Principles of accounting chapter 1 homework answers

CHAPTER 1

Accounting in Action

ASSIGNMENT CLASSIFICATION TABLE

Learning Objectives

Questions

Brief

Exercises

Do It!

Exercises

A

Problems

B

Problems

1. Explain what accounting is.

1, 2, 5

1

1

2. Identify the users and uses of accounting.

3, 4

1

2

3. Understand why ethics is a fundamental business concept.

1

3

4. Explain generally accepted accounting principles.

6

1

3, 4

5. Explain the monetary unit assumption and the economic entity assumption.

7, 8, 9, 10

4

6. State the accounting equation, and define its components.

11, 12, 13, 22

1, 2, 3, 4, 5

2, 4

5, 6, 7, 10, 11, 16

1A, 2A 4A, 5A

1B, 2B 4B, 5B

7. Analyze the effects of business transactions on the accounting equation.

14, 15, 16, 18

6, 7, 8, 9

3

6, 7, 8, 10

1A, 2A, 4A

1B, 2B, 4B

8. Understand the four financial statements and how they are prepared.

17, 19, 20, 21

10, 11

4

9, 10, 11, 12, 13, 14, 15, 16

2A, 3A, 4A, 5A

2B, 3B, 4B, 5B

ASSIGNMENT CHARACTERISTICS TABLE

Problem

Number

Description

Difficulty

Level

Time Allotted (min.)

1A

Analyze transactions and compute net income.

Moderate

40–50

2A

Analyze transactions and prepare income statement, owner’s equity statement, and balance sheet.

Moderate

50–60

3A

Prepare income statement, owner’s equity statement, and balance sheet.

Moderate

50–60

4A

Analyze transactions and prepare financial statements.

Moderate

40–50

5A

Determine financial statement amounts and prepare owner’s equity statement.

Moderate

40–50

1B

Analyze transactions and compute net income.

Moderate

40–50

2B

Analyze transactions and prepare income statement, owner’s equity statement, and balance sheet.

Moderate

50–60

3B

Prepare income statement, owner’s equity statement, and balance sheet.

Moderate

50–60

4B

Analyze transactions and prepare financial statements.

Moderate

40–50

5B

Determine financial statement amounts and prepare owner’s equity statement.

Moderate

40–50

WEYGANDT ACCOUNTING PRINCIPLES 11E

CHAPTER 1

ACCOUNTING IN ACTION

Number

LO

BT

Difficulty

Time (min.)

BE1

6

AP

Simple

2–4

BE2

6

AP

Simple

3–5

BE3

6

AP

Moderate

4–6

BE4

6

AP

Moderate

4–6

BE5

6

C

Simple

2–4

BE6

7

C

Simple

2–4

BE7

7

C

Simple

2–4

BE8

7

C

Simple

2–4

BE9

7

C

Simple

1–2

BE10

8

AP

Simple

3–5

BE11

8

C

Simple

2–4

DI1

1, 2, 3, 4

K

Simple

2–4

DI2

6

K

Simple

2–4

DI3

7

AP

Simple

6–8

DI4

6, 8

AP

Moderate

8–10

EX1

1

C

Moderate

5–7

EX2

2

C

Simple

6–8

EX3

3, 4

C

Moderate

6–8

EX4

4, 5

C

Moderate

6–8

EX5

6

C

Simple

4–6

EX6

6, 7

C

Simple

6–8

EX7

6, 7

C

Simple

4–6

EX8

7

AP

Moderate

12–15

EX9

8

AP

Simple

12–15

EX10

6, 8

AP

Moderate

8–10

EX11

6, 8

AP

Moderate

6–8

EX12

8

AP

Simple

8–10

EX13

8

AN

Simple

8–10

EX14

8

AP

Simple

10–12

EX15

8

AP

Simple

6–8

EX16

6, 8

AP

Moderate

6–8

ACCOUNTING IN ACTION (Continued)

Number

LO

BT

Difficulty

Time (min.)

P1A

6, 7

AP

Moderate

40–50

P2A

6–8

AP

Moderate

50–60

P3A

8

AP

Moderate

50–60

P4A

6–8

AP

Moderate

40–50

P5A

6–8

AP

Moderate

40–50

P1B

6, 7

AP

Moderate

40–50

P2B

6–8

AP

Moderate

50–60

P3B

8

AP

Moderate

50–60

P4B

6–8

AP

Moderate

40–50

P5B

6–8

AP

Moderate

40–50

BYP1

8

AN

Simple

10–15

BYP2

8

AN, E

Simple

10–15

BYP3

BYP4

8

9

AN, E

C, AN

Simple

Simple

10–15

15–20

BYP5

7

E

Moderate

15–20

BYP6

8

E

Simple

12–15

BYP7

3

E

Simple

10–12

BYP8

BYP9

BYP10

3

–

–

E

AP

C

Moderate

Moderate

Simple

15–20

15–20

10–15

ANSWERS TO QUESTIONS

 1. Yes, this is correct. Virtually every organization and person in our society uses accounting information. Businesses, investors, creditors, government agencies, and not-for-profit organizations must use accounting information to operate effectively.

 2. Accounting is the process of identifying, recording, and communicating the economic events of an organization to interested users of the information. The first step of the accounting process is therefore to identify economic events that are relevant to a particular business. Once identified and measured, the events are recorded to provide a history of the financial activities of the organization. Recording consists of keeping a chronological diary of these measured events in an orderly and systematic manner. The information is communicated through the preparation and distribution of accounting reports, the most common of which are called financial statements. A vital element in the communication process is the accountant’s ability and responsibility to analyze and interpret the reported information.

 3. (a) Internal users are those who plan, organize, and run the business and therefore are officers and other decision makers.

(b) To assist management, managerial accounting provides internal reports. Examples include financial comparisons of operating alternatives, projections of income from new sales campaigns, and forecasts of cash needs for the next year.

 4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell owner​ship shares of a company.

(b) Creditors use accounting information to evaluate the risks of granting credit or lending money.

 5. No, this is incorrect. Bookkeeping usually involves only the recording of economic events and therefore is just one part of the entire accounting process. Accounting, on the other hand, involves the entire process of identifying, recording, and communicating economic events.

 6. Trenton Travel Agency should report the land at $90,000 on its December 31, 2014 balance sheet. This is true not only at the time the land is purchased, but also over the time the land is held. In determining which measurement principle to use (cost or fair value) companies weigh the factual nature of cost figures versus the relevance of fair value. In general, companies use cost. Only in situations where assets are actively traded do companies apply the fair value principle. An important concept that accountants follow is the historical cost principle.

 7. The monetary unit assumption requires that only transaction data that can be expressed in terms of money be included in the accounting records. This assumption enables accounting to quantify (measure) economic events.

 8. The economic entity assumption requires that the activities of the entity be kept separate and distinct from the activities of its owners and all other economic entities.

 9. The three basic forms of business organizations are: (1) proprietorship, (2) partnership, and (3) corporation.

Questions Chapter 1 (Continued)

10. One of the advantages Rachel Hipp would enjoy is that ownership of a corporation is repre​sented by transferable shares of stock. This would allow Rachel to raise money easily by selling a part of her ownership in the company. Another advantage is that because holders of the shares (stockholders) enjoy limited liability; they are not personally liable for the debts of the corporate entity. Also, because ownership can be transferred without dissolving the corporation, the corporation enjoys an unlimited life.

11. The basic accounting equation is Assets = Liabilities + Owner’s Equity.

12. (a) Assets are resources owned by a business. Liabilities are claims against assets. Put more simply, liabilities are existing debts and obligations. Owner’s equity is the ownership claim on total assets.

(b) Owner’s equity is affected by owner’s investments, drawings, revenues, and expenses.

13. The liabilities are: (b) Accounts payable and (g) Salaries and wages payable.

14. Yes, a business can enter into a transaction in which only the left side of the accounting equation is affected. An example would be a transaction where an increase in one asset is offset by a decrease in another asset. An increase in the Equipment account which is offset by a decrease in the Cash account is a specific example.

15. Business transactions are the economic events of the enterprise recorded by accountants because they affect the basic accounting equation.

(a) The death of the owner of the company is not a business transaction as it does not affect the basic accounting equation.

(b) Supplies purchased on account is a business transaction as it affects the basic accounting equation.

(c) An employee being fired is not a business transaction as it does not affect the basic accounting equation.

(d) A withdrawal of cash from the business is a business transaction as it affects the basic accounting equation.

16. (a) Decrease assets and decrease owner’s equity.

(b) Increase assets and decrease assets.

(c) Increase assets and increase owner’s equity.

(d) Decrease assets and decrease liabilities.

17. (a) Income statement. (d) Balance sheet.

(b) Balance sheet. (e) Balance sheet and owner’s equity statement.

(c) Income statement. (f) Balance sheet.

18. No, this treatment is not proper. While the transaction does involve a receipt of cash, it does not represent revenues. Revenues are the gross increase in owner’s equity resulting from business activities entered into for the purpose of earning income. This transaction is simply an additional investment made by the owner in the business.

Questions Chapter 1 (Continued)

19. Yes. Net income does appear on the income statement—it is the result of subtracting expenses from revenues. In addition, net income appears in the owner’s equity statement—it is shown as an addition to the beginning-of-period capital. Indirectly, the net income of a company is also included in the balance sheet. It is included in the capital account which appears in the owner’s equity section of the balance sheet.

20. (a) Ending capital balance $198,000

Beginning capital balance 168,000

Net income $ 30,000

(b) Ending capital balance $198,000

Beginning capital balance 168,000

  30,000

Deduct: Investment 13,000

Net income $ 17,000

21. (a) Total revenues ($20,000 + $70,000) $90,000

(b) Total expenses ($26,000 + $40,000) $66,000

(c) Total revenues $90,000

Total expenses 66,000

Net income $24,000

22. Apple’s accounting equation at September 24, 2011 was $116,371,000,000 = $39,756,000,000 + $76,615,000,000.

SOLUTIONS TO BRIEF EXERCISES

BRIEF EXERCISE 1-1

(a) $90,000 – $50,000 = $40,000 (Owner’s Equity).

(b) $40,000 + $70,000 = $110,000 (Assets).

(c) $94,000 – $53,000 = $41,000 (Liabilities).

BRIEF EXERCISE 1-2

(a) $120,000 + $232,000 = $352,000 (Total assets).

(b) $190,000 – $91,000 = $99,000 (Total liabilities).

(c) $800,000 – 0.5 ADVANCE \r 1 ($800,000) = $400,000 (Owner’s equity).

BRIEF EXERCISE 1-3

(a) ($800,000 + $150,000) – ($300,000 – $80,000) = $730,000

(Owner’s equity).

(b) ($300,000 + $100,000) + ($800,000 – $300,000 – $70,000) = $830,000

(Assets).

(c) ($800,000 – $80,000) – ($800,000 – $300,000 + $120,000) = $100,000

(Liabilities).

BRIEF EXERCISE 1-4

Owner’s Equity

Assets

=

Liabilities

+

Owner’s Capital

–

Owner’s Drawings

+

Revenues

–

Expenses

(a)

X

=

$90,000

+

$150,000

–

$40,000

+

$450,000

–

$320,000

X

=

$90,000

+

$240,000

X

=

$330,000

(b)

$57,000

=

X

+

$25,000

–

$7,000

+

$52,000

–

$35,000

$57,000

=

X

+

$35,000

X

=

$22,000 ($57,000 – $35,000)

(c)

$600,000

=

($600,000 x 2/3)

+

X (Owner’s equity)

$600,000

=

$400,000

+

X

X

=

$200,000

BRIEF EXERCISE 1-5

A (a) Accounts receivable A (d) Supplies

L (b) Salaries and wages payable OE (e) Owner’s capital

A (c) Equipment L (f) Notes payable

BRIEF EXERCISE 1-6

Assets

Liabilities

Owner’s Equity

(a)

+

+

NE

(b)

+

NE

+

(c)

–

NE

–

BRIEF EXERCISE 1-7

Assets

Liabilities

Owner’s Equity

(a)

+

NE

+

(b)

–

NE

–

(c)

NE

NE

NE

BRIEF EXERCISE 1-8

E (a) Advertising expense D (e) Owner’s drawings

R (b) Service revenue R (f) Rent revenue

E (c) Insurance expense E (g) Utilities expense

E (d) Salaries and wages expense

BRIEF EXERCISE 1-9

R (a) Received cash for services performed

NOE (b) Paid cash to purchase equipment

E (c) Paid employee salaries

BRIEF EXERCISE 1-10

FRITZ COMPANY

Balance Sheet

December 31, 2014

Assets

Cash $ 49,000

Accounts receivable 72,500

Total assets $121,500

Liabilities and Owner’s Equity

Liabilities

Accounts payable $ 90,000

Owner’s equity

Owner’s capital 31,500

Total liabilities and owner’s equity $121,500

BRIEF EXERCISE 1-11

BS (a) Notes payable

IS (b) Advertising expense

OE, BS (c) Owner’s capital

BS (d) Cash

IS (e) Service revenue

SOLUTIONS FOR DO IT! REVIEW EXERCISES

DO IT! 1-1

1. False. The three steps in the accounting process are identification, recording, and communication.

2. True

3. False. Congress passed the Sarbanes-Oxley Act to reduce unethical behavior and decrease the likelihood of future corporate scandals.

4. False. The primary accounting standard-setting body in the United States is the Financial Accounting Standards Board (FASB).

5. True.

DO IT! 1-2

1. Drawings is owner’s drawings (D); it decreases owner’s equity.

2. Rent Revenue is revenue (R); it increases owner’s equity.

3. Advertising Expense is an expense (E); it decreases owner’s equity.

4. When the owner puts personal assets into the business, it is investment by owner (I); it increases owner’s equity.

DO IT! 1-3

Assets

=

Liabilities

+

Owner’s Equity

Cash

+

Accounts Receivable

=

Accounts Payable

+

Owner’s Capital

–

Owner’s Drawings

+

Revenues

–

Expenses

(1)

+$20,000

+$20,000

(2)

+$20,000

–$20,000

(3)

+$2,300

–$2,300

(4)

–$ 3,600

–$3,600

DO IT! 1-4

(a) The total assets are $47,000, comprised of Cash $4,500, Accounts Receivable $13,500, and Equipment $29,000.

(b) Net income is $18,500, computed as follows:

Revenues

Service revenue $51,500

Expenses

Salaries and wages expense $16,500

Rent expense 10,500

Advertising expense 6,000

Total expenses 33,000

Net income $18,500

DO IT! 1-4 (Continued)

(c) The ending owner’s equity balance of Howard Company is $19,000. By rewriting the accounting equation, we can compute Owner’s Equity as Assets minus Liabilities, as follows:

Total assets [as computed in (a)] $47,000

Less: Liabilities

Notes payable $25,000

Accounts payable 3,000 28,000

Owner’s equity $19,000

Note that it is not possible to determine the company’s owner’s equity in any other way, because the beginning balance for owner’s equity is not provided.

SOLUTIONS TO EXERCISES

EXERCISE 1-1

C Analyzing and interpreting information.

R Classifying economic events.

C Explaining uses, meaning, and limitations of data.

R Keeping a systematic chronological diary of events.

R Measuring events in dollars and cents.

C Preparing accounting reports.

C Reporting information in a standard format.

I Selecting economic activities relevant to the company.

R Summarizing economic events.

EXERCISE 1-2

(a) Internal users

Marketing manager

Production supervisor

Store manager

Vice-president of finance

External users

Customers

Internal Revenue Service

Labor unions

Securities and Exchange Commission

Suppliers

(b) I Can we afford to give our employees a pay raise?

E Did the company earn a satisfactory income?

I Do we need to borrow in the near future?

E How does the company’s profitability compare to other companies?

I What does it cost us to manufacture each unit produced?

I Which product should we emphasize?

E Will the company be able to pay its short-term debts?

EXERCISE 1-3

Jill Motta, president of Motta Company, instructed Linda Berger, the head of the accounting department, to report the company’s land in their accounting reports at its fair value of $170,000 instead of its cost of $100,000, in an effort to make the company appear to be a better investment. The historical cost principle requires that assets be recorded and reported at their cost, because cost is faithfully representative and can be objectively measured and verified. In this case, the historical cost principle should be used and Land reported at $100,000, not $170,000.

The stakeholders include stockholders and creditors of Motta Company, potential stockholders and creditors, other users of Motta’s accounting reports, Jill Motta, and Linda Berger. All users of Motta’s accounting reports could be harmed by relying on information that may be unreliable. Jill Motta could benefit if the company is able to attract more investors, but would be harmed if the inappropriate reporting is discovered. Similarly, Linda Berger could benefit by pleasing her boss, but would be harmed if the inappropriate reporting is discovered.

Linda’s alternatives are to report the land at $100,000 or to report it at $170,000. Reporting the land at $170,000 is not appropriate since it may mislead many people who rely on Motta’s accounting reports to make finan​cial decisions. Linda should report the land at its cost of $100,000. She should try to convince Jill Motta that this is the appropriate course of action, but be prepared to resign her position if Motta insists.

EXERCISE 1-4

1. Incorrect. The historical cost principle requires that assets (such as buildings) be recorded and reported at their cost.

2. Correct. The monetary unit assumption requires that companies include in the accounting records only transaction data that can be expressed in terms of money.

3. Incorrect. The economic entity assumption requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities.

EXERCISE 1-5

Asset

Liability

Owner’s Equity

Cash

Accounts payable

Owner’s capital

Equipment

Notes payable

Supplies

Accounts receivable

Salaries and wages payable

EXERCISE 1-6

1. Increase in assets and increase in owner’s equity.

2. Decrease in assets and decrease in owner’s equity.

3. Increase in assets and increase in liabilities.

4. Increase in assets and increase in owner’s equity.

5. Decrease in assets and decrease in owner’s equity.

6. Increase in assets and decrease in assets.

7. Increase in liabilities and decrease in owner’s equity.

8. Increase in assets and decrease in assets.

9. Increase in assets and increase in owner’s equity.

EXERCISE 1-7

1. (c) 5. (d)

2. (d) 6. (b)

3. (a) 7. (e)

4. (b) 8. (f)

EXERCISE 1-8

(a) 1. Owner invested $15,000 cash in the business.

2. Purchased equipment for $5,000, paying $2,000 in cash and the balance of $3,000 on account.

3. Paid $750 cash for supplies.

4. Performed $8,500 of services, receiving $4,600 cash and $3,900 on account.

5. Paid $1,500 cash on accounts payable.

EXERCISE 1-8 (Continued)

6. Owner withdrew $2,000 cash for personal use.

7. Paid $650 cash for rent.

8. Collected $450 cash from customers on account.

9. Paid salaries and wages of $4,800.

10. Incurred $500 of utilities expense on account.

(b) Investment $15,000

Service revenue 8,500

Drawings (2,000 )

Rent expense (650 )

Salaries and wages expense (4,800 )

Utilities expense (500 )

Increase in owner’s equity $15,550

(c) Service revenue $8,500

Rent expense (650 )

Salaries and wages expense (4,800)

Utilities expense (500 )

Net income $2,550

EXERCISE 1-9

LIAM AGLER & CO.

Income Statement

For the Month Ended August 31, 2014

Revenues

Service revenue $8,500

Expenses

Salaries and wages expense $4,800

Rent expense 650

Utilities expense 500

Total expenses 5,950

Net income $2,550

EXERCISE 1-9 (Continued)

LIAM AGLER & CO.

Owner’s Equity Statement

For the Month Ended August 31, 2014

Owner’s capital, August 1 $ 0

Add: Investments $15,000

Net income 2,550 17,550

17,550

Less: Drawings 2,000

Owner’s capital, August 31 $15,550

LIAM AGLER & CO.

Balance Sheet

August 31, 2014

Assets

Cash $ 8,350

Accounts receivable 3,450

Supplies 750

Equipment 5,000

Total assets $17,550

Liabilities and Owner’s Equity

Liabilities

Accounts payable $ 2,000

Owner’s equity

Owner’s capital 15,550

Total liabilities and owner’s equity $17,550

EXERCISE 1-10

(a) Owner’s equity—12/31/13 ($400,000 – $250,000) $150,000

Owner’s equity—1/1/13 100,000

Increase in owner’s equity 50,000

Add: Drawings 15,000

Net income for 2013 $ 65,000

EXERCISE 1-10 (Continued)

(b) Owner’s equity—12/31/14 ($460,000 – $300,000) $160,000

Owner’s equity—1/1/14—see (a) 150,000

Increase in owner’s equity 10,000

Less: Additional investment 45,000

Net loss for 2014 $ 35,000

(c) Owner’s equity—12/31/15 ($590,000 – $400,000) $190,000

Owner’s equity—1/1/15—see (b) 160,000

Increase in owner’s equity 30,000

Less: Additional investment 15,000

15,000

Add: ADVANCE \r 1 Drawings 25,000

Net income for 2015 $ 40,000

EXERCISE 1-11

(a) Total assets (beginning of year) $110,000

Total liabilities (beginning of year) 85,000

Total owner’s equity (beginning of year) $ 25,000

(b) Total owner’s equity (end of year) $ 40,000

Total owner’s equity (beginning of year) 25,000

Increase in owner’s equity $ 15,000

Total revenues $215,000

Total expenses 175,000

Net income $ 40,000

Increase in owner’s equity $ 15,000

Less: Net income $(40,000)

Add: ADVANCE \r 1 Drawings 29,000) (11,000 )

Additional investment $ 4,000

(c) Total assets (beginning of year) $129,000

Total owner’s equity (beginning of year) 80,000

Total liabilities (beginning of year) $ 49,000

EXERCISE 1-11 (Continued)

(d) Total owner’s equity (end of year) $130,000

Total owner’s equity (beginning of year) 80,000

Increase in owner’s equity $ 50,000

Total revenues $100,000

Total expenses 60,000

Net income $ 40,000

Increase in owner’s equity $ 50,000

Less: Net income $(40,000)

Additional investment (25,000) (65,000)

Drawings $ 15,000

EXERCISE 1-12

DAVID PANDE CO.

Income Statement

For the Year Ended December 31, 2014

Revenues

Service revenue $63,600

Expenses

Salaries and wages expense $29,500

Rent expense 10,400

Utilities expense 3,100

Advertising expense 1,800

Total expenses 44,800

Net income $18,800

DAVID PANDE CO.

Owner’s Equity Statement

For the Year Ended December 31, 2014

Owner’s capital, January 1 $48,000

Add: ADVANCE \r 1 Net income 18,800

66,800

Less: Drawings 6,000

Owner’s capital, December 31 $60,800

EXERCISE 1-13

TAYLOR COMPANY

Balance Sheet

December 31, 2014

Assets

Cash $15,000

Accounts receivable 9,500

Supplies 8,000

Equipment 46,000

Total assets $78,500

Liabilities and Owner’s Equity

Liabilities

Accounts payable $21,000

Owner’s equity

Owner’s capital ($67,500 – $10,000) 57,500

Total liabilities and owner’s equity $78,500

EXERCISE 1-14

(a) Camping fee revenues $140,000

General store revenues 65,000

Total revenue 205,000

Expenses 150,000

Net income $ 55,000

(b) DEER PARK

Balance Sheet

December 31, 2014

Assets

Cash $ 23,000

Accounts Receivable 17,500

Equipment 105,500

Total assets $146,000

EXERCISE 1-14 (Continued)

DEER PARK

Balance Sheet (Continued)

December 31, 2014

Liabilities and Owner’s Equity

Liabilities

Notes payable $ 60,000

Accounts payable 11,000

Total liabilities 71,000

Owner’s equity

Owner’s capital ($146,000 – $71,000) 75,000

Total liabilities and owner’s equity $146,000

EXERCISE 1-15

GILLIGAN CRUISE COMPANY

Income Statement

For the Year Ended December 31, 2014

Revenues

Ticket revenue $410,000

Expenses

Salaries and wages expense $142,000

Maintenance and repairs expense 95,000

Advertising expense 24,500

Utilities expense 10,000

Total expenses 271,500

Net income $138,500

EXERCISE 1-16

HUAN FENG, ATTORNEY

Owner’s Equity Statement

For the Year Ended December 31, 2014

Owner’s capital, January 1 $ 34,000 (a)

Add: ADVANCE \r 1 Net income 124,000 (b)

158,000

Less: Drawings 90,000

Owner’s capital, December 31 $ 68,000 (c)

EXERCISE 1-16 (Continued)

Supporting Computations

(a) Assets, January 1, 2014 $ 96,000

Liabilities, January 1, 2014 62,000

Capital, January 1, 2014 $ 34,000

(b) Legal service revenue $335,000

Total expenses 211,000

Net income $124,000

(c) Assets, December 31, 2014 $168,000

Liabilities, December 31, 2014 100,000

Capital, December 31, 2014 $ 68,000

PROBLEM 1-1A (Continued)

(b) Service revenue $10,000

Expenses

Salaries and wages $2,500

Rent 600

Advertising 700 3,800

Net income $ 6,200

PROBLEM 1-2A (Continued)

(b) SUE KOJIMA, ATTORNEY AT LAW

Income Statement

For the Month Ended August 31, 2014

Revenues

Service revenue $7,500

Expenses

Salaries and wages expense $2,500

Rent expense 900

Advertising expense 400

Utilities expense 270

Total expenses 4,070

Net income $3,430

SUE KOJIMA, ATTORNEY AT LAW

Owner’s Equity Statement

For the Month Ended August 31, 2014

Owner’s capital, August 1 $ 8,800

Add: ADVANCE \r 1 Net income 3,430

12,230

Less: Drawings 700

Owner’s capital, August 31 $11,530

PROBLEM 1-2A (Continued)

SUE KOJIMA, ATTORNEY AT LAW

Balance Sheet

August 31, 2014

Assets

Cash $ 3,500

Accounts receivable 4,800

Supplies 500

Equipment 8,000

Total assets $16,800

Liabilities and Owner’s Equity

Liabilities

Notes payable $ 2,000

Accounts payable 3,270

Total liabilities 5,270

Owner’s equity

Owner’s capital 11,530

Total liabilities and owner’s equity $16,800

PROBLEM 1-3A

(a) CRAZY CREATIONS CO.

Income Statement

For the Month Ended June 30, 2014

Revenues

Service revenue $6,700

Expenses

Rent expense $1,600

Advertising expense 500

Gasoline expense 200

Utilities expense 150

Total expenses 2,450

Net income $4,250

CRAZY CREATIONS CO.

Owner’s Equity Statement

For the Month Ended June 30, 2014

Owner’s capital, June 1 $ 0

Add: ADVANCE \r 1 Investments $12,000

Net income 4,250 16,250

16,250

Less: Drawings 1,300

Owner’s capital, June 30 $14,950

CRAZY CREATIONS CO.

Balance Sheet

June 30, 2014

Assets

Cash $10,150

Accounts receivable 3,000

Supplies 2,000

Equipment 10,000

Total assets $25,150

PROBLEM 1-3A (Continued)

CRAZY CREATIONS CO.

Balance Sheet (Continued)

June 30, 2014

Liabilities and Owner’s Equity

Liabilities

Notes payable $ 9,000

Accounts payable 1,200

Total liabilities  10,200

Owner’s equity

Owner’s capital 14,950

Total liabilities and owner’s equity $25,150

(b) CRAZY CREATIONS CO.

Income Statement

For the Month Ended June 30, 2014

Revenues

Service revenue ($6,700 + $900) $7,600

Expenses

Rent expense $1,600

Advertising expense 500

Gasoline expense ($200 + $150) 350

Utilities expense 150

Total expenses 2,600

Net income $5,000

CRAZY CREATIONS CO.

Owner’s Equity Statement

For the Month Ended June 30, 2014

Owner’s capital, June 1 $ 0

Add: ADVANCE \r 1 Investments $12,000

Net income 5,000 17,000

17,000

Less: Drawings 1,300

Owner’s capital, June 30 $15,700

PROBLEM 1-4A (Continued)

(b) MENGE CONSULTING

Income Statement

For the Month Ended May 31, 2014

Revenues

Service revenue ($4,000 + $5,400) $9,400

Expenses

Salaries and wages expense $2,500

Rent expense 900

Utilities expense 275

Advertising expense 125

Total expenses 3,800

Net income $5,600

(c) MENGE CONSULTING

Balance Sheet

May 31, 2014

Assets

Cash $14,600

Accounts receivable 1,400

Supplies 600

Equipment 4,200

Total assets $20,800

Liabilities and Owner’s Equity

Liabilities

Notes payable $ 5,000

Accounts payable 4,200

Total liabilities 9,200

Owner’s equity

Owner’s capital 11,600*

Total liabilities and owner’s equity $20,800

*($7,000 + $5,600 – $1,000)

PROBLEM 1-5A

(a)

Farrell

Company

Prasad

Company

Thao

Company

Zinda

Company

(a)

$ 32,000

(d)

$50,000

(g)

$129,000

(j)

$ 60,000

(b)

110,000

(e)

40,000

(h)

98,000

(k)

251,000

(c)

16,000

(f)

33,000

(i)

385,000

(l)

444,000

(b) FARRELL COMPANY

Owner’s Equity Statement

For the Year Ended December 31, 2014

Owner’s capital, January 1 $32,000

Add: ADVANCE \r 1 Investment $16,000

Net income 17,000 33,000

65,000

Less: Drawings 15,000

Owner’s capital, December 31 $50,000

(c) The sequence of preparing financial statements is income statement, owner’s equity statement, and balance sheet. The interrelationship of the owner’s equity statement to the other financial statements results from the fact that net income from the income statement is reported in the owner’s equity statement and ending capital reported in the owner’s equity statement is the amount reported for owner’s equity on the balance sheet.

PROBLEM 1-1B (Continued)

(b) Service revenue ($6,100 + $750) $6,850

Expenses

Salaries and wages $2,000

Rent 400

Advertising 250

Utilities 170 2,820

Net income $4,030

PROBLEM 1-2B (Continued)

(b) PETER NIMMER, VETERINARIAN

Income Statement

For the Month Ended September 30, 2014

Revenues

Service revenue $7,800

Expenses

Salaries and wages expense $1,700

Rent expense 900

Advertising expense 450

Utilities expense 170

Total expenses 3,220

Net income $4,580

PETER NIMMER, VETERINARIAN

Owner’s Equity Statement

For the Month Ended September 30, 2014

Owner’s capital, September 1 $13,700

Add: ADVANCE \r 1 Net income 4,580

18,280

Less: Drawings 1,100

Owner’s capital, September 30 $17,180

PROBLEM 1-2B (Continued)

PETER NIMMER, VETERINARIAN

Balance Sheet

September 30, 2014

Assets

Cash $14,950

Accounts receivable 5,700

Supplies 600

Equipment 8,100

Total assets $29,350

Liabilities and Owner’s Equity

Liabilities

Notes payable $10,000

Accounts payable 2,170

Total liabilities 12,170

Owner’s equity

Owner’s capital 17,180

Total liabilities and owner’s equity $29,350

PROBLEM 1-3B

(a) RC FLYING SCHOOL

Income Statement

For the Month Ended May 31, 2014

Revenues

Service revenue $8,100

Expenses

Gasoline expense $2,500

Rent expense 1,200

Advertising expense 600

Utilities expense 400

Maintenance and repairs expense 400

Total expenses 5,100

Net income $3,000

RC FLYING SCHOOL

Owner’s Equity Statement

For the Month Ended May 31, 2014

Owner’s capital, May 1 $ 0

Add: ADVANCE \r 1 Investments $40,000

Net income 3,000 43,000

43,000

Less: Drawings 1,500

Owner’s capital, May 31 $41,500

RC FLYING SCHOOL

Balance Sheet

May 31, 2014

Assets

Cash $ 3,400

Accounts receivable 4,900

Equipment 64,000

Total assets $72,300

PROBLEM 1-3B (Continued)

RC FLYING SCHOOL

Balance Sheet (Continued)

May 31, 2014

Liabilities and Owner’s Equity

Liabilities

Notes payable $30,000

Accounts payable 800

Total liabilities 30,800

Owner’s equity

Owner’s capital 41,500

Total liabilities and owner’s equity $72,300

(b) RC FLYING SCHOOL

Income Statement

For the Month Ended May 31, 2014

Revenues

Service revenue ($8,100 + $900) $9,000

Expenses

Gasoline expense ($2,500 + $1,500) $4,000

Rent expense 1,200

Advertising expense 600

Utilities expense 400

Maintenance and repair expense 400

Total expenses 6,600

Net income $2,400

RC FLYING SCHOOL

Owner’s Equity Statement

For the Month Ended May 31, 2014

Owner’s capital, May 1 $ 0

Add: ADVANCE \r 1 Investments $40,000

Net income 2,400 42,400

42,400

Less: Drawings 1,500

Owner’s capital, May 31 $40,900

PROBLEM 1-4B (Continued)

(b) LULJAK DELIVERIES

Income Statement

For the Month Ended June 30, 2014

Revenues

Service revenue ($4,400 + $1,300) $5,700 Expenses

Salaries and wages expense $1,000

Rent expense 500

Utilities expense 250

Gasoline expense 200

Total expenses 1,950

Net income $3,750

(c) LULJAK DELIVERIES

Balance Sheet

June 30, 2014

Assets

Cash $ 7,800

Accounts receivable 3,150

Supplies 150

Equipment 12,000

Total assets $23,100

Liabilities and Owner’s Equity

Liabilities

Notes payable $ 9,400

Accounts payable 150

Total liabilities 9,550

Owner’s equity

Owner’s capital 13,550*

Total liabilities and owner’s equity $23,100

*($10,000 + $3,750 – $200)

PROBLEM 1-5B

(a)

Luo

Company

Foster

Company

Usher

Company

Merritt

Company

(a)

$ 45,000

(d)

$50,000

(g)

$120,000

(j)

$ 80,000

(b)

118,000

(e)

66,000

(h)

70,000

(k)

242,000

(c)

13,000

(f)

44,000

(i)

431,000

(l)

443,000

(b) FOSTER COMPANY

Owner’s Equity Statement

For the Year Ended December 31, 2014

Owner’s capital, January 1 $ 60,000

Add: Investment $15,000

Net income 35,000 50,000

110,000

Less: Drawings 44,000

Owner’s capital, December 31 $ 66,000

(c) The sequence of preparing financial statements is income statement, owner’s equity statement, and balance sheet. The interrelationship of the owner’s equity statement to the other financial statements results from the fact that net income from the income statement is reported in the owner’s equity statement and ending capital reported in the owner’s equity statement is the amount reported for owner’s equity on the balance sheet.

CCC1 CONTINUING COOKIE CHRONICLE

(a) Natalie has a choice between a sole proprietorship and a corporation. A partnership is not an option since she is the sole owner of the business.

A proprietorship is the easiest to create and operate because there are no formal procedures involved in creating the proprietorship. However, if she operates the business as a proprietorship she will personally have unlimited liability for the debts of the business. Operating the business as a corporation would limit her liability to her investment in the business. Natalie will in all likelihood require the services of a lawyer to incorporate. Costs to incorporate as well as additional ongoing costs to administrate and operate the business as a corporation may be costly.

My recommendation is that Natalie choose the proprietorship form of business organization. This is a very small business where the cost of incorporating outweighs the benefits of incorporating at this point in time. Furthermore, it will be easier to stop operating the business if Natalie decides not to continue with it once she has finished college.

(b) Yes, Natalie will need accounting information to help her operate her business. She will need information on her cash balance on a daily or weekly basis to help her determine if she can pay her bills. She will need to know the cost of her services so she can establish her prices. She will need to know revenue and expenses so she can report her net income for personal income tax purposes, on an annual basis. If she borrows money, she will need financial statements so lenders can assess the liquidity, solvency, and profitability of the business. Natalie would also find financial statements useful to better understand her business and identify any financial issues as early as possible. Monthly financial statements would be best because they are more timely, but they are also more work to prepare.

CCC1 (Continued)

(c) Assets: Cash, Accounts Receivable, Supplies, Equipment, Prepaid Insurance

Liabilities: Accounts Payable, Unearned Service Revenue, Notes Payable

Owner’s Equity: Owner’s Capital, Owner’s Drawings

Revenue: Service Revenue

Expenses: Advertising Expense, Rent Expense, Utilities Expense

(d) Natalie should have a separate bank account. This will make it easier to prepare financial statements for her business. The business is a separate entity from Natalie and must be accounted for separately.

BYP 1-1 FINANCIAL REPORTING PROBLEM

(a) Apple’s total assets at September 24, 2011 were $116,371 million and at September 25, 2010 were $75,183 million.

(b) Apple had $9,815 million of cash and cash equivalents at September 24, 2011.

(c) Apple had accounts payable totaling $14,632 million on September 24, 2011 and $12,015 million on September 25, 2010.

(d) Apple reports net sales for three consecutive years as follows:

2009 $108,249 million

2010 $65,225 million

2011 $42,905 million

(e) From 2010 to 2011, Apple’s net income increased $11,909 million from $14,013 million to $25,922 million.

BYP 1-2 COMPARATIVE ANALYSIS PROBLEM

(a)

(in millions)

PepsiCo

Coca-Cola

1.

Total assets

$72,882

$79,974

2.

Accounts receivable (net)

$6,912

$ 4,920

3.

Net sales

$66,504

$46,542

4.

Net income

$6,462

$ 8,634

(b) Coca-Cola’s total assets were approximately 10% greater than PepsiCo’s total assets, but PepsiCo’s net sales were 43% greater than Coca-Cola’s net sales. PepsiCo’s accounts receivable were 40% greater than Coca-Cola’s and represent 10% of its net sales. Coca-Cola’s accounts receivable amount to 11% of its net sales. Both PepsiCo’s and Coca-Cola’s accounts receivable are at satisfactory levels.

Coca-Cola’s net income 34% greater than PepsiCo’s. It appears that these two companies’ operations are comparable in some ways, with Coca-Cola’s operations significantly more profitable.

BYP 1-3 COMPARATIVE ANALYSIS PROBLEM

(a)

(in millions)

Amazon

Wal-Mart

1.

Total assets

$25,278

$193,406

2.

Accounts receivable (net)

$2,571

$5,937

3.

Net sales

$42,000

$443,854

4.

Net income

$631

$15,699

(b) Wal-Mart’s total assets were approximately 765% greater than Amazon’s total assets, and Wal-Mart’s net sales were over 10 times greater than Amazon’s net sales. Wal-Mart’s accounts receivable were 231% greater than Amazon’s and represent 1% of its net sales. Amazon’s accounts receivable amount to 6% of its net sales. Both Amazon’s and Wal-Mart’s accounts receivable are at satisfactory levels.

Wal-Mart’s net income was 25 times greater than Amazon’s. It appears that these two companies’ operations are comparable in some ways, but Wal-Mart’s operations are substantially more profitable.

BYP 1-4 REAL-WORLD FOCUS

(a) The field is normally divided into three broad areas: auditing, financial/ tax, and management accounting.

(b) The skills required in these areas:

People skills, sales skills, communication skills, analytical skills, ability to synthesize, creative ability, initiative, computer skills.

(c) The skills required in these areas differ as follows:

Auditing

Financial and Tax

Management

Accounting

People skills

Medium

Medium

Medium

Sales skills

Medium

Medium

Low

Communication skills

Medium

Medium

High

Analytical skills

High

Very High

High

Ability to synthesize

Medium

Low

High

Creative ability

Low

Medium

Medium

Initiative

Medium

Medium

Medium

Computer skills

High

High

Very High

(d) Some key job options in accounting:

Audit: Work in audit involves checking accounting ledgers and financial statements within corporations and government. This work is becoming increasingly computerized and can rely on sophisticated random sampling methods. Audit is the bread-and-butter work of accounting. This work can involve significant travel and allows you to really understand how money is being made in the company that you are analyzing. It’s great background!

Budget Analysis: Budget analysts are responsible for developing and managing an organization’s financial plans. There are plentiful jobs in this area in government and private industry. Besides quantitative skills many budget analyst jobs require good people skills because of negotiations involved in the work.

BYP 1-4 (Continued)

Financial: Financial accountants prepare financial statements based on general ledgers and participate in important financial decisions involving mergers and acquisitions, benefits/ERISA planning, and long-term finan​cial projections. This work can be varied over time. One day you may be running spreadsheets. The next day you may be visiting a customer or supplier to set up a new account and discuss business. This work requires a good understanding of both accounting and finance.

Management Accounting: Management accountants work in companies and participate in decisions about capital budgeting and line of busi​ness analysis. Major functions include cost analysis, analysis of new contracts, and participation in efforts to control expenses efficiently. This work often involves the analysis of the structure of organizations. Is responsibility to spend money in a company at the right level of our organization? Are goals and objectives to control costs being communi​cated effectively? Historically, many management accountants have been derided as “bean counters.” This mentality has undergone major change as management accountants now often work side by side with marketing and finance to develop new business.

Tax: Tax accountants prepare corporate and personal income tax state​ments and formulate tax strategies involving issues such as financial choice, how to best treat a merger or acquisition, deferral of taxes, when to expense items and the like. This work requires a thorough understanding of economics and the tax code. Increasingly, large corpo​rations are looking for persons with both an accounting and a legal background in tax. A person, for example, with a JD and a CPA would be especially desirable to many firms.

(e) Junior Staff Accountant $40,000-$80,000

BYP 1-5 DECISION MAKING ACROSS THE ORGANIZATION

(a) The estimate of the $6,100 loss was based on the difference between the $25,000 invested in the driving range and the bank balance of $18,900 at March 31. This is not a valid basis for determining income because it only shows the change in cash between two points in time.

(b) The balance sheet at March 31 is as follows:

CHIP-SHOT DRIVING RANGE

Balance Sheet

March 31, 2014

Assets

Cash $18,900

Buildings 8,000

Equipment 800

Total assets $27,700

Liabilities and Owner’s Equity

Liabilities

Accounts payable ($150 + $100) $ 250

Owner’s equity

Owner’s capital ($27,700 – $250) 27,450

Total liabilities and owner’s equity $27,700

As shown in the balance sheet, the owner’s capital at March 31 is $27,450. The estimate of $2,450 of net income is the difference between the initial investment of $25,000 and $27,450. This was not a valid basis for determining net income because changes in owner’s equity between two points in time may have been caused by factors unrelated to net income. For example, there may be drawings and/or additional capital investments by the owner(s).

BYP 1-5 (Continued)

(c) Actual net income for March can be determined by adding owner’s drawings to the change in owner’s capital during the month as shown below:

Owner’s capital, March 31, per balance sheet $27,450

Owner’s capital, March 1 25,000

Increase in owner’s capital 2,450

Add: Drawings 1,000

Net income $ 3,450

Alternatively, net income can be found by determining the revenues earned [described in (d) below] and subtracting expenses.

(d) Revenues earned can be determined by adding expenses incurred during the month to net income. March expenses were Rent, $1,000; Wages, $400; Advertising, $750; and Utilities, $100 for a total of $2,250. Revenues earned, therefore, were $5,700 ($2,250 + $3,450). Alternatively, since all revenues are received in cash, revenues earned can be computed from an analysis of the changes in cash as follows:

Beginning cash balance $25,000

Less: Cash payments

Caddy shack $8,000

Golf balls and clubs 800

Rent 1,000

Advertising 600

Wages 400

Drawings 1,000 11,800

Cash balance before revenues 13,200

Cash balance, March 31 18,900

Revenues earned $ 5,700

BYP 1-6 COMMUNICATION ACTIVITY

To: Ashley Hirano

From: Student

I have received the balance sheet of New York Company as of December 31, 2014. A number of items in this balance sheet are not properly reported. They are:

1. The balance sheet should be dated as of a specific date, not for a period of time. Therefore, it should be dated “December 31, 2014.”

2. Equipment should be shown as an asset and reported below Supplies on the balance sheet.

3. Accounts receivable should be shown as an asset, not a liability, and reported between Cash and Supplies on the balance sheet.

4. Accounts payable should be shown as a liability, not an asset. The note payable is also a liability and should be reported in the liability section.

5. Liabilities and owner’s equity should be shown on the balance sheet. Owner’s capital and Owner’s drawings are not liabilities.

6. Owner’s capital and Owner’s drawings are part of owner’s equity. The drawings account is not reported on the balance sheet but is subtracted from Owner’s capital to arrive at owner’s equity at the end of the period.

BYP 1-6 (Continued)

A correct balance sheet is as follows:

NEW YORK COMPANY

Balance Sheet

December 31, 2014

Assets

Cash $ 9,000

Accounts receivable 6,000

Supplies 2,000

Equipment 25,500

$42,500

Liabilities and Owner’s Equity

Liabilities

Notes payable $10,500

Accounts payable 8,000

Total liabilities 18,500

Owner’s equity

Owner’s capital ($26,000 – $2,000) 24,000

Total liabilities and owner’s equity $42,500

BYP 1-7 ETHICS CASE

(a) The students should identify all of the stakeholders in the case; that is, all the parties that are affected, either beneficially or negatively, by the action or decision described in the case. The list of stakeholders in this case are:

· Greg Thorpe, interviewee.

· Both Baltimore firms.

· Great Northern College.

(b) The students should identify the ethical issues, dilemmas, or other con​siderations pertinent to the situation described in the case. In this case the ethical issues are:

· Is it proper that Greg charged both firms for the total travel costs rather than split the actual amount of $296 between the two firms?

· Is collecting $592 as reimbursement for total costs of $296 ethical behavior?

· Did Greg deceive both firms or neither firm?

(c) Each student must answer the question for himself/herself. Would you want to start your first job having deceived your employer before your first day of work? Would you be embarrassed if either firm found out that you double-charged? Would your school be embarrassed if your act was uncovered? Would you be proud to tell your professor that you collected your expenses twice?

BYP 1-8 ALL ABOUT YOU

(a) Answers to the following will vary depending on students’ opinions.

(1) This does not represent the hiding of assets, but rather a choice as to the order of use of assets. This would seem to be ethical.

(2) This does not represent the hiding of assets, but rather is a change in the nature of assets. Since the expenditure was necessary, although perhaps accelerated, it would seem to be ethical.

(3) This represents an intentional attempt to deceive the financial aid office. It would therefore appear to be both unethical and poten​tially illegal.

(4) This is a difficult issue. By taking the leave, actual net income would be reduced. The form asks the applicant to report actual net income. However, it is potentially deceptive since you do not intend on taking unpaid absences in the future, thus future income would be higher than reported income.

(b) Companies might want to overstate net income in order to potentially increase the stock price by improving investors’ perceptions of the company. Also, a higher net income would make it easier to receive debt financing. Finally, managers would want a higher net income to increase the size of their bonuses.

(c) Sometimes companies want to report a lower income if they are nego​tiating with employees. For example, professional sports teams fre​quently argue that they can not increase salaries because they aren’t making enough money. This also occurs in negotiations with unions. For tax accounting (as opposed to the financial accounting in this course) companies frequently try to minimize the amount of reported taxable income.

(d) Unfortunately many times people who are otherwise very ethical will make unethical decisions regarding financial reporting. They might be driven to do this because of greed. Frequently it is because their superiors have put pressure on them to take an unethical action, and they are afraid to not follow directions because they might lose their job. Also, in some instances top managers will tell subordinates that they should be a team player, and do the action because it would help the company, and therefore would help fellow employees.

BYP 1-9 FASB CODIFICATION ACTIVITY

No solution necessary

BYP1-10 CONSIDERING PEOPLE, PLANET, AND PROFIT

(a) The 5 aspirations relate to the company’s goals related to sustaining its business, its brands, its people, its community and the planet.

(b) i. Support sustainable food and agriculture: Purchased 170 million pounds of organic ingredients since the company’s inception.

ii. Embrace zero waste business practices: Caddies are 100% shrink-wrap free and made from 100% recycled paperboard.

iii. Promote climate action and renewable energy: Installed largest “smart” solar array in North America that provides nearly all of its electrical needs.

iv. Conserve natural resources, protect wild places: Planted 40,000 trees in partnership with American Forests.

IFRS EXERCISES

IFRS1-1

The International Accounting Standards Board, IASB, and the Financial Accounting Standards Board, FASB, are two key players in developing inter​national accounting standards. The IASB releases international standards known as International Financial Reporting Standards (IFRS). The FASB releases U.S. standards, referred to a Generally Accepted Accounting Principles or GAAP.

IFRS1-2

Accounting standards have developed in different ways because the standard setters have responded to different user needs. In some countries, the primary users of financial statements are private investors; in others the primary users are taxing authorities or central government planners.

IFRS1-3

A single set of high-quality accounting standards is needed because of in​creases in multinational corporations, mergers and acquisitions, use of infor​mation technology, and international financial markets.

IFRS1-4

Currently the internal control standards applicable to Sarbanes-Oxley (SOX) apply only to large public companies listed on U.S. exchanges. If such standards were adopted by non-U.S. companies, users of statements would benefit from more uniform regulation and U.S. companies would be compet​ing on a more “even” playing field. The disadvantage of adopting SOX would be the additional cost associated with its required internal control measures.

IFRS1-5 INTERNATIONAL FINANCIAL REPORTING PROBLEM

(a) Grant Thornton UK LLP

(b) 1000 Highgate Studios, 53-79 Highgate Road, London, NW5 1TL

(c) The company reports in sterling (pounds).

(d) The company operates in Confectionary which had sales of £85.9 million and Natural and Premium Snacks which had sales of £49.1 million.

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Broadening Your Perspective�

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Real–World Focus�Considering � People, Planet, � and Profit�

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Financial Reporting�Comparative Analysis��

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All About You�Comparative Analysis�Decision–Making Across� the Organization�Communication Activity�Ethics Case�

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1-5

BLOOM’S TAXONOMY TABLE

1-24 Copyright © 2013 John Wiley & Sons, Inc.   Weygandt, Accounting Principles, 11/e, Solutions Manual   (For Instructor Use Only)

PROBLEM 1-1A

(a) RENATO’S TRAVEL AGENCY�

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