued

Date

CHAPTER FIVE
P 57 continued

Date

CHAPTERFIVE
P58
1.
ZenithProductsInc.
GeneralLedger

Merchandize Retained
Inventory No.150 Earnings No.340 Purchases No.550
Op.Bal. 4,000 22,500

Income PurchaseReturns
Summary No.360 &Allowances No.558
575

Sales No.510 PurchaseDiscounts No.559
31,000 225

SalesReturns& Transportation
Allowances No.508 In No.560
690 300

SalesDiscounts No.509 SalariesExpense No.656
310 5,000

CHAPTERFIVE/AccountingfortheSaleofGoods 343
CHAPTER FIVE
P 58 continued
2.
Partial Income Statement

CHAPTER FIVE
P 59
1.

CHAPTER FIVE
P 59 continued
2.

Date
3.

CHAPTER FIVE
P 510
1.

Date

CHAPTER FIVE
P 510 continued
2.
Income Statement

CHAPTER FIVE
P 510 continued

CHAPTER FIVE
P 510 continued
Balance Sheet

CHAPTER FIVE
P 510 continued
3.

Date

CHAPTER FIVE
AP 51
1.

Date

CHAPTER FIVE
AP 51 continued

Date

CHAPTER FIVE
AP 51 continued
2.
Income Statement
3.

Date

CHAPTER FIVE
AP 52

Date

CHAPTER FIVE
AP 52 continued

Date

CHAPTER FIVE
AP 52 continued

Date

CHAPTER FIVE
AP 52 continued

Date

CHAPTER FIVE
AP 53

Date

CHAPTER FIVE
AP 53 continued

Date

CHAPTER FIVE
AP 53 continued

Date

CHAPTER FIVE
AP 53 continued

Date

CHAPTER FIVE
AP 53 continued

Date

CHAPTER FIVE
AP 53 continued

Date

CHAPTER FIVE
AP 54

CHAPTER FIVE
AP 55
1.

Date

CHAPTER FIVE
AP 55 continued
2.
Unadjusted Adjusting Entries Adjusted

Cash
Accounts receivable
Prepaid insurance
Prepaid rent
Furniture
Bank loan
Accounts payable
Interest payable
Share capital
Retained earnings
Income Summary
Sales
Sales ret. and allow.
Sales discounts
Cost of goods sold
Advertizing expense
Commissions expense
Delivery expense
Insurance expense
Interest expense
Rent expense
Telephone expense
Utilities expense

CHAPTER FIVE
AP 55 continued
3.
Income Statement

CHAPTER FIVE
AP 55 continued

CHAPTER FIVE
AP 55 continued
Balance Sheet

CHAPTER FIVE
AP 55 continued
4.

Date

CHAPTER FIVE
AP 56
1.

Date

CHAPTER FIVE
AP 56 continued
2.
3.

Date

CHAPTER FIVE
AP 57

Date

CHAPTER FIVE
AP 57 continued

Date

CHAPTER FIVE
AP 57 continued

Date

CHAPTER FIVE
AP 58

Date

CHAPTER FIVE
AP 58 continued

Date

CHAPTER FIVE
AP 58 continued

Date

CHAPTER FIVE
AP 58 continued

Date

CHAPTER FIVE
AP 58 continued

Date

CHAPTER FIVE
AP 59
Income Statement

CHAPTER FIVE
AP 510
1.

Date

CHAPTER FIVE
AP 510 continued
2.
Unadjusted Adjusting Entries Adjusted

Cash
Accounts receivable
Merch. Inv. Jan. 1, 2016
Prepaid insurance
Prepaid rent
Unused supplies
Equipment
Bank loan
Accounts payable
Share capital
Retained earnings
Income summary
Commissions earned
Sales
Sales ret. and allow.
Sales discounts
Purchases
Purch. ret. and allow.
Purchase discounts
Transportation in
Advertizing expense
Commissions expense
Supplies expense
Insurance expense
Interest expense
Rent expense
Telephone expense
Utilities expense

CHAPTER FIVE
AP 510 continued
3.
Income Statement

CHAPTER FIVE
AP 510 continued

CHAPTER FIVE
AP 510 continued
3. continued
Balance Sheet

CHAPTER FIVE
AP 510 continued
4.

Date

CHAPTER FIVE
DP 51
1.

CHAPTER FIVE
DP 51 continued
2.

Date

CHAPTER FIVE
DP 51 continued

Date

CHAPTERFIVE
DP51continued
2.(continued) BillDavisMusicInc.
GeneralLedger
Cash No.101 Accounts Share Sales No.500
Payable No.210 Capital No.320

Accounts
Receivable No.110 Interest Retained
Payable No.222 Earnings No.340

Merchandize
Inventory No.150 NotesPayable Income CostofGoodsSold No.570
Longterm No.280 Summary No.360

InterestExpense No.632

RentExpense No.654

3.

IncomeStatement

CHAPTER FIVE
DP 51 continued
Balance Sheet
4.

CHAPTER FIVE

CHAPTER SIX
Assigning Costs to Merchandize Name
Concept Self-check
CHAPTER SIX / Assigning Costs to Merchandize 395

CHAPTER SIX
396 CHAPTER SIX / Assigning Costs to Merchandize

CHAPTER SIX

CHAPTER SIX

CHAPTER SIX
CP 61
1. FIFO
Purchased Sold Balance in Inventory

Unit Total Unit Total Unit Total
Date Units Cost $ Units Cost $ Units Cost $
2. Weighted average

Weighted average calculations:

CHAPTER SIX
CP 62
1. FIFO

a. January 5 sale

Date

CHAPTER SIX
CP 62 continued
b. January 16 sale

Date
c. Ending inventory calculations
2. Weighted average

Units Unit Cost Total Units Unit Cost Total Units Unit Cost Total
Date $ $ $

CHAPTER SIX
CP 62 continued
a. January 5 sale

Date
b. January 16 sale

Date

CHAPTER SIX
CP 62 continued
c. Ending inventory
CP 63
1. a. FIFO

Date $ $ $

CHAPTER SIX
CP 63 continued
b. Specific identification

Date $ $ $

CHAPTER SIX
CP 63 continued
c. Weighted average

Date $ $ $

CHAPTER SIX
CP 63 continued
2.
Spec.
FIFO ident. Wtd. avg.
Sales
Cost of goods sold
Gross profit
3.
CP 64
Matches actual flow of goods with actual flow of costs in all cases
Matches old costs with new sales prices
Results in the lowest net income in periods of falling prices
Does not assume any particular flow of goods
Best suited for situations in which inventory consists of perishable goods
Values inventory at approximate replacement cost

CHAPTER SIX
CP 65
2015 Statements 2016 Statements

2015 2015 2016 2016
Open. End. Total Net Open. End. Total Net
Errors invent. invent. assets income invent. invent. assets income
1. Goods purchased in 2015
were included in December
31 inventory, but the
transaction was not
recorded until early 2016.
were included in December
31, 2015 inventory, and the
transaction was recorded
in 2015.
3. Goods were purchased in
2015 and the transaction
recorded in that year;
however, the goods were
not included in the
December 31 inventory as
they should have been.
were excluded from
December 31 inventory,
and the transaction was
recorded early in 2016.

CHAPTER SIX
CP 66
1. a.
b.
2.

CHAPTER SIX
CP 67
1. LCNRV on a unitbyunit basis:
2. LCNRV on a group inventory basis:
Conclusion:

CHAPTER SIX
CP 68
1.
$ $ %
Sales
Cost of goods sold
Opening inventory
Purchases
Cost of goods available
Ending inventory
Cost of goods sold
Gross profit
(a) Gross profit calculation
(b) Cost of goods sold calculation
(c) Estimated ending inventory calculation
2.

CHAPTER SIX
CP 69
1.
At retail At cost
Sales
Cost of goods sold
Opening inventory
Purchases
Transportation-in
Cost of cost of goods available
Less: Ending inventory
Cost of goods sold
Gross Profit
2.
CP 610
At retail At cost
Sales
Cost of goods sold
Opening inventory
Purchases
Transportation-in
Cost of goods sold
Gross Profit

CHAPTER SIX
CP 611
1 2 3 4
Opening inventory
Purchases
(Ending inventory)
Cost of goods sold
CP 612
FIFO Spec. ident. Wtd. Avg.

Sales
Cost of goods sold
Opening inventory
Purchases
Less: Ending inv.
Cost of goods sold
Gross profit
Calculations

CHAPTER SIX
CP 613
1. Specific identification ending Inventory
2. FIFO ending inventory
3. Weighted average ending inventory
4. Specific identification cost of goods sold

CHAPTER SIX
CP 613 continued
5.
6. Weighted average cost of goods sold

CHAPTER SIX
CP 614
1. a. FIFO ending inventory
b. Specific identification ending inventory
c. Weighted average
2.
FIFO Spec. ident. Wtd. Avg.

Sales
Cost of goods sold
Opening inventory
Purchases
Less: Ending inv.
Cost of goods sold
Gross profit

CHAPTER SIX
P 61
1. COGS calculation

2.
3.

CHAPTER SIX
P 62
1. a. FIFO

The journal entry would be

Date

CHAPTER SIX
P 62 continued
b. Weighted average

Weighted average calculations

CHAPTER SIX
P 62 continued
The journal entry would be

Date
2.
Wtd.
FIFO avg.
Sales
COGS
Gross profit
Observation

CHAPTER SIX
P 62 continued
3.
P 63
1.
Product A

CHAPTER SIX
P 63 continued
2.
Product B
3. Total ending inventory at December 31, 2016:
Product A
Product B
Total
4.

CHAPTER SIX
P 63 continued
1.
P 64
2. a. FIFO


CHAPTER SIX
P 64 continued
1. b. Specific identification


CHAPTER SIX
P 64 continued
1. c. Weighted Average


CHAPTER SIX
P 64 continued
2. FIFO journal entries

Date

CHAPTER SIX
P 64 continued
3.
Spec. Wtd.
FIFO ident. Avg.
COGS
Ending inventory
Total
Observation
P 65
1.
2.

CHAPTER SIX
P 66
Unit Group
Item Cost Market LCNRV LCNRV
A
B
C
D
Conclusion
P 67
1.
2016 2017
Net Nets
realizable Unit basis realizable Unit basis
Item Cost value (LCNRV) Cost value (LCNRV)
Product X
Product Y
Product Z
Total
Calculations

CHAPTER SIX
P 67 continued
2. 2016
Unit basis Group basis

(LCNRV) (LCNRV) Cost basis
Sales
Cost of goods sold
Opening inventory
Purchases
Less: Ending inv.
Cost of goods sold
Gross profit
3. 2017
Unit basis Group basis

(LCNRV) (LCNRV) Cost basis
Sales
Cost of goods sold
Opening inventory
Purchases
Less: Ending inv.
Cost of goods sold
Gross profit
4.
5.

CHAPTER SIX
P 68
1.
Sales
Less: Sales returns
Net sales
Cost of goods sold:
Opening inventory
Purchases
Less: Purchase returns
Transportation in
Cost of goods sold
Gross profit
Calculations
2.

CHAPTER SIX
P 69
1. Retail inventory method
Sales At retail At cost, should be

Less: Sales returns
Net sales
Cost of goods sold:
Opening inventory
Purchases
Transportation in
Cost of goods sold
Gross profit
Calculations
2.
3.

CHAPTER SIX
P 69 continued
4.

CHAPTER SIX
P 610
a. Specific identification
2016 2017 2018

Sales
Cost of goods sold
Opening
inventory
Purchases
(Ending
inventory)
Cost of goods sold
Gross profit/net income
b. FIFO
2016 2017 2018

Sales
Cost of goods sold
Opening
inventory
Purchases
(Ending
inventory)
Cost of goods sold
c. Weighted average
2016 2017 2018

Sales
Cost of goods sold
Opening
inventory
Purchases
(Ending
inventory)
Cost of goods sold

CHAPTER SIX
P 611
1.
Spec. Weighted
Units FIFO ident. average
Opening inventory
Purchases
2.
FIFO =
Specific identification =
Weighted average
Calculations
3.
Spec. Weighted
Units FIFO ident. average
(Ending inventory)
Cost of goods sold
Calculations

CHAPTER SIX
P 611 continued
4. Observations based on response 3 above:
5.
P 612
1.
2.
3.
FIFO Weighted average

Sales
Cost of goods sold
Opening inventory
Purchases
Cost of goods sold
Gross profit

CHAPTER SIX
P 612 continued
Observation
4.

CHAPTERSIX
AssigningCoststoMerchandize Name
P613
1.Totalpurchases
Jan. 7 8,000units@$12.00 96,000

Mar. 30 9,000units@$12.40 111,600
May 10 12,000units@$12.00 144,000
Jul. 4 16,000units@$12.60 201,600
Sept. 2 6,000units@$12.80 76,800
Dec. 14 7,000units@$12.70 88,900
Total
Itemsremaininginendinginventory:
FIFO
Date Quantity Unitcost Totalcost

Specificidentification

436 CHAPTERSIX/AssigningCoststoMerchandize
CHAPTERSIX
P613continued
Weightedaveragecalculations:
Weightedaverage
Jan.1
Jan.7
Mar.30
May10
July4
Sept.2
Dec.14
Totals
Perunitweightedaverage,andtotalcostinendinginventory:
2. Basedontheabovecalculationsasappropriate,thegrossprofitwouldbe:
FIFO SpecificIdent. Weightedaverage

Sales
Costofgoodssold
Openinginventory
Purchases
Costofgoodsavailable
Less:Endinginventory
Costofgoodssold
Grossprofit
3. Observations
CHAPTERSIX/AssigningCoststoMerchandize 437
CHAPTER SIX
P 614
1. to 3.
Rising prices Falling prices

Wtd. Wtd.
FIFO avg. FIFO avg.
Sales $5,000 $5,000 $5,000 $5,000
Cost of goods sold
Opening inventory $1,000
Purchases 6,000
Cost of goods avail. 7,000
Ending inventory 3,000
Cost of goods sold 4,000
Gross profit $1,000 $ $ $
Calculations
4.

CHAPTER SIX
AP 61
1. a. FIFO

Jan. 1 200 $1 $200

CHAPTER SIX
AP 61 continued

Jan. 1 200 $1 $200

CHAPTER SIX
AP 61 continued
c. Weighted Average

Jan. 1 200 $1 $200
2.

CHAPTER SIX
AP 61 continued
3.
AP 62
1.a. FIFO


CHAPTER SIX
AP 62 continued
1.b. Weighted Average


CHAPTER SIX
AP 62 continued
1. a. FIFO

Date
b. Weighted average

Date
2. Observation
3.

CHAPTER SIX
AP 63
1.
Product A
Product B

CHAPTER SIX
AP 63 continued
Product C
2. Ending inventory at December 31, 2016:
Product A
Product B
Product C
Total
3.

CHAPTER SIX
AP 64
1. a. FIFO


CHAPTER SIX
AP 64 continued
1. b. Specific identification


CHAPTER SIX
AP 64 continued
1. c. Weighted Average


CHAPTER SIX
AP 64 continued
2. FIFO journal entries

Date

CHAPTER SIX
AP 64 continued
3.
Spec. Wtd.
FIFO ident. avg.
COGS
Ending inv.
Total
Conclusion

CHAPTER SIX
AP 65
a. FIFO

Jan. 1 6 $400 $2,400

CHAPTER SIX
AP 65 continued

Jan. 1 6 $400 $2,400

CHAPTER SIX
AP 65 continued
c. Weighted average

Jan. 1 6 $400 $2,400

CHAPTER SIX
AP 65 continued
2. Journal entries to record sales

Date
FIFO
Specific Identification
Weighted Average

CHAPTER SIX
AP 65 continued
Journal entries to record the cost of goods sold for the January 29 sale

Date

CHAPTER SIX
AP 65 continued
Calculations

CHAPTER SIX
AP 66
1. a. The partial income statement and general ledger account, correctly stated, should show
Merchandize Inventory 2016 2017

Op. Bal. Sales
2016 Purch. 2016 COGS COGS
2016 Bal. Gross Profit
2017 Purch. 2017 COGS
2017 Bal.
b. The partial income statement and general ledger account, incorrectly stated, actually shows
Merchandize Inventory 2016 2017

Op. Bal. Sales
2016 Purch. 2016 COGS COGS
2016 Bal. Gross Profit
2017 Purch. 2017 COGS
2017 Bal.
2.

CHAPTER SIX
AP 67
1.
Unit Group
Item Units Cost Market LCNRV LCNRV
a. LCNRV applied to each item
b. LCNRV applied to each category
c. LCNRV applied to entire inventory

CHAPTER SIX
AP 67 continued
2.

CHAPTER SIX
AP 68
Sales
Less: Sales returns
Net sales
Cost of goods sold:
Opening inventory
Purchases
Transportation in
Cost of goods sold
Gross profit
Calculations

CHAPTER SIX
AP 69
1. Retail inventory method
Sales At retail At cost, should be

Less: Sales returns
Net sales
Cost of goods sold:
Opening inventory
Purchases
Transportation in
Cost of goods sold
Gross profit
Calculations
2. Inventory lost
3.

CHAPTER SIX
AP 610 1.
a. FIFO Ending inventory Cost of goods sold

Total Total
Quant. cost Quant. cost
b. Weighted average Ending inventory Cost of goods sold

Total Total
c. Specific identification Ending inventory Cost of goods sold

Total Total

CHAPTER SIX
AP 610 continued
2.
AP 611
1. FIFO ending inventory consists of:
2. Specific identification ending inventory consists of:
3. Weighted average ending inventory consists of:

CHAPTERSIX
AP612
1.a.Specificidentification
PartA PartB
2019 201619
Net Net
income income
2016 2017 2018 (Part6) (Part7)
Sales
Costofgoodssold:
Openinginventory
Purchases
(Endinginventory)
Costofgoodssold
Grossprofit/netincome
b.Weightedaverage
PartA PartB
2019 201619
Net Net
income income
2016 2017 2018 (Part6) (Part7)
Sales
Costofgoodssold:
Openinginventory
Purchases
(Endinginventory)
Costofgoodssold

CHAPTERSIX/AssigningCoststoMerchandize 465
CHAPTERSIX
AP612continued
c.FIFO
PartA PartB
2019 201619
Net Net
income income
2016 2017 2018 (Part6) (Part7)
Sales
Costofgoodssold:
Openinginventory
Purchases
(Endinginventory)
Costofgoodssold
PartA
1.
2.
3.
466 CHAPTERSIX/AssigningCoststoMerchandize
CHAPTER SIX
AP 612 continued
4.
5.
Part B
6. comments
7. comments

CHAPTER SIX
AP 613
1. FIFO:
2. Specific identification:
3. Weighted average:

CHAPTER SIX
AP 614
1.
Sp. ident/ FIFO/ Wtd. avg./

Units Perpetual Perpetual Perpetual
Cost of goods sold
Op. inventory
Purchases
Sales at cost
Purchases
Sales at cost
End. Inventory
Cost of goods sold
Calculations

CHAPTER SIX
AP 614 continued
Calculations continued
AP 614 continued
2.
Sp. ident/ FIFO/ Wtd. avg./

Units Perpetual Perpetual Perpetual
Cost of goods sold
Op. inventory
Purchases
Sales at cost
Purchases
Sales at cost
End. Inventory
Cost of goods sold

CHAPTER SIX
Calculations
3.

CHAPTER SIX
AP 615
1. Perpetual inventory, weighted average
Quantity x unit Total

Date Transaction price Cost Average

CHAPTER SIX
AP 615 continued
2. Periodic inventory, weighted average
Quantity x unit Total

Date Transaction price Cost Average

CHAPTER SIX
SP 61
1. FIFO


CHAPTER SIX
SP 61 continued
b. Specific identification:


CHAPTER SIX
SP 61 continued
1. a. Effect of FIFO on income statement:
b. Effect of FIFO on balance sheet:
3.

Date

CHAPTER SIX
SP 62
1.
January February
Sales
Cost of goods sold
Opening inventory
Purchases
Less: Ending inv.
Cost of goods sold
Gross profit
2. Gross profit percentage
3.
March April
Sales
Cost of goods sold
Opening inventory
Purchases
Less: Ending inv.
Cost of goods sold
Gross profit
Gross profit percentage
Calculations

CHAPTER SIX
SP 62 continued
4.
5.

CHAPTER SIX
SP 63
Part A
1.
At retail At cost
Sales
Less: Sales ret. and allowances
Net sales
Cost of goods sold
Opening inventory
Purchases
Less: Purch. ret. and allow.
Transportation-in
Cost of goods sold
Gross Profit
Calculations

CHAPTER SIX
SP 63 continued
2.
3.
4.

CHAPTER SIX
SP 63 continued
Part B
2015 2016 2017 Total

Sales
Cost of goods sold
Gross profit
Gross profit percentage
Sales
Less: Sales returns
Net sales
Cost of goods sold:
Opening inventory
Purchases
Transportation in
Cost of goods sold
Gross profit
Calculations

CHAPTER SIX
SP 64
1.
At retail At cost
Sales
Less: Sales ret. and allowances
Net sales
Cost of goods sold
Opening inventory
Purchases
Less: Purch. ret. and allow.
Transportation-in
Cost of goods sold
Gross Profit
Calculations
2. Gross profit

CHAPTER SIX
3.
SP 65
1a. FIFO


CHAPTER SIX
SP 65 continued
1b. Specific identification


CHAPTER SIX
SP 65 continued
1c. Weighted average


CHAPTER SIX
SP 65 continued
2. FIFO/perpetual

Date

CHAPTER SIX
SP 65 continued
3. FIFO/periodic

Date

CHAPTER SIX
SP 66
1.
2016 2017 2018

Sales
Cost of goods sold
Opening inventory
Purchases
Less: Ending inv.
Cost of goods sold
Gross profit
2.
3.

CHAPTER SIX
SP 67
1.
FIFO/ Sp. ident./ Weighted

Units Periodic Periodic Average
Opening inventory
Purchases
Ending inventory
Cost of goods sold
Calculations

CHAPTER SIX
SP 67 continued
2.
FIFO/ Sp. Ident./ Weighted

Periodic Periodic Average
Sales
Cost of goods sold
Gross profit
3.

CHAPTER SEVEN
Cash and Receivables Name
Concept Self-check
CHAPTER SEVEN / Cash and Receivables 491

CHAPTER SEVEN
492 CHAPTER SEVEN / Cash and Receivables

CHAPTER SEVEN

CHAPTER SEVEN
CP 71

Date

CHAPTER SEVEN
CP 72
Bank Reconciliation
Cash per general ledger, Dec. 31 Cash per bank statement, Dec. 31
Add: Add:
Less: Less:
Adjusted Cash balance, Dec. 31 Adjusted Cash balance, Dec. 31

Date

CHAPTER SEVEN
CP 73
Bank Reconciliation
Add: Add:
Less: Less:

Date

CHAPTER SEVEN
CP 74
1.

Date

CHAPTER SEVEN
CP 74 continued
2.
CP 75
1.
2.
3.
Partial Balance Sheet

CHAPTER SEVEN
CP 76
1.
2.
CP 77
1. a.

Date
b.

CHAPTER SEVEN
CP 77 continued
2. a.

Date
b.
3.

CHAPTERSEVEN
CashandReceivables Name
CP78
1. a.
b.
2. a.
b.
3.
CHAPTERSEVEN/CashandReceivables 501
CHAPTER SEVEN
CP 79
1. November 30, 2015

Date
2. December 31, 2015

Date
3. February 1, 2016

Date

CHAPTER SEVEN
P 71
1. 2015

Date
2.

CHAPTER SEVEN
P 72
1. ____ The company has received a $3,000 loan from the bank, that was deposited into its
bank account but was not recorded in the books of the company.
____ A $250 cheque was not returned with the bank statement though it was paid by the
bank.
____ Cheques amounting to $4,290 shown as outstanding on the November reconciliation

still have not been returned by the bank.
____ A collection of a note receivable for $1,000 made by the bank has not been previously
reported to Goertzen. This includes interest earned of $50.
____ The bank has erroneously charged Goertzen with an $1,100 cheque which should have
been charged to Gagetown Ltd.
____ A $350 cheque made out by Fynn Company and deposited by Goertzen has been
returned by the bank marked NSF; this is the first knowledge Goertzen has of this
action.
____ A cheque for $840 was erroneously recorded as $730 in the company records.
____ A $600 bank deposit of December 31 does not appear on the bank statement.
____ Bank service charges amounting to $75 were deducted from the bank statement but
not yet from the company records.

CHAPTER SEVEN
P 72 continued
2.
Bank Reconciliation
Add: Add:
Less: Less:

CHAPTER SEVEN
P 72 continued
3.

Date

CHAPTER SEVEN
P 73
1.
Bank Reconciliation
Add: Add:
Less: Less:

CHAPTER SEVEN
P 73continued
2.
Date
P 74
1.
2.

CHAPTER SEVEN
P 75
1. 2015
Date
2016 a.
Date
2016 b.
Date
2016 c.
Date

CHAPTER SEVEN
P 75 continued
2016 d.
Date
2016 e.
Date
Calculations

CHAPTER SEVEN
P 75 continued
2.
Allowance for Doubtful Accounts
P 76
Part A: 2015
1.
Date

CHAPTER SEVEN
P 76 continued
2. Calculation of uncollectible amount at December 31, 2015
Est.
Accounts Est. loss Uncollectible
Age (days) Receivable Percentage Amount
1-30
31-60
61-90
91-120
Over 120
Date

CHAPTER SEVEN
P 76 continued
Part B: 2016
Date
Est.
1-30
31-60
61-90
91-120
Over 120

CHAPTER SEVEN
P 77
1. a.
Date
b.
Date
2.
3. a.
Date

CHAPTER SEVEN
P 77 continued
3. b.
Date
c. Calculation of uncollectible amount at December 31, 2016
Est.
1-30
31-60
61-90
91-120
Over 120
Date

CHAPTER SEVEN
P 78
1.
Date
2.
Date
3.
Date

CHAPTER SEVEN
P 79
1.
Date

CHAPTER SEVEN
P 79 continued
2.a
Date
b.
Date
3.
4.

CHAPTER SEVEN
P 710
1.
Name 1-30 31-60 61-90 91-120 121-150 +150
2.
Est.
1-30
31-60
61-90
91-120
121-150
Over 150
3.
Date

CHAPTER SEVEN
P 711
1.
Date
2.
Est.
1-30
31-60
61-90
91-120
Over 120

CHAPTER SEVEN
P 711 continued
Date

CHAPTER SEVEN
P 712
1.
Date
2.
Date
3.
Date

CHAPTER SEVEN
AP 71
1.
Date
2.

CHAPTER SEVEN
AP 72
1. ____ A collection of a $2,000 note receivable was not previously reported to Edison Life.
This included interest earned of $50.
____ A certified cheque amounting to $500 and dated January 15 was not returned with the
January bank statement.
____ The January 31 deposit of $1,000 arrived too late at the bank to be included in the
January bank statement.
____ A $225 cheque from Go-Slow Truckers has been returned with the bank statement,
marked NSF; this is the first knowledge Edison Life has of this.
____ A cheque received for $540 was recorded as $450 in the company records.
____ Service charges of $13 were deducted on the bank statement. These have not yet
been recorded in the company records.
____ A $10,000 loan received from the bank was included in the bank statement but not in
the companys general ledger.
____ A $150 December cheque had still not cleared the bank.
____ The bank credited Edison Life with a $2,000 deposit that should have been credited to
Alva Life Insurance.

CHAPTER SEVEN
AP 72 continued
2.
Bank Reconciliation
Add: Add:
Less: Less:

CHAPTER SEVEN
AP 73
1.
Bank Reconciliation
Add: Add:
Less: Less:

CHAPTER SEVEN
AP 73 continued
2.
Date

CHAPTER SEVEN
AP 74 1.
Bank Reconciliation
Add: Add:
Less: Less:
2.
Date

CHAPTER SEVEN
AP 75
Est.
1-30
31-60
61-90
91-120
Over 120
Date

CHAPTER SEVEN
AP 76
1.
Date

CHAPTER SEVEN
AP 76 continued
2.
Est.
1-30
31-60
61-90
91-120
Over 120
Date

CHAPTER SEVEN
AP 77
Part A:
1.
Date
2.
Est.
1-30
31-60
61-90
91-120
Over 120
Date

CHAPTER SEVEN
AP 77 continued
Part B:
a.
Date
b.
Date
c.
Date

CHAPTER SEVEN
AP 77 continued
d.
Est.
1-30
31-60
61-90
91-120
Over 120
Date

CHAPTER SEVEN
AP 78
a.
Date
b.
Date

CHAPTER SEVEN
AP 78 continued
c.
Date

CHAPTER SEVEN
AP 79
1.
2.
Date
3.
4.

CHAPTER SEVEN
AP 710
1. a
Date
b.
Date
c.
Date
Calculations, if any

CHAPTER SEVEN
AP 710 continued
2.
AP 711
1. 2016
Date
1. 2017
a.
Date

CHAPTER SEVEN
AP 711 continued
b.
Date
c.
Date
d.
Date

CHAPTER SEVEN
AP 711 continued
1.e.
Date
2.

CHAPTER SEVEN
AP 712
1. a.
Date
b.
Date
2. a.
Date

CHAPTER SEVEN
AP 712 continued
2. b.
Date

CHAPTER SEVEN
AP 712 continued
2. c.
Date
Est.
1-30
31-60
61-90
91-120
Over 120

CHAPTER SEVEN
AP 713
1.
Date
2.
Date

CHAPTER SEVEN
DP 71
1.
Bank Reconciliation
Add: Add:
Less: Less:
Amount of cash taken by Sly

CHAPTER SEVEN
DP 71 continued
2. He concealed the theft as follows:

CHAPTER SEVEN

CHAPTER EIGHT
Long-lived Assets Name
Concept Self-check
CHAPTER EIGHT / Long-lived Assets 549

CHAPTER EIGHT
550 CHAPTER EIGHT / Long-lived Assets

CHAPTER EIGHT

CHAPTER EIGHT

CHAPTER EIGHT

CHAPTER EIGHT
CP 81
____Battery purchased for truck

____Cash discount received on payment for equipment
____Commission paid to real estate agent to purchase land
____Cost of equipment test runs
____Cost to remodel building
____Cost to replace manual elevator with automatic elevator
____Cost of sewage system
____Equipment assembly expenditure
____Expenditures for debugging equipment
____Installation of airconditioner in automobile
____Insurance paid during construction of building
____Legal fees associated with court case to defend title to land purchased
____Oil change for truck
____Payment for landscaping
____Payment to demolish a derelict building on land purchased
____Expenditures for removal of derelict structures
____Repair made to building after moving in
____Repair of collision damage to truck
____Repair of torn seats in automobile
____Replacement of rusted fender on automobile
____Replacement of transmission on automobile
____Special floor foundations for installation of equipment
____Tires purchased for truck
____Transportation expenditures to bring equipment to plant.
Assumptions

CHAPTER EIGHT
CP 82
1.
2.
Year Straight-line DDB
Conclusion

CHAPTER EIGHT
CP 83
1. Journal entries to record the sale on the books of:
a. Freeman:
Date
b. The developer:
Date
Calculation of gain/loss
2.

CHAPTER EIGHT
CP 84
1. Straightline method:
2. Doubledeclining balance method:
CP 85
2. Usage method:

CHAPTER EIGHT
CP 86
1. Jan. 31, 2016
Date
2. Dec. 31, 2016
Date
Dec. 31, 2017
Date

CHAPTER EIGHT
CP 87

CHAPTER EIGHT
CP 88
1. Equipment sold for $50,000:
Date
Date

CHAPTER EIGHT
CP 88 continued
Date

CHAPTER EIGHT
CP 89
Date

CHAPTER EIGHT
CP 810
1.
Depreciation
Method Calculation Year 1 Year 2 Year 3
A. Straight-line
B. Declining balance
2.
3.

CHAPTER EIGHT
CP 811
1. 2018
Date
2. 2018
Date

CHAPTER EIGHT
CP 811 continued
3. 2018
Date

CHAPTER EIGHT
CP 812
1.
2. 2017
Date

CHAPTER EIGHT
CP 812 continued
3.
Accumulated Depreciation Equipment Acct. No. 193

Date DR
Description Folio Debit Credit CR Balance
Balance forward CR 2,250
4.
5.

CHAPTER EIGHT
CP 813
1. a. Jan. 1, 2016
Date
b. Dec. 31, 2016
Date
c. March 1, 2017
Date

CHAPTER EIGHT
CP 813 continued
d. Dec. 31, 2017
Date
2.a. March 3, 2018
Date

CHAPTER EIGHT
CP 813 continued
b. March 3, 2018
Date

CHAPTER EIGHT
CP 814
1. Jan. 1, 2016
Date
2. Dec. 31, 2016
Date

CHAPTER EIGHT
CP 814 continued
3. Dec. 31, 2017
Date
4.a. Dec. 2, 2018
Date

CHAPTER EIGHT
CP 814 continued
4. b. Dec. 2, 2018
Date
P 81
Cost of lots:

CHAPTER EIGHT
P 82
Invoice price of new machine, net of cash discount offered

Cash discount on the above, which has not yet been taken (assumes the company
follows this treatment)
Anticipated first years savings in operating costs from use of new machine
Twoyear service contract on operations of new machine paid in full
Cost of materials used while testing new machine
Cost of installing sound insulation in wall near machine so that nearby office
employees will not be disturbed by it
Cost of removing machine that new machine replaces.
Explanations/assumptions

CHAPTER EIGHT
P 83
1.
Date

CHAPTER EIGHT
P 83 continued
1. continued
Date

CHAPTER EIGHT
P 83 continued
2.
P 84
1.
2.
3.
4.

CHAPTER EIGHT
P 85
1. Depreciation expense
Year Straight-line DDB Usage

2016
2017
2018
2019
Totals
Calculations
Double-declining balance calculations

Year Carrying DDB Depn
Amount Rate Expense

CHAPTER EIGHT
P 85 continued
2.
3.
P 86
1. a. Usage
b. Straightline
c. Doubledeclining balance

CHAPTER EIGHT
P 86 continued
2. Depreciation Carrying
expense amount
a. Usage
b. Straightline
c. Doubledeclining balance
3.
P 87
1. a. Straight-line method
b. Double-declining balance method
2. a. Straight-line depreciation
Date

CHAPTER EIGHT
P 87 continued
b. Declining balance method
Date
3.

CHAPTER EIGHT
P 88
1.
2.
3.
Date

CHAPTER EIGHT
P 88 continued
4.
Date
Calculations

CHAPTER EIGHT
P 89
Part A
1.
Date
2.
Date

CHAPTER EIGHT
P 89
Part B
1.
Date
2.
Date

CHAPTER EIGHT
P 810
1. a.
Date
b.
Date

CHAPTER EIGHT
P 810 continued
c.
Date
d.
Date

CHAPTER EIGHT
P 810 continued
1.d. continued
Date
2.

CHAPTER EIGHT
AP 8-1
Cost of land
Cost of building
Cost of equipment
Assumptions/rationale

CHAPTER EIGHT
AP 82
a.
Date
b.
Date
c.
Date

CHAPTER EIGHT
AP 82 continued
d.
Date
e.
Date

CHAPTER EIGHT
AP 83
1.
Method Calculations 2016 2017 2018 2019 2020 Total

Straightline
Doubledec. bal.
Additional calculations
2. a.
b.

CHAPTER EIGHT
AP 84
1.
Depreciation expense Carrying amount

Method Calculations 2016 2017 2018 2016 2017 2018
Straightline
Doubledec. bal.
Usage
Additional calculations if needed
2.

CHAPTER EIGHT
AP 85

2016 2017 2018

2016 2017 2018

CHAPTER EIGHT
AP 85 continued
Declining balance method:
1. Partial Income Statement

2016 2017 2018

2016 2017 2018
3.

CHAPTER EIGHT
AP 86
1.
2. a. Straight-line method:
Date

CHAPTER EIGHT
AP 86 continued
b. Declining balance method:
Date
Calculations
3.

CHAPTER EIGHT
AP 87
Assumptions
1.
Date
2.
Date

CHAPTER EIGHT
AP 87 continued
3. a.
Date
b.
Date
4.
Date

CHAPTER EIGHT
AP 87 continued
5. a.
Date
Calculations

CHAPTER EIGHT
AP 87 continued
5. b.
Date
Calculations

CHAPTER EIGHT
AP 88
1.
Date

CHAPTER EIGHT
AP 88 continued
2.
Equipment Acct. No. 183

Date DR

Date DR

CHAPTER EIGHT
AP 88 continued
3.
Date
4.
Date
Calculations

CHAPTER EIGHT
AP 88 continued
4. continued

Date DR
AP 89
1.
2.

CHAPTER EIGHT
AP 89 continued
3.
AP 810
1.
Depreciable 2016 2017

Machine amount depreciation depreciation
A
B
C
D
Calculations

CHAPTER EIGHT
AP 810 continued
2. 2018
Date

CHAPTER EIGHT
AP 810 continued
2. 2019
Date

CHAPTER NINE
Debt Financing: Current and Non-current Liabilities Name
Concept Self-check
CHAPTER NINE / Debt Financing: Current and Non-current Liabilities 609

CHAPTER NINE
610 CHAPTER NINE / Debt Financing: Current and Non-current Liabilities

CHAPTER NINE
CP 91
Date
CP 92
Date

CHAPTER NINE
CP 93
1. 2016
Date
Calculations

CHAPTER NINE
CP 93 continued
2. 2017
Date

CHAPTER NINE
CP 94
1.
Date
2.
Date
3.
Date
4.

CHAPTER NINE
CP 95
1.
Date
2.
Date
3.
Date

CHAPTER NINE
CP 96
1.
Date
2.
Date
3.
Date

CHAPTER NINE
CP 96 continued
4. a.
Date
b.
Date
c.
Date

CHAPTER NINE
CP 97
1.
Date
2.
Date
3.

CHAPTER NINE
CP 98
CP 99
1. a. 2019
Date
b.
Date

CHAPTER NINE
CP 99 continued
2.
Loan Repayment Schedule
A B C D E
Year Beginning (D B) (A C)
ended loan Interest Reduction of Total loan Ending loan
Dec. 31 balance expense loan payable payment balance
3.
Date

CHAPTER NINE
CP 910
1.
Date
2.
Lease Repayment Schedule
A B C D E

CHAPTER NINE
CP 910 continued
3.
Balance Sheet
P 91
1. a. 2016
Date
b.
Date

CHAPTER NINE
P 91 continued
c.
Date
d.
Date
e.
Date

CHAPTER NINE
P 91 continued
2. f. 2016
Date
g.
Date

CHAPTER NINE
P 91 continued
h.
Date
3. Current liabilities at January 31:

CHAPTER NINE
P 92 1.
SHAREHOLDERS
ASSETS LIABILITIES EQUITY
Corp. Inc. Tax.
Cash Bank Loan Pay. Share Capital
Sales
Accounts
Receivable Accounts Payable Interest Payable Cost of Goods Sold
Merchandize Empee Inc. Tax

Inventory Salaries Payable Pay. Salaries Expense
Employ. Ins. Pay. Govt Pens. Pay. Employ. Ins. Exp.
GST Payable Govt Pension Exp.
Interest Expense
Corp. Taxes Exp.

CHAPTER NINE
P 92 continued
2.
Income Statement

CHAPTER NINE
P 92 continued
Balance Sheet

CHAPTER NINE
P 93
1.a.
Date
b.
Date
c.
Date
d.
Date

CHAPTER NINE
P 93 continued
e.
Date
To record salaries payable as follows:
Deductions
Gross Income Employ. Govt Comp. Total. Net
pay taxes insur. pension health deduct. pay
Employee
Employer
f.
Date

CHAPTER NINE
P 93 continued
g.
Date

CHAPTER NINE
P 93 continued
2.
Acct. Unadjusted Adjusting Entries Adjusted

101 Cash
150 Merch. inventory
151 Parts inventory
212 Est. current liab.
213 Est. warranty liab.
226 Salaries payable

227 Empee inc. tax. pay.
228 Emp. insur. pay.
229 Govt pension pay.
230 Co. health ins. pay.
238 GST payable
248 Unearned rent revenue
260 Corp. inc. tax. pay.
320 Share capital
440 Rent earned
500 Sales
570 Cost of goods sold
653 Professional fess

656 Salaries expense
658 Govt emp. insur.

659 Govt pens. exp.
660 Co. health insur. exp.
678 Warranty expense
830 Corp. inc. tax. expense

CHAPTER NINE
P 93 continued
Income Statement

CHAPTER NINE
P 93 continued
Balance Sheet

CHAPTER NINE
P 94
1.a.
Date
b.
Date
2.
A B C D E

CHAPTER NINE
P 94 continued
3.
Date
4.

CHAPTER NINE
P 95
1. 2016
Date
2.
A B C D E

CHAPTER NINE
P 95 continued
3.
Balance Sheet
AP 91
1.a.
Date
b.
Date

CHAPTER NINE
AP 91 continued
c.
Date
d.
Date
e.
Date

CHAPTER NINE
AP 91 continued
f.
Date
Deductions
Employee
Employer
g.
Date

CHAPTER NINE
AP 91 continued
h.
Date
i.
Date
j.
Date

CHAPTER NINE
AP 91 continued
k.
Date
l.
Date
m.
Date

CHAPTER NINE
AP 91 continued
n.
Date
o.
Date

CHAPTER NINE
AP 91 continued
3. p.
Date
q.
Date
r.
Date

CHAPTERNINE
DebtFinancing:CurrentandNoncurrentLiabilities Name
2.and3
ASSETS LIABILITIES SHAREHOLDERSEQUITY

Cash AccountsPayable ShareCapital Sales

CostofGoodsSold

AccountsReceivable InterestPayable ProfessionalFees

MerchandizeInventory EmpeeInc.Tax.Pay. Salaries Expense

Land GovtPensionPay. GovtPension Expense

CHAPTERNINE/DebtFinancing:CurrentandNoncurrentLiabilities 645
CHAPTER NINE
AP 91 continued
2. and 3 continued
Building Co. Health Ins. Pay. Co. Health Ins. Exp.
Acc. Depn Bldg. Co. Pension Pay. Co. Pension Exp.
GST Payable Corp. Inc. Tax. Exp.
Corp. Inc. Tax. Pay.
Bank loan Non-

current
Finance Lease

CHAPTER NINE
AP 91 continued
4.
Income Statement

CHAPTER NINE
AP 91 continued
Balance Sheet

CHAPTER NINE
AP 92
1.a.
Date
b.
Date
c.
Date

CHAPTER NINE
AP 92 continued
d.
Date
e.
Date
Deductions
Employee
Employer

CHAPTER NINE
AP 92 continued
f.
Date
g.
Date
h.
Date

CHAPTER NINE
AP 92 continued
i.
Date
j.
Date
k.
Date

CHAPTER NINE
AP 92 continued
No. Account Unadjusted Adjusted

Trial Balance Adjusting Entries Trial Balance
101 Cash 5,000
110 Accounts receivable 6,000
150 Merch. inventory 100,000
151 Parts inventory 5,000
180 Land 300,000
181 Building 100,000
183 Equipment 50,000
191 Acc. depn bldg. 10,000
193 Acc. depn equip. 5,000
210 Accounts payable 37,000
212 Est. current liab. -0-
220 Note payable -0-

213 Est. warranty liab. 25,000
222 Interest payable -0-
226 Salaries payable 2,000

227 Empee inc. tax pay. 300
228 Emp. insur. payable 120
229 Govt pension payable 300
231 Union dues payable 200
238 GST payable 2,000
242 Unearn. commiss. rev. 3,000

260 Corp. inc. tax payable 22,000
275 Mortgage payable 200,000
276 Finance lease 40,000
320 Share capital 8,000
340 Retained earnings 13,000
350 Dividends 10,000
Continued on next page

CHAPTER NINE
AP 92 continued
No. Account Unadjusted Adjusted

Trial Balance Adjusting Entries Trial Balance
410 Commissions earned 5,000
500 Sales 911,080
570 Cost of goods sold 482,500
621 Depn exp. bldg. -0-
623 Depn exp. equip. -0-
632 Interest expense 17,500
653 Professional fees -0-
656 Salaries expense 100,000

658 Govt emp. insur. exp. 4,000
659 Govt pension expense 10,000
678 Warranty expense -0-
830 Corp. inc. tax expense -0-
1,237,000 1,237,000

CHAPTER NINE
AP 92 continued
3.
Income
Statement

CHAPTER NINE
AP 92 continued
Balance Sheet

CHAPTER NINE
AP 92 continued
4.
AP 93
1.a.
Date
b.
Date

CHAPTER NINE
AP 93
2.
A B C D E
3.
Date

CHAPTER NINE
AP 93 continued
4.
Balance Sheet

CHAPTER NINE
AP 94
1.
Date
2.
A B C D E

CHAPTER NINE
AP 94 continued
3.

CHAPTER NINE

CHAPTER TEN
Debt Financing: Bonds Name
Concept Self-check
CHAPTER TEN / Debt Financing: Bonds 663

CHAPTER TEN
664 CHAPTER TEN / Debt Financing: Bonds

CHAPTER TEN

CHAPTER TEN

CHAPTER TEN

CHAPTER TEN

CHAPTER TEN
CP 101
1. If the market rate of interest is 15% and the bond interest rate is 10%, the
bonds will sell at a ______________.
2. If a bonds interest rate is 10% and the market rate of interest is 8%, the bonds
will sell at a ______________.
3. In computing the carrying amount of a bond, unamortized ______________ is

subtracted from the face value of the bond.
4. In computing the carrying amount of a bond, unamortized ______________ is

added to the face value of the bond.
5. If a bond sells at a ______________, an amount in excess of the face value of

the bond is received on the date of issuance.
6. If a bond sells at a ______________, an amount less than the face value of the
bond is received on the date of issuance.
CP 102
1. a. The issuance of bonds:
Date

CHAPTER TEN
CP 102 continued
b. The interest payment:
Date
c. The amortization of the discount:
Date
2.

CHAPTER TEN
CP 102 continued
3.
4. Retirement of the bonds:
Date

CHAPTER TEN
CP 102 continued
5. Calling of the bonds:
Date
CP 103
1. a. The issuance of the bonds:
Date
b. The interest payment:
Date

CHAPTERTEN
DebtFinancing:Bonds Name
CP103continued
c. Theamortizationofthepremium:
Date

2.
3.

PartialBalanceSheet

CHAPTERTEN/DebtFinancing:Bonds 673
CHAPTER TEN
CP 103 continued
4. Calling of the bonds:
Date
CP 104
Date
CP 105
Date

CHAPTER TEN
CP 106
Case A
1.
2.
3.
4.
Date
5.
Date

CHAPTER TEN
CP 106 continued
Case B
1.
2.
3.
4.
Date
5.
Date

CHAPTER TEN
CP 106 continued
Case C
1.
2.
3.
4.
Date
5.
Date

CHAPTER TEN
CP 107
1.
2.

CHAPTER TEN
CP 108 (Appendix)
1.
2. Issue of $200,000 Bonds Payable for $210,152
Amortization Table
Using Market Interest Rate of ____ Per Cent
A B C D E
Beginning Actual Ending
Six month bond cash Periodic bond
period carrying 6-month interest prem./disc. carrying
Year ending amount interest expense paid amort. amount
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31

CHAPTER TEN
CP 108 (Appendix) continued
3.
Calculation of Effective Interest Rate

A B
Six month Bond Using ___% market rate to
period carrying calculate periodic interest
Year ending amount expense (B/A)
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31
4.

CHAPTER TEN
P 101
1. a.
b.
2.
3.
Date

CHAPTER TEN
P 101 continued
4.

CHAPTER TEN
P 102
1.
Date
2.
Date
3.
Date

CHAPTER TEN
P 102 continued
4.
Date
5.a.
Date

CHAPTER TEN
P 102 continued
Date
6.a.
Date
b.
Date

CHAPTER TEN
P 102 continued
c.
Date
P 103
1.a.Amount of interest paid every 6 months:
b. Amount of amortization every 6 months:

CHAPTER TEN
P 103 continued
2.
Case A Case B Case C

a. Issue of the bonds Debit Credit Debit Credit Debit Credit
b. Payment of interest
c. Amortization

CHAPTER TEN
P 103 continued

d. Payment of interest Debit Credit Debit Credit Debit Credit
e. Amortization
f. Payment of interest
g. Amortization
h. Redemption of bonds

CHAPTER TEN
P 103 continued
3. Calculation of interest expense
4. Exercise of a call option at Dec. 31, 2016


CHAPTER TEN
P 104
1. a.
b.
2.
Amortization Table
A B C D E
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31

CHAPTER TEN
P 104 continued
3.

A B
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31
4.

CHAPTERTEN
DebtFinancing:Bonds Name
P104continued
5.

PartialBalanceSheet

692 CHAPTERTEN/DebtFinancing:Bonds
CHAPTER TEN
P 105
1. a. Difference between the premiums from 2015 to 2016
b. Total premium/yearly amortization
2.
Date

CHAPTER TEN
P 105 continued
3. 2017 unadjusted interest expense
The following journal entry is needed:
Date
4.

CHAPTER TEN
P 106
1.
Date

CHAPTER TEN
P 106 continued
2.
Date

CHAPTER TEN
P 106 continued
3.
Date

CHAPTER TEN
P 107 (Appendices)
1.a. Interest payment every 6 months
Calculation Case A Case B Case C
b. Issue price computation

CHAPTER TEN
P 107 (Appendices) continued
c. i. Bonds issued when market rate is 1%
ii. Bonds issued when market rate is 16%
Amortization Table
A B C D E
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31

CHAPTER TEN
iii. Bonds issued when market rate is 8%
Amortization Table
A B C D E
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31
d. The carrying value of the bonds at December 31, 2017:

CHAPTER TEN
2.


CHAPTER TEN
P 108 (Appendices)
1. Issue price computation:
2.
Amortization Table
A B C D E
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31

CHAPTER TEN
3.

A B
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31
4.

CHAPTER TEN
AP 101
1.a. Interest payment every 6 months
b. Amortization every 6 months:

CHAPTER TEN
AP 101 continued
2.a. Issue of bonds

b.
c.

CHAPTER TEN
AP 101 continued
3. Income statement interest expense December 31, 2018

CHAPTER TEN
AP 101 continued
4. Exercise of a call option


CHAPTER TEN
AP 102
1.


CHAPTER TEN
AP 102 continued


CHAPTER TEN
AP 102 continued
2. Bond premium
3.
Balance Sheet
4.

CHAPTER TEN
AP 102 continued
5. Cash paid
Interest expense reported
AP 103
1.a.
Date

CHAPTER TEN
AP 103 continued
b.
Date
c.
Date
d.
Date

CHAPTER TEN
AP 103 continued
2. Interest paid in cash in 2015
3. Amortization for 2015
Interest expense reported on 2015 income statement
4. Bond discount balance
AP 104
1.a. Interest payment every 6 months:
b. Amortization every 6 months:

CHAPTER TEN
AP 104 continued
Amortization Table
A B C D E
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31

CHAPTER TEN
AP 104 continued
3. Jun. 30, 2015 Payment of Interest
Date
Jun. 30, 2015 Amortization of Premium
Date
4.
Balance Sheet

CHAPTER TEN
AP 105
1.a. Difference between unamortized discounts from 2015 to 2016
b. Total discount/monthly amortization
2.
Date

CHAPTER TEN
AP 105 continued
3. 2017 unadjusted interest expense
At December 31, 2017 the following journal entry is needed:
Date

CHAPTER TEN
AP 106
1. a. Interest payment every 6 months
b.
Amortization Table
A B C D E
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31

CHAPTER TEN
AP 106 continued
3.

A B
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31
4.

CHAPTER TEN
AP 107
1.a.
b. Issue price computation:

CHAPTER TEN
AP 107 continued
c. i.
ii. Amortization every 6 months; bonds issued when market rate is 16%:
Amortization Table
A B C D E
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31

CHAPTER TEN
AP 107 continued
iii. Amortization every 6 months; bonds issued when market rate is 8%:
Amortization Table
A B C D E
Jun. 30
Dec. 31
Jun. 30
Dec. 31
Jun. 30
Dec. 31

CHAPTER TEN
AP 107 continued
2. Journal entries for 2017:


CHAPTER TEN

CHAPTER ELEVEN
Equity Financing Name
Concept Self-check
CHAPTER ELEVEN/ Equity Financing 725

CHAPTER ELEVEN
726 CHAPTER ELEVEN / Equity Financing

CHAPTER ELEVEN

CHAPTER ELEVEN

CHAPTER ELEVEN

CHAPTER ELEVEN

CHAPTER ELEVEN

CHAPTER ELEVEN

CHAPTER ELEVEN

CHAPTER ELEVEN
CP 111
Total share Retained

capital earnings
1. Company is incorporated
2. Issued shares with a stated value of $1
3. Split the common shares 2 for 1
4. Recorded net income for the year
5. Reacquired common shares previously outstanding
6. Issued a share dividend
7. Paid a cash dividend
8. Declared a share dividend
9. Created a restriction on retained earnings
CP 112
1.
12% Preferred Common

bonds shares shares
Income before interest and inc. taxes
Less: Interest expense
Income before income taxes
Less: Income taxes
2
Less: Preferred dividends
Net available to common s/h (a)
No. common shares outstanding (b)
Earnings per common share (a/b)

CHAPTER ELEVEN
CP 112 continued
2.
CP 113
1. Authorization of share issue:
Date
2. Issue of 10,000 common shares:
Date
3. Issue of 1,000 preferred shares:
Date

CHAPTER ELEVEN
CP 114
1.
Date
2.
CP 115
1.
2.
3.

CHAPTER ELEVEN
CP 116
Date

CHAPTER ELEVEN
CP 117
1. 2016
Date
2. 2016
Date
CP 118
1.
2.

CHAPTER ELEVEN
CP 119
CP 1110
1. a. Book value per preferred share
b. Book value per common share
2. Book value per common share after split

CHAPTER ELEVEN
CP 1111
1.
2.
3. Amount available for all dividends

CHAPTER ELEVEN
CP 1112
Date

CHAPTER ELEVEN
CP 1113
Date

CHAPTER ELEVEN
CP 1114
1.
Date

CHAPTER ELEVEN
CP 1114 continued
2. a.
Parital Balance Sheet
b.

CHAPTER ELEVEN
CP 1114 continued
c.
CP 1115
1.
Date

CHAPTER ELEVEN
CP 1115 continued
2.
Date
CP 1116

CHAPTER ELEVEN
P 111
1.

bonds shares shares
Less: Income taxes
2
2.
3. Other factors to be considered by board of directors:

CHAPTER ELEVEN
P 112
1. a.
Date
b.
Date
c.
Date
d.
Date

CHAPTER ELEVEN
P 112 continued
e.
Date
2.

CHAPTER ELEVEN
P 112 continued
3.

CHAPTER ELEVEN
P 113
1. Before Split
After Split
2.
Date DR/
3.

CHAPTER ELEVEN
P 114

CHAPTER ELEVEN
P 115
Shareholders
Assets Liabilities Equity
1. Common shares issued for cash
2. Declared a cash dividend
3. Common shares split 3:1
4. Calculated book value of common shares
5. Paid cash dividend related to item 2 above
6. Recorded restriction of retained earnings
P 116
1. a.
Date
b.
Date

CHAPTER ELEVEN
P 116 continued
c.
Date
d.
Date
e.
Date

CHAPTER ELEVEN
P 116 continued
2.
If appendix 2 is not covered, only four columns above will be needed.

CHAPTER ELEVEN
P 117
1.
2.

CHAPTER ELEVEN
P 118
1.
Date

CHAPTER ELEVEN
P 118 continued
2.
P 119
1.

CHAPTER ELEVEN
P 119 continued
2.
Date

CHAPTER ELEVEN
P 119 continued
2.
If appendix 2 is not covered, only four columns above will be needed.

CHAPTER ELEVEN
AP 111
Shareholders
Assets Liabilities Equity
1. Declared of cash dividend
2. Paid the cash dividend in item 1
3. Split common shares 2:1
4. Declared a share dividend
5. Redeemed preferred shares for cash
6. Paid a share dividend
7. Recorded a restriction on retained earnings
AP 112
1.

bonds shares shares
Less: Income taxes
2
2.

CHAPTER ELEVEN
AP 112 continued
3. Other factors to be considered:

CHAPTER ELEVEN
AP 113
1.
Date

CHAPTER ELEVEN
AP 113 continued
2.

CHAPTER ELEVEN
AP 113 continued
3.

CHAPTER ELEVEN
AP 114
1.
Date

CHAPTER ELEVEN
AP 114 continued
2.
3.
Total value of
Number of common shares
shares on balance Book value per Market price
sheet
outstanding share per share

CHAPTER ELEVEN
AP 115

CHAPTER ELEVEN
AP 116
1.
Date

CHAPTER ELEVEN
AP 116 continued
2.
3.

CHAPTER ELEVEN
AP 117
Part A
1. Book value per share at Jan. 1, 2017
2.
Date
3.

CHAPTER ELEVEN
AP 117 continued
4. Stated value per share at Dec. 31, 2017

CHAPTER ELEVEN
Part B
5.
Date

CHAPTER ELEVEN
AP 117 continued
6.
7. Book value per share at Dec. 31, 2018
8.
Dec. 31, Dec. 31,

2018 2017
Market value
Book value
Market value/book value

CHAPTER ELEVEN
AP 118
1.
Date

CHAPTER ELEVEN
AP 118 continued
2.
Date

CHAPTER ELEVEN
AP 118 continued
3.
If appendix 2 is not covered, only five columns above are needed

CHAPTER ELEVEN
AP 119
1.
2.
Date

CHAPTER TWELVE
Proprietorships and Partnerships Name
Concept Self-check
CHAPTER TWELVE / Proprietorships and Partnerships 779

CHAPTER TWELVE
780 CHAPTER TWELVE / Proprietorships and Partnerships

CHAPTER TWELVE

CHAPTER TWELVE

CHAPTER TWELVE

CHAPTER TWELVE

CHAPTER TWELVE
CP 121
1.
Income Statement
2.
Statement of Proprietors Capital

CHAPTER TWELVE
CP 121 continued
3.
Balance Sheet

CHAPTER TWELVE
CP 121 continued
4.
Date

CHAPTER TWELVE
CP 122
1.
Income Statement
2.

CHAPTER TWELVE
CP 122 continued
3.
Balance Sheet

CHAPTER TWELVE
CP 122 continued
4.
Date

CHAPTER TWELVE
CP 123
1.
Date
2.
Date
Calculations

CHAPTER TWELVE
CP 123 continued
3.
Date
Calculations

CHAPTER TWELVE
CP 124
1.
Date
2.
Date
3.
Date

CHAPTER TWELVE
CP 125
1.
Statement of Partnership Liquidation
Other
Cash assets Liabilities Partners capital
2. a.
Date

CHAPTER TWELVE
CP 125 continued
b.
Date
c.
Date
d.
Date

CHAPTER TWELVE
P 121
1.
Income Statement
2.

CHAPTER TWELVE
P 121 continued
3.
Balance Sheet

CHAPTER TWELVE
P 121 continued
4.
Date

CHAPTER TWELVE
P 122
1.
2.

CHAPTER TWELVE
P 123
1.
Date

CHAPTER TWELVE
P 123 continued
2.
Date
To allocate net income as follows:
Partner
Total
Profit to be allocated
Interest allocation:
Balance
Salary allocation:
Balance
Balance allocated in profit and
loss sharing ratio:
Balance
Total allocated to partners

CHAPTER TWELVE
P 124
1.
Partner
Total
Balance
Salary allocation:
Balance
loss sharing ratio:
Balance
2.
Date

CHAPTER TWELVE
P 125
1.
Profit and loss (a) Division with profit of (b) Division with loss of
sharing plan $60,000 $30,000
Bo Diddley Bo Diddley
Plan A
Plan B
Calculations
2.

CHAPTER TWELVE
P 126
1.
The new partners bonus is recorded as:
Date

CHAPTER TWELVE
P 126 continued
2.
The bonus to existing partners is recorded as:
Date

CHAPTER TWELVE
P 127
1.
Other
Cash assets Liabilities Partners capital
2.a. Loss on Sale of Other Assets
Date

CHAPTER TWELVE
P 127 continued
b.
Date
c.
Date
d.
Date

CHAPTER TWELVE
P 127 continued
e.
Date

CHAPTER TWELVE
AP 121
1.
Income Statement

CHAPTER TWELVE
AP 121 continued
2.
Statement of Partners Capital

CHAPTER TWELVE
AP 121 continued
3.
Balance Sheet

CHAPTER TWELVE
AP 121 continued
4.
Date

CHAPTER TWELVE
AP 122
1. a.
The income statement would appear as follows:
Income Statement

CHAPTER TWELVE
AP 122 continued
b.
c.
Balance Sheet

CHAPTER TWELVE
AP 122 continued
2.a.
Income Statement
b.

CHAPTER TWELVE
AP 122 continued
c.
Balance Sheet

CHAPTER TWELVE
AP 123
Partner
Total
Balance
Salary allocation:
Balance
loss sharing ratio:
Balance
Calculations

CHAPTER TWELVE
AP 124
1.
Profit and loss (a) Division with profit of (b) Division with loss
sharing plan $150,000 $25,000
Madge Ryan Madge Ryan
Plan A
Plan B
Calculations
2.

CHAPTER TWELVE
AP 125
1.
Date
2.
Calculations
The new partners bonus is recorded as follows:
Date

CHAPTER TWELVE
AP 125 continued
3.
Calculations
The new partners bonus is recorded as follows:
Date

CHAPTER TWELVE
AP 126
Other Accounts
Cash assets payable Partners Capital

CHAPTER TWELVE
DP 121
1.
Date
Amounts are calculated as follows:
Partner
Total
Balance
Salary allocation:
Balance
loss sharing ratio:
Balance

CHAPTER TWELVE
DP 121 continued
Calculations

CHAPTER TWELVE
DP 121 continued
2.
Date
Amounts are calculated as follows:
Partner
Total
Balance
Salary allocation:
Balance
loss sharing ratio:
Balance

CHAPTER TWELVE
DP 121 continued
Calculations

CHAPTER TWELVE
DP 122 Debit (Credit)
Acct. Acc. Dep. Acct. Inc.

Cash Rec. Invent. Equip. Equip. Pay. Sum. Partners Capital
Jones Smith Scott
Op. bals. $10,800 $19,400 $23,800 $35,200 ($8,200) ($21,600) ($20,000) ($13,760) ($12,000) ($13,640)

CHAPTER TWELVE
DP 122 continued
b. i.
Date
ii.
Date

CHAPTER TWELVE
DP 122 continued
iii.
Date
iv.
Date
2.a.
Date

CHAPTER TWELVE
DP 122 continued
b.
Date
Calculations

CHAPTER TWELVE
DP 122 continued
3.
Date

CHAPTER TWELVE
DP 122 continued
4.

CHAPTER TWELVE

CHAPTER THIRTEEN
Financial Statement Analysis Name
Concept Self-check
CHAPTER THIRTEEN / Financial Statement Analysis 833

CHAPTER THIRTEEN
834 CHAPTER THIRTEEN / Financial Statement Analysis

CHAPTER THIRTEEN

CHAPTER THIRTEEN

CHAPTER THIRTEEN

CHAPTER THIRTEEN

CHAPTER THIRTEEN
DC 131
Liquidity ratios
Year
Ratio/Calculations
Year
Ratio/Calculations
Year
Ratio/Calculations
Year
Ratio/Calculations

CHAPTER THIRTEEN
DC 131 continued
Analysis

CHAPTER THIRTEEN
DC 131 continued
1. a. Financial structure
Analysis

CHAPTER THIRTEEN
DC 131 continued
b.
c.
2. Other observations:

CHAPTER THIRTEEN
DC 131 continued
3. Scott formula
Balance Sheet

CHAPTER THIRTEEN
DC 131 continued
Income Statement

CHAPTER THIRTEEN
DC 131 continued
Return on
Return on operating + Return on leveraging = shareholders
Year capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =
= + =
x + x =
= x + x =
= + =
x + x =
= x + x =
= + =

CHAPTER THIRTEEN
DC 131 continued
Analysis

CHAPTER THIRTEEN
DC 132
1. a. Current ratio
Year
Ratio/Calculations
Sales to total assets ratio
Year
Ratio/Calculations
Return on total assets
Year
Ratio/Calculations

CHAPTER THIRTEEN
DC 132 continued
Return on shareholders equity
Year
Ratio/Calculations
Gross profit ratio
Year
Ratio/Calculations
Net profit ratio
Year
Ratio/Calculations

CHAPTER THIRTEEN
DC 132 continued
Debt to shareholders equity ratio
Year
Ratio/Calculations
Earnings per share
Year
Ratio/Calculations
Price-earnings ratio
Year
Ratio/Calculations

CHAPTER THIRTEEN
DC 132 continued
b. i. Sales:
ii. Gross profits:
iii Net profits:
2.a.

CHAPTER THIRTEEN
DC 132 continued
b.
c.
d.

CHAPTER THIRTEEN
DC 132 continued
3.
4.
Balance Sheets
At December 31
(000s)
Hi Inc. Low Corp.

2018 2017 2016 2018 2017 2016

CHAPTER THIRTEEN
DC 132 continued
Income Statements
At December 31
(000s)
Hi Inc. Low Corp.

2018 2017 2016 2018 2017 2016

CHAPTER THIRTEEN
DC 132 continued
Scott formula analysis, Hi. Inc.
Return on
Year capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =
= + =
x + x =
= x + x =
= + =
x + x =
= x + x =
= + =

CHAPTER THIRTEEN
DC 132 continued
Scott formula analysis, Low Corp.
Return on
Year capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =
= + =
x + x =
= x + x =
= + =
x + x =
= x + x =
= + =

CHAPTER THIRTEEN
DC 132 continued
Comparative analysis

CHAPTER THIRTEEN
CP 131
Acidtest ratio
Current ratio
Times interest earned
Earnings per share
Accounts receivable collection period
Sales to total assets
Dividend yield
Pricetoearnings ratio
Number of days of sales in inventory
Net profit ratio

CHAPTER THIRTEEN
CP 132
1. Current ratio
Year
Calculations
Definition/interpretation
2. Acidtest ratio
Year
Calculations
Definition/interpretation

CHAPTER THIRTEEN
CP 132 continued
3.
4.
Balance Sheet

CHAPTER THIRTEEN
CP 133
Gross profit ratio
Year
Calculations
Analysis
Net profit ratio
Year
Calculations
Analysis

CHAPTER THIRTEEN
CP 134
Price-earnings ratio
Company
Calculations A B C
Analysis
Dividend yield
Company
Calculations
Analysis

CHAPTER THIRTEEN
CP 135
(a) (b)
2016 2015 (a) (b) % change
Sales $2,520 $1,440
Cost of goods sold 1,890 960
Gross profit 630 480
Other expenses 510 430
Net income $ 120 $ 50
Analysis

CHAPTER THIRTEEN
CP 136
Effect on ratio
No
Transaction Ratio Inc. Dec. change
Declared a cash dividend Current ratio
Wrote-off an uncollectible account Accounts receivable collection
receivable period
Purchased inventory on account Acidtest ratio
Issued 10year bonds to acquire capital Return on total assets
assets
Issued additional shares for cash Debt to shareholders equity
ratio
Declared a share dividend on common Earnings per share
shares
Restricted part of retained earnings Return on shareholders equity
Purchased supplies on account Current ratio
Paid a shortterm creditor in full Acidtest ratio
Paid an account payable, taking the cash Number of days sales in
discount inventory

CHAPTER THIRTEEN
CP 137
1.a. Return on total assets
b. Return on shareholders equity
c. Times interest earned ratio
d. Earnings per share

CHAPTER THIRTEEN
CP 137 continued
e. Number of days of sales in inventory
f. Accounts receivable collection period
g. Sales to total assets ratio
h. Current ratio

CHAPTER THIRTEEN
CP 137 continued
i. Acid-test ratio
j. Debt to shareholders equity ratio
2. The following ratios are measures of liquidity:

CHAPTER THIRTEEN
CP 137 continued
3.
Balance Sheet
Income Statement

CHAPTER THIRTEEN
CP 137 continued
4. Scott formula
Return on
Year capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =
= + =
CP 138
1. Current ratio
2. Return on total assets

CHAPTER THIRTEEN
CP 138 continued
3. Sales to total assets ratio
4. Acid-test ratio
5. Times interest earned ratio
6. Earnings per common share

CHAPTER THIRTEEN
CP 138 continued
7. Accounts receivable collection period
8. Return on shareholders equity

CHAPTER THIRTEEN
CP 138 continued
9. Scott formula
Return on
Year capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =
= + =
Calculations

CHAPTER THIRTEEN
CP 139
1. Current liabilities
2. Inventory

CHAPTER THIRTEEN
CP 139 continued
4. Number of days of sales in inventory
5. Revenue operating

CHAPTER THIRTEEN
CP 1310
1.
Effect on current ratio

No
Transaction Inc. Dec. change
a. Bought $20,000 of merchandize on account (the company
uses a perpetual inventory system)
b. Sold for $10,000 cash, merchandize that cost $5,000
c. Collected a $2,500 account receivable
d. Paid a $10,000 account payable
e. Wrote off a $1,500 bad debt against the allowance for
doubtful accounts
f. Declared a $1 pershare cash dividend on the 10,000
outstanding common shares
g. Paid the dividend declared above
h. Borrowed $10,000 from a bank by assuming a 60day, 10
per cent loan
i. Borrowed $25,000 from a bank by placing a 10year
mortgage on the plant
j. Used the $25,000 proceeds of the mortgage to buy
additional machinery

CHAPTER THIRTEEN
CP 1310 continued
2. a. Current ratio
Transaction effects
May 1 May 31
Bal. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Bal.
Current assets X $200
Current liabilities y $80
Current ratio x/y 2.5
b. Acidtest ratio
Transaction effects
May 1 May 31
Bal. (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Bal.
Quick assets X $200
Current liabilities y $80
Acid test ratio x/y 2.5

CHAPTER THIRTEEN
P 131
1. a. Current ratio
b. Acid-test ratio
c. Debt to shareholders equity ratio
2.

CHAPTER THIRTEEN
P 131 continued
3.
P 132
1. a. Current ratio
b. Acid-test ratio

CHAPTER THIRTEEN
P 132 continued
c. Accounts receivable collection period
d. Number of days of sales in inventory
e. Debt to shareholders equity ratio

CHAPTER THIRTEEN
P 132 continued
f. Return on shareholders equity
g. Earnings per share
2. Dividends paid on common shares

CHAPTER THIRTEEN
P 132 continued
3.Observations

CHAPTER THIRTEEN
P 132 continued
4. Restatement for Scott formula analysis
Balance Sheet

CHAPTER THIRTEEN
P 132 continued
Income Statement
5. Scott Formula
Return on
Year capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =

CHAPTER THIRTEEN
P 132 continued
Analysis

CHAPTER THIRTEEN
P 133
Balance Sheet
Calculations

CHAPTER THIRTEEN
P 134
1.
Common Size Percentages

2018 2017 2016
Sales
Cost of goods sold
Gross profit
Other expenses
Net income
2. Analysis

CHAPTER THIRTEEN
P 135
Balance Sheet

CHAPTER THIRTEEN
P 135 continued
Calculations

CHAPTER THIRTEEN
AP 131
1. Earnings per share
2. Pricetoearnings ratio
AP 132
1. Current ratio
2. Acid-test ratio

CHAPTER THIRTEEN
AP 132 continued
4. Number of days sales in inventory
5. Debt to shareholders equity ratio
6. Net profit ratio

CHAPTER THIRTEEN
AP 132 continued
7. Income from operations

CHAPTER THIRTEEN
AP 132 continued
8. Scott formula
Balance Sheet

CHAPTER THIRTEEN
AP 132 continued
Income Statement

CHAPTER THIRTEEN
AP 132 continued
Return on
Year capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =
= + =

CHAPTER THIRTEEN
AP 133
Balance Sheet

CHAPTER THIRTEEN
AP 133
Calculations

CHAPTER THIRTEEN
AP 134
1.
Common Size
Percentages
Year Ended Year Ended
2017 2016 2017 2016
Sales $1,397 $1,122 100.0% 100.0%
Cost of goods sold 935 814
Gross profit 462 308
Operating expenses:
Selling expenses 154 121
General expenses 88 77
Total operating expenses 242 198
Income from operations 220 110
Other revenue 4 7
Income before interest and income taxes 224 117
Interest expense 2 9
Income before income taxes 222 108
Income taxes expense 134 66
Net income $ 88 $ 42

CHAPTER THIRTEEN
AP 134 continued
2. Analysis

CHAPTER THIRTEEN
AP 135
1.
Balance Sheet

CHAPTER THIRTEEN
AP 135 continued
2.
Income Statement
Calculations

CHAPTER THIRTEEN
AP 135 continued

CHAPTER THIRTEEN
AP 135 continued
3. Scott formula
Balance Sheet

CHAPTER THIRTEEN
AP 135 continued
Income Statement
Return on
Year capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =
= + =

CHAPTER THIRTEEN
SP 131
1.
Change
2017 2016 Amount Percent
a b (a-b) [(a-b)/b]
Current
Cash $ 60 $ 10
Short-term investments 10 20
Accounts receivable 60 40
Merchandize inventories 108 120
Prepaid expenses 12 10
250 200
Property, plant, and equipment at carrying amount 170 180
Total assets $420 $380
Liabilities
Current
Accounts payable $100 $ 80
Accrued liabilities 20 10
120 90
Non-current borrowings 50 30
170 120
Shareholders Equity
Common shares (10 shares outstanding) 150 150
Retained earnings 100 110
250 260
Total liabilities and shareholders equity $420 $380

CHAPTER THIRTEEN
SP 131 continued
Analysis

CHAPTER THIRTEEN
SP 132
Part A
1. a. Current ratio
b. Number of days sales in inventory
c. Earnings per share
d. Return on shareholders equity

CHAPTER THIRTEEN
SP 132 continued
2. Other information

CHAPTER THIRTEEN
SP 132 continued
3. Scott formula
Balance Sheet

CHAPTER THIRTEEN
SP 132 continued
Income Statement

CHAPTER THIRTEEN
SP 132 continued
Return on
Year capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =
= + =
Analysis
Part B
Effect on current ratio

No
Transaction Inc. Dec. change
Additional common shares were sold for cash
Paid $20,000 of accounts payable
Purchased $15,000 of inventory on account
Wrote off $2,000 of accounts receivable as uncollectible

CHAPTER THIRTEEN
SP 133
1. a. Liquidity
Current ratio
Acidtest ratio

CHAPTER THIRTEEN
SP 133 continued
Number of days sales in inventory
Revenue operating cycle
b. Profitability
Gross profit ratio

CHAPTER THIRTEEN
SP 133 continued
Net profit ratio
Return on total assets ratio

CHAPTER THIRTEEN
SP 133 continued
c. Financial structure
d. Market returns:
Earnings per share

CHAPTER THIRTEEN
SP 133 continued
2.

CHAPTER THIRTEEN
SP 133 continued

CHAPTER THIRTEEN
SP 133 continued
3. Scott formula
Balance Sheet

CHAPTER THIRTEEN
SP 133 continued
Income Statement
Return on
Year capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =
= + =

CHAPTER THIRTEEN
SP 133 continued
Analysis
DP 131
1.
2.
3.
Firm A:
Firm B:
Firm C:
Firm D:

CHAPTER THIRTEEN
DP 132
1.
Company A Company B
Current ratio
Acid-test ratio
Number of days sales in inventory
Revenue operating cycle
Sales to total assets ratio
Gross profit ratio
Net profit ratio

CHAPTER THIRTEEN
DP 132 continued
2.

CHAPTER THIRTEEN
DP 132 continued
3. Scott formula
Balance Sheet
Company A Company B

CHAPTER THIRTEEN
DP 132 continued
Income Statement
Company A Company B

CHAPTER THIRTEEN
DP 132 continued
Company A
Return on
capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =
= + =
Company B
Return on
capital equity
(1) x (2) + (3) x (4) = (5)
x + x =
= x + x =
= + =

CHAPTER THIRTEEN
DP 132 continued
Analysis

CHAPTER THIRTEEN
DP 133
1.
2.
3.
4.

CHAPTER THIRTEEN
DP 133 continued
5.
6.

CHAPTER THIRTEEN
DP 134
Acme Auto Parts Ltd.

Selected Financial Ratios
2019
industry
2019 2018 2017 average
a. Current ratio 1.3 1.5 1.8
b. Acid-test ratio .48 .62 1.1
c. Accounts receivable collection period 35 30 35
d. Number of days of sales in inventory 140 135 122
e. Return on total assets 14.9% (7.0%) 18.0%
f. Return on shareholders equity 23.2% 15.2% 20.0%
g. Times interest earned ratio 3.9X (2.9)X 5X
h. Sales to total assets ratio 2.7 2.9 3.4
i. Debt to shareholders equity ratio 2.4 2.6 1.5
j. Gross profit ratio 59.1% 60.7% 52.4%
k. Net profit ratio 2.5% 1.7% 2.1%
l. Earnings per share $3.00 $2.14 $4.00
m. Price-earnings ratio 18.5X 15.2X 21X
Calculations

CHAPTER THIRTEEN
DP 134 continued
Analysis

CHAPTER THIRTEEN
DP 134 continued
Analysis continued

CHAPTER THIRTEEN
DP 134 continued
Analysis continued

CHAPTER FOURTEEN
The Statement of Cash Flows Name
Concept Self-check
CHAPTER FOURTEEN / The Statement of Cash Flows 931

CHAPTER FOURTEEN
932 CHAPTER FOURTEEN / The Statement of Cash Flows

CHAPTER FOURTEEN

CHAPTER FOURTEEN

CHAPTER FOURTEEN
CP 141
A payment of $5,000 was made on a non-

current bank loan.
Depreciation expense for equipment was

$1,000.
$10,000 of share capital was issued for cash.
Cash dividends of $2,500 were declared and

paid to shareholders.
A long-term bank loan was assumed in exchange

for equipment costing $7,000.
Land was purchased for $25,000 cash.
$750 of accrued salaries was paid.
A $5,000 short-term demand loan was obtained.
$10,000 of accounts receivable was collected.
A building was purchased for $80,000. $30,000

was paid in cash and the rest was borrowed.
Land was sold for $50,000 cash.
Equipment was sold for $6,000. The original cost

was $10,000. The accumulated depreciation was
$3,000.
$1,200 was paid for a 14month insurance

policy to take effect next year.
A patent was amortized for $500.
Shares were redeemed for $50,000 cash, their

original issue price.

CHAPTER FOURTEEN
CP 142
Operating Financing Investing

activities activities activities
In (out) In (out) In (out)
1. Retired $100 of non-current debt with cash
2. Purchased a building for $90; $60 was loaned by a
bank and the rest was paid in cash
3. Declared and paid cash dividends of $12 during the
year
4. Purchased equipment by issuing $20 of common
shares with the proceeds
5. Paid $50 in cash to pay off a bank loan
6. Sold land for $30 cash
7. Earned net income of $75
8. Purchased equipment costing $15; of this, $5 was
paid in cash and the rest with a 90day note payable
9. Amortized a patent by $2
10. Assumed $100 of non-current debt and repurchased
common shares
11. Purchased short-term investments for $5 cash
12. Sold a machine that cost $20 for $7 cash; the
accumulated depreciation on it was $10
13. Depreciation expense for building and equipment
amounted to $8
14. Paid in cash the note payable from transaction 8
above.
15. Issued $20 of preferred shares for cash
16. Purchased a patent for $25 cash
17. Prepaid $20 for the next two months of advertizing
18. Purchased land for $60 cash.

CHAPTER FOURTEEN
CP 142 continued
Assumptions

CHAPTER FOURTEEN
CP 143
Cash Flow
No
Effect
1. Earning net income for the year
2. Redemption of preferred shares at face value
3. Purchase of inventory
4. Issuing common shares for equipment
5. Assuming non-current debt
6. Declaring a cash dividend
7. Collection of an account receivable
8. Payment of an account payable
9. Purchase of land for cash
10. Issuing common shares for cash
11. Reclassifying non-current liabilities as current liabilities
for the amount to be repaid in cash next year
12. Payment of a cash dividend declared last year
13. Decrease in market value of short-term investments
14. Calculated amount owing for income taxes.

CHAPTER FOURTEEN
CP 144
CP 145

CHAPTER FOURTEEN
CP 146
Cash Flow Table:
Balance Change Cash Effect

2017 2016
Account Dr(Cr) Dr(Cr) Dr Cr Inflow Outflow Activity
$ net cash flow
Cash flow from operating activities would be calculated as:
Net income
Add (deduct) changes in non-cash working capital
Cash flow from operating activities

CHAPTER FOURTEEN
CP 147
1. Calculation of cash received on sale:
2. The journal entry to record the sale of the equipment would have been:
Date
3.
Operating activities
Net income
Items not affecting cash flow
Investing activities
Cash flow from investing activities

CHAPTER FOURTEEN
CP 148
1. Cash flow table:

2017 2016
$ net cash flow
2. Calculation of dividends declared
3.
Financing activities
Cash flow from financing activities

CHAPTER FOURTEEN
CP 149
1. Cash flow table:

2017 2016
$ net cash flow

CHAPTER FOURTEEN
CP 149 continued
Calculations

CHAPTER FOURTEEN
CP 149 continued
2.
Statement of Cash Flows
Net income
Cash flow from (used by) operating activities

Cash flow from (used by) investing activities

Cash flow from (used by) financing activities

Net increase in cash
Cash at beginning of year
Cash at end of year

CHAPTER FOURTEEN
CP 149 continued
3.
Analysis

CHAPTER FOURTEEN
P 141
1.
Date
Analysis
2.
Net income

CHAPTER FOURTEEN
P 142
Cash Flow Table:

2017 2016
$ net cash flow
Cash flow from operating activities:


CHAPTER FOURTEEN
P 143
1.
Date
Analysis
2.
Date
Analysis

CHAPTER FOURTEEN
P 143 continued
3. Cash flow table:

2017 2016
$ net cash flow
Net income


Cash at end of year

CHAPTER FOURTEEN
P 144
1. Partial cash flow table:

2017 2016
$ net cash flow
Notes (if any)

CHAPTER FOURTEEN
P 144 continued 2.
Net income



Cash at end of year

CHAPTER FOURTEEN
P 144 continued
Notes, if any

CHAPTER FOURTEEN
P 145
1. Partial cash flow table:

2017 2016
$ net cash flow
Notes (if any)

CHAPTER FOURTEEN
P 145 continued 2.



Cash at end of year

CHAPTER FOURTEEN
P 145 continued
3. Analysis
P 146
1. Calculation of retained earnings:
Notes, if any

CHAPTER FOURTEEN
P 146
2. Cash flow table:

2017 2016
$ net cash flow

CHAPTER FOURTEEN
P 146 continued
Notes (if any)

CHAPTER FOURTEEN
P 146 continued



Cash at end of year

CHAPTER FOURTEEN
P 146 continued
3.
Analysis

CHAPTER FOURTEEN
P 147
1. Cash flow table ($000s):

2017 2016
$ net cash flow

CHAPTER FOURTEEN
Notes (if any)

CHAPTER FOURTEEN
P 147 continued 2.



Cash at end of year

CHAPTER FOURTEEN
P 147 continued
3. Analysis
AP 141
1.
Date
Analysis

CHAPTER FOURTEEN
AP 141 continued
2.
Date
Analysis
3.
Net income

CHAPTER FOURTEEN
AP 142
Net income
AP 143
Notes (if any)

CHAPTER FOURTEEN
AP 144
Cash flow from financing activities
AP 145
1. Treatment of items c. and d.

CHAPTER FOURTEEN
AP 145 continued
2. Cash flow table:

2017 2016
$ net cash flow
Notes (if any)

CHAPTER FOURTEEN
AP 145 continued
3.


CHAPTER FOURTEEN
AP 145 continued
3. continued

Cash at end of year
Represented by
Notes (if any)
4. Analysis

CHAPTER FOURTEEN
AP 146
1.

CHAPTER FOURTEEN
AP 146 continued
2. Cash flow table:

2017 2016
$ net cash flow
Notes (if any)

CHAPTER FOURTEEN
AP 146 continued
3.



CHAPTER FOURTEEN
AP 146 continued
3. continued

Cash at end of year
Represented by
4. Analysis

CHAPTER FOURTEEN
AP 147
1. Cash flow table:

2017 2016
$ net cash flow
Notes (if any)

CHAPTER FOURTEEN
AP 147 continued
2.



Cash at end of year

CHAPTER FOURTEEN
AP 147 continued
Notes (if any)
3. Analysis

CHAPTER FOURTEEN
DP 141
1.a. Cash flow table for the year ended December 31, 2020 (000s):

2020 2019
$ net cash flow
Assumptions

CHAPTER FOURTEEN
DP 141 continued
Assumptions continued

CHAPTER FOURTEEN
DP 141 continued
1.b. Cash flow table for the year ended December 31, 2021 (000s):

2021 2020
$ net cash flow
Assumptions

CHAPTER FOURTEEN
DP 141 continued
Assumptions continued

CHAPTERFOURTEEN
TheStatementofCashFlows Name
DP141continued
2.
StatementofCashFlows
2021 2020
Operatingactivities

Itemsnotaffectingcashflow

Cashflowfrom(usedby)operatingactivities
Investingactivities

Cashflowfrom(usedby)investingactivities
Continuedonnextpage
982 CHAPTERFOURTEEN/TheStatementofCashFlows
CHAPTER FOURTEEN
DP 141 continued

Cash at end of year
Represented by
Notes (if any)

CHAPTER FOURTEEN
DP 141 continued
3. Analysis

CHAPTER FOURTEEN
DP 142
1.a. Cash flow table for the year ended December 31, 2018 (000,000s)

2018 2017
$ net cash flow
Notes (if any)

CHAPTER FOURTEEN
DP 142 continued
1.b. Cash flow table for the year ended December 31, 2019 (000,000s):

2019 2018
$ net cash flow
Notes (if any)

CHAPTERFOURTEEN
TheStatementofCashFlows Name
DP142continued
2.
StatementofCashFlows
2019 2018
Operatingactivities

Itemsnotaffectingcashflow

Cashflowfrom(usedby)operatingactivities
Investingactivities

Cashflowfrom(usedby)investingactivities
Continuedonnextpage
CHAPTERFOURTEEN/TheStatementofCashFlows 987
CHAPTER FOURTEEN
DP 142 continued
2. continued

Cash at end of year
Represented by
3. Analysis

CHAPTER FOURTEEN
DP 142 continued
Analysis continued

Copyright 2014 David Annand
Published by David Annand
4910C 58 St., Athabasca AB T9S 1L5
ISBN 978-0-9936701-1-4
Library and Archives Canada Cataloguing in Publication
Annand, David, 1954
This student workbook is licensed under a Creative Commons License,

AttributionNon-commercialShare Alike 4.0 Canada: see
www.creativecommons.org. This material may be reproduced for non-
commercial purposes and changes may be used by others provided that
credit is given to the original author.
To obtain permission for uses beyond those outlined in the Creative

Commons license, please contact David Annand, at
davida@athabascau.ca.
Latest version available at http://business.athabascau.ca/faculty/david-

annand-edd/
Please forward suggested changes to davida@athabascau.ca.
December 8, 2014

Student Workbook To Accompany Introduction To Financial Accounting

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Student Workbook To Accompany Introduction To Financial Accounting

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Авторское право:

Доступные форматы

Student Workbook to Accompany

Based on International Financial Reporting

Prepared by David Annand

Published by David Annand

4910C 58 St., Athabasca AB T9S 1L5

Library and Archives Canada Cataloguing in Publication

Annand, David, 1954

This student workbook is licensed under a Creative Commons License,

To obtain permission for uses beyond those outlined in the Creative

Latest version available at http://business.athabascau.ca/faculty/david-

Please forward suggested changes to davida@athabascau.ca.

CHAPTER ONE / Introduction to Financial Accounting 1

CHAPTER ONE / Introduction to Financial Accounting 3

Truck operating expense

Unused office supplies

CHAPTER ONE / Introduction to Financial Accounting 5

6 CHAPTER ONE / Introduction to Financial Accounting

Statement of Changes in Equity

CHAPTER ONE / Introduction to Financial Accounting 7

Statement of Changes in Equity

8 CHAPTER ONE / Introduction to Financial Accounting

CHAPTER ONE / Introduction to Financial Accounting 9

10 CHAPTER ONE / Introduction to Financial Accounting

ASSETS = LIABILITY + S/H EQUITY

Acct. Ppd. Unused Acct. Share Ret.

CHAPTER ONE / Introduction to Financial Accounting 11

12 CHAPTER ONE / Introduction to Financial Accounting

Statement of Changes in Equity

CHAPTER ONE / Introduction to Financial Accounting 13

14 CHAPTER ONE / Introduction to Financial Accounting

Statement of Changes in Equity

CHAPTER ONE / Introduction to Financial Accounting 15

16 CHAPTER ONE / Introduction to Financial Accounting

Statement of Changes in Equity

CHAPTER ONE / Introduction to Financial Accounting 17

18 CHAPTER ONE / Introduction to Financial Accounting

CHAPTER ONE / Introduction to Financial Accounting 19

Statement of Changes in Equity

20 CHAPTER ONE / Introduction to Financial Accounting

CHAPTER ONE / Introduction to Financial Accounting 21

Statement of Changes in Equity

22 CHAPTER ONE / Introduction to Financial Accounting

CHAPTER ONE / Introduction to Financial Accounting 23

24 CHAPTER ONE / Introduction to Financial Accounting

Snider Truck Rentals Corporation

ASSETS LIABILITIE S/H EQUITY

CHAPTER ONE / Introduction to Financial Accounting 25

Acc. Ppd. Ppd. Bank Acct. Un. Share Ret.

26 CHAPTER ONE / Introduction to Financial Accounting

Statement of Changes in Equity

CHAPTER ONE / Introduction to Financial Accounting 27

28 CHAPTER ONE / Introduction to Financial Accounting

Statement of Changes in Equity

CHAPTER ONE / Introduction to Financial Accounting 29

30 CHAPTER ONE / Introduction to Financial Accounting

Statement of Changes in Equity

CHAPTER ONE / Introduction to Financial Accounting 31

32 CHAPTER ONE / Introduction to Financial Accounting

Statement of Changes in Equity

CHAPTER ONE / Introduction to Financial Accounting 33

34 CHAPTER ONE / Introduction to Financial Accounting

CHAPTER ONE / Introduction to Financial Accounting 35

Statement of Changes in Equity