?
A?
VI
TU
_S
ED
OV
PR
AP
,AP
TABLE OF CONTENTS
Solutions Manual: Financial Accounting, 17th Edition
PR By Carl S. Warren, Jefferson P. Jones, and William B. Tayler
Chapter 1 Introduction to Accounting and Business
OV
Chapter 2 Analyzing Transactions
Chapter 3 The Adjusting Process
Chapter 4 The Accounting Cycle
ED
Chapter 5 Accounting for Retail Businesses
Chapter 6 Inventories
Chapter 7 Internal Control and Cash
Chapter 8 Receivables
_S
Chapter 9 Long-Term Assets: Fixed and Intangible TU
Chapter 10 Liabilities: Current, Installment Notes, and Contingencies
Chapter 11 Liabilities: Bonds Payable
Chapter 12 Accounting for Partnerships and Limited Liability Companies
Chapter 13
VI
Corporations: Organization, Stock Transactions, and Dividends
Chapter 14 Statement of Cash Flows
Chapter 15 Financial Statement Analysis
A?
?
1
,AP CHAPTER 1
INTRODUCTION TO ACCOUNTING AND BUSINESS
DISCUSSION QUESTIONS
PR
1. Some users of accounting information include managers, employees, investors, creditors,
customers, and the government.
2. The role of accounting is to provide information for managers to use in operating the business.
OV
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.
ED
No. The business entity assumption 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 not be recorded by Dispatch Delivery Service.
5. The land should be recorded at its cost of $167,500 to Reliable Repair Service. This is consistent
6.
with the cost principle.
a.
_S
No. The offer of $2,000,000 and the increase in the assessed value should not be recognized
in the accounting records.
b. Cash would increase by $2,125,000, land would decrease by $900,000, and stockholders’
equity would increase by $1,225,000.
TU
7. An account receivable is a claim against a customer for goods or services sold. An account
payable is an amount owed to a creditor for goods or services purchased. Therefore, an account
receivable in the records of the seller is an account payable in the records of the purchaser.
8.
VI
(b) The business realized net income of $91,000 ($679,000 – $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) Common stock and retained earnings at the end of the period
A?
(c) Cash at the end of the period
?
, AP CHAPTER 1 Introduction to Accounting and Business
BASIC EXERCISES
BE 1–1
$190,000. Under the cost principle, the land should be recorded at the cost to Upstate
PR
Metal Roofing.
BE 1–2
a. A = L + SE
OV $710,000 = $195,000 + SE
SE = $515,000
b. A = L + SE
$710,000 + $125,000 = $195,000 + $25,000 + SE
ED
$835,000
SE
=
=
$220,000 + SE
$615,000
BE 1–3
_S
(2) Expense (Advertising Expense) increases by $8,500;
Asset (Cash) decreases by $8,500.
(3) Asset (Supplies) increases by $3,200;
Liability (Accounts Payable) increases by $3,200.
TU
(4) Asset (Accounts Receivable) increases by $31,750;
Revenue (Delivery Service Fees) increases by $31,750.
(5) Asset (Cash) increases by $27,700;
Asset (Accounts Receivable) decreases by $27,700.
VI
BE 1–4
Worldwide Travel
A?
Income Statement
For the Year Ended July 31, 20Y6 ?
Fees earned $ 1,175,000
Expenses:
Salary and wages expense $776,000
Office expense 175,000
Miscellaneous expense 80,000
Total expenses (1,031,000)
Net income $ 144,000
A?
VI
TU
_S
ED
OV
PR
AP
,AP
TABLE OF CONTENTS
Solutions Manual: Financial Accounting, 17th Edition
PR By Carl S. Warren, Jefferson P. Jones, and William B. Tayler
Chapter 1 Introduction to Accounting and Business
OV
Chapter 2 Analyzing Transactions
Chapter 3 The Adjusting Process
Chapter 4 The Accounting Cycle
ED
Chapter 5 Accounting for Retail Businesses
Chapter 6 Inventories
Chapter 7 Internal Control and Cash
Chapter 8 Receivables
_S
Chapter 9 Long-Term Assets: Fixed and Intangible TU
Chapter 10 Liabilities: Current, Installment Notes, and Contingencies
Chapter 11 Liabilities: Bonds Payable
Chapter 12 Accounting for Partnerships and Limited Liability Companies
Chapter 13
VI
Corporations: Organization, Stock Transactions, and Dividends
Chapter 14 Statement of Cash Flows
Chapter 15 Financial Statement Analysis
A?
?
1
,AP CHAPTER 1
INTRODUCTION TO ACCOUNTING AND BUSINESS
DISCUSSION QUESTIONS
PR
1. Some users of accounting information include managers, employees, investors, creditors,
customers, and the government.
2. The role of accounting is to provide information for managers to use in operating the business.
OV
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.
ED
No. The business entity assumption 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 not be recorded by Dispatch Delivery Service.
5. The land should be recorded at its cost of $167,500 to Reliable Repair Service. This is consistent
6.
with the cost principle.
a.
_S
No. The offer of $2,000,000 and the increase in the assessed value should not be recognized
in the accounting records.
b. Cash would increase by $2,125,000, land would decrease by $900,000, and stockholders’
equity would increase by $1,225,000.
TU
7. An account receivable is a claim against a customer for goods or services sold. An account
payable is an amount owed to a creditor for goods or services purchased. Therefore, an account
receivable in the records of the seller is an account payable in the records of the purchaser.
8.
VI
(b) The business realized net income of $91,000 ($679,000 – $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) Common stock and retained earnings at the end of the period
A?
(c) Cash at the end of the period
?
, AP CHAPTER 1 Introduction to Accounting and Business
BASIC EXERCISES
BE 1–1
$190,000. Under the cost principle, the land should be recorded at the cost to Upstate
PR
Metal Roofing.
BE 1–2
a. A = L + SE
OV $710,000 = $195,000 + SE
SE = $515,000
b. A = L + SE
$710,000 + $125,000 = $195,000 + $25,000 + SE
ED
$835,000
SE
=
=
$220,000 + SE
$615,000
BE 1–3
_S
(2) Expense (Advertising Expense) increases by $8,500;
Asset (Cash) decreases by $8,500.
(3) Asset (Supplies) increases by $3,200;
Liability (Accounts Payable) increases by $3,200.
TU
(4) Asset (Accounts Receivable) increases by $31,750;
Revenue (Delivery Service Fees) increases by $31,750.
(5) Asset (Cash) increases by $27,700;
Asset (Accounts Receivable) decreases by $27,700.
VI
BE 1–4
Worldwide Travel
A?
Income Statement
For the Year Ended July 31, 20Y6 ?
Fees earned $ 1,175,000
Expenses:
Salary and wages expense $776,000
Office expense 175,000
Miscellaneous expense 80,000
Total expenses (1,031,000)
Net income $ 144,000
