Summary Solution Manual Accounting 18th Edition Step-by-Step Answers

Solution manual for accounting 28th edition by
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1. Some users of accounting information include managers, employees, investors, cr
editors, customers, and the government.
2. The role of accounting is to provide information for managers to use in operating the
business. In addition, accounting provides information to others to use in assessing the
economic performance and condition of the business.
3. The corporate form allows the company to obtain large amounts of resources by issuing
stock. For this reason, most companies that require large investments in property, plant,
and equipment are organized as corporations.
4. No. The business entity concept limits the recording of economic data to transactions
directly affecting the activities of the business. The payment of the interest of $4,500
is a personal transaction of Josh Reilly and should notlbe recorded by Dispatch Deli
very Service.
5. The land should be recorded atlits costlof $167,500 to Reliable Repair Service. This is c
onsistent with the cost concept.
6. a.
No. The offer of $2,000,000 and the increase in the assessed value should not
be recognized in the accounting records because land is recorded on the costlbasis.
b.
Cash would increase by $2,125,000, land would decrease by $900,000, and
owner’s equity would increase by $1,225,000.
7. An account receivable is a claim against a customer for goods or services sold. An acco
unt payable is an amount owed to a creditor for goods or services purchased. Therefo
re, an account receivable in the records of the seller is an account payable in the recor
ds of the purchaser.
8. (b) The business realized net income of $91,000 ($679,000 –l$588,000).
9. (a) The business incurred a net loss of $75,000 ($640,000 – $715,000).
10. (a) Net income or net loss
(b) Owner’s equity at the end of the period
(c) Cash at the end oflthe period

, CHAPTER 1 Introduction to Accounting and Business




PRACTICE EXERCISES

PE 1-1A
$597,000. Under the costlconcept, the land should be recorded at the costlto Boulder Repa
ir Service.


PE 1-1B
$369,500. Under the costlconcept, the land should be recorded at the cost to Clementine R
epair Service.


PE 1-2A
a. A = L + OE
$518,000l = $165,000 + O
E OE = $353,000
b. A = L + OE
+$86,200 = +$25,000 +
OE OE = +$61,200
OE on December 31, 20Y9 = $353,000 + $61,200
= $414,200


PE 1-2B
a. A = L + OE
$382,000 = $94,000 + OE
OE = $288,000
b. A = L + OE
–
$63,000 = +$35,000 + O
E OE = –$98,000
OE on December 31, 20Y9 = $288,000 – $98,000
= $190,000


PE 1-3A
(2) Asset (Accounts Receivable) increases by $22,400;
Owner’s Equity (Delivery Service Fees) increases by $22,400.
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, CHAPTER 1 Introduction to Accounting and Business


PE 1-3B
(3) Liability (Accounts Payable) decreases by $4,100; A
sset (Cash) decreases by $4,100.
(4) Asset (Cash) increases by $14,700;
Asset (Accounts Receivable) decreases by $14,700.
(5) Asset (Cash) decreases by $1,600;
Owner’s Equity (Terry Young, Drawing) decreases by $1,600.
(2) Owner’s Equity (Advertising Expense, increases) decreases by $6,750; As
set (Cash) decreases by $6,750.
(3) Asset (Supplies) increases by $2,920;
Liability (Accounts Payable) increases by $2,920.
(4) Asset (Accounts Receivable) increases by $20,460;
Owner’s Equity (Delivery Service Fees) increases by $20,460.
(5) Asset (Cash) increases by $11,410;
Asset (Accounts Receivable) decreases by $11,410.


PE 1-4A

Up-in-the-Air Travel Service
Income Statement
For the Year Ended April 30, 20Y7
Fees earned $1,870,000
Expenses:
Wages expense $1,115,000
Office expense 343,000
Miscellaneous expense 21,000
Total expenses 1,479,000
Net income $ 391,000



PE 1-4B

Zenith Travel Service
Income Statement
For the Year Ended August 31, 20Y4
Fees earned $899,600
Expenses:
Wages expense $539,800
Office expense 353,800
Miscellaneous expense 14,400
Total expenses 908,000
Net loss $ (8,400

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, CHAPTER 1 Introduction to Accounting and Business

PE 1-5A

Up-in-the-Air Travel Service
Statement of Owner’s Equity For
the Year Ended April 30, 20Y7
Jerome Foley, capital, May 1, 20Y6 $ 876,000
Additional investment by owner during year $ 52,000
Net income for the year 391,000
Withdrawals (34,000
Increase in owner’s equity 409,000
Jerome Foley, capital, April 30, 20Y7 $1,285,000



PE 1-5B

Zenith Travel Service
Statement oflOwner’s Equity
For the Year Ended August 31, 20Y4
Megan Cox, capital, September 1, 20Y3 $456,000
Additional investment by owner during year $ 43,200
Netlloss for the year (8,400
Withdrawals (21,600
Increase in owner’s equity 13,200
Megan Cox, capital, August 31, 20Y4 $469,200



PE 1-6A

Up-in-the-Air Travel Service
Balance Sheet
April 30, 20Y7
Assets
Cash $ 170,000
Accounts receivable 417,000
Supplies 16,000
Land 772,000
Total assets $1,375,000
Liabilities
Accounts payable $ 90,000
Owner’s Equity
Jerome Foley, capital 1,285,000
Total liabilities and owner’s equity $1,375,000




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© 2021 Cengage Learning, Inc. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.