SOLUTION MANUAL FOR Accounting 28th Edition by Carl Warren , Christine Jonick ISBN:978-1337902687 Complete Guide| With Rationales | Revised Edition| | A+|

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, CHAPTER 1 BP



INTRODUCTION TO ACCOUNTING AND BUSINESS BP BP BP BP




DISCUSSION QUESTIONS BP




1. Some users of accounting information include managers, employees, investors, credito
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rs, customers, and the government.
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2. The role of accounting is to provide information for managers to use in operating the bus
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iness. In addition, accounting provides information to others to use in assessing the eco
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nomic performance and condition of the business.
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3. The corporate form allows the company to obtain large amounts of resources by iss
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uing stock. For this reason, most companies that require large investments in property, plan
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t, and equipment are organized as corporations.
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4. No. The business entity concept limits the recording of economic data to transactions dir
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ectly affecting the activities of the business. The payment of the interest of $4,500 is a
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personal transaction of Josh Reilly and should not be recorded by Dispatch Delivery Ser
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vice.
5. The land should be recorded at its cost of $167,500 to Reliable Repair Service. This is con
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sistent with the cost concept.
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6. a.
No. The offer of $2,000,000 and the increase in the assessed value should not be
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recognized in the accounting records because land is recorded on the cost basis.
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b.
Cash would increase by $2,125,000, land would decrease by $900,000, and own
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er’s equity would increase by $1,225,000.
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7. An account receivable is a claim against a customer for goods or services sold. An accou
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nt payable is an amount owed to a creditor for goods or services purchased. Therefore, an
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account receivable in the records of the seller is an account payable in the records of the
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purchaser.
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8. (b) B P The business realized net income of $91,000 ($679,000 – $588,000).
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9. (a) BPBP The business incurred a net loss of $75,000 ($640,000 – $715,000).
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10. (a) Net income or net loss
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(b) Owner’s equity at the end of the period
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(c) Cash at the end of the period
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©BP2021BPCengageBPLearning, BPInc. BPMayBPnotBPbeBPscanned, BPcopiedBPorBPduplicated,BPorBPpostedBPtoBPaBPpubliclyBPaccessible BPwebsite, BPi
nBPwholeBPorBPinBPpart.

, CHAPTER BP Introduction to Accounting and Busine
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1 ss
PE 1- BP PRACTICE EXERCISES BP


3B
PE 1-1A
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$597,000. Under the cost concept, the land should be recorded at the cost to Boulde
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r Repair Service.
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PE 1-1B
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$369,500. Under the cost concept, the land should be recorded at the cost to
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Clementine Repair Service.
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PE 1-2A
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a. A = L + OE B P B P


$518,000 = $165,000 + OE BP BP


OE = $353,000

b. A = L + OE B P B P


+$86,200 = +$25,000 + OE BP BP


OE = +$61,200
OE on December 31, 20Y
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9 0
= $414,200


PE 1-2B
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a. A = L + OE B P B P


$382,000 = $94,000 + OE BP BP


OE = $288,000

b. A = L + OE
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– BP = +$35,000 + OE – BP BP BP


$63,000 = $98,000
OE = $288,000 – BP


OE on December 31, 20Y
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9 $190,000

PE 1-3A
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(2) Asset (Accounts Receivable) increases by $22,400;
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Owner’s Equity (Delivery Service Fees) increases by $22,400.
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(3) Liability (Accounts Payable) decreases by $4,10
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0; Asset (Cash) decreases by $4,100.
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(4) Asset (Cash) increases by $14,700;
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Asset (Accounts Receivable) decreases by $14,700.
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(5) Asset (Cash) decreases by $1,600;
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Owner’s Equity (Terry Young, Drawing) decreases by $1,600.
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©BP 2021BP CengageBP Learning,BP Inc.BP MayBP notBP beB P scanned,BP copiedBP orBP duplicated,BP orBP postedB P toBP aBP publiclyBP accessibleBP websit
e,BP inBP wholeBP orB P inB P part.

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