Solution manual for accounting 28th edition by carl s warren christine

SOLUTIONSMANUAL forAccounting28thEdition
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by Carl ytyt y t yt




Warren, ChristineJonick & Jennifer
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Schnei ytyt




der. (CompleteChapters1-26)
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, CHAPTER 1 yt




INTRODUCTION TO ACCOUNTING AND BUSINESS yt yt yt yt




DISCUSSION QUESTIONS yt




1. Some users of accounting information include managers, employees, investors, creditors
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, customers, and the government.
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2. The role of accounting is to provide information for managers to use in operating the business. I
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n addition, accounting provides information to others to use in assessing the economic perfor
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mance and condition of the business. yt yt yt yt yt




3. The corporate form allows the company to obtain large amounts of resources by issuing stock.
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y For this reason, most companies that require large investments in property, plant, and equip
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ment are organized as corporations. y t y t y t y t




4. No. The business entity concept limits the recording of economic data to transactions directly af
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fecting the activities of the business. The payment of the interest of $4,500 is a personal tran
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saction of Josh Reilly and should not be recorded by Dispatch Delivery Service.
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5. The land should be recorded at its cost of $167,500 to Reliable Repair Service. This is consistent
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th 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 recognized
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y t 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 owner’s e
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quity would increase by $1,225,000. y t y t y t y t




7. An account receivable is a claim against a customer for goods or services sold. An account pay
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able is an amount owed to a creditor for goods or services purchased. Therefore, an account receiv
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able in the records of the seller is an account payable in the records of the purchaser.
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8. (b) The business realized net income of $91,000 ($679,000 – $588,000).
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9. (a) 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 yt yt yt yt yt yt yt



(c) Cash at the end of the period yt yt yt yt yt yt




1-1

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, CHAPTER 1 yt Introduction to Accounting and Business yt yt yt yt




PRACTICE EXERCISES yt




PE 1-1A
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$597,000. Under the cost concept, the land should be recorded at the cost to Boulder Repair
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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 Clem
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entine Repair Service.
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PE 1-2A
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a. A = L + OE yty t y t y t y t



$518,000 = $165,000 + OE ytyt yt yt



OE = $353,000 ytyt




b. A = L + OE yty t y t y t y t



+$86,200 = +$25,000 + O yty t y t yt yt



E OE = +$61,200 yt yty t y t



OE on December 31, 20Y9 = $353,000 + $61,200
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= $414,200 y t




PE 1-2B
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a. A = L + OE yty t y t y t y t



$382,000 = $94,000 + OE ytyt yt yt



OE = $288,000 ytyt




b. A = ytyt L + OE
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–$63,000 = ytyt +$35,000 + OE yt yt



OE = ytyt –$98,000
OE on December 31, 20Y9
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= ytyt $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 $4,100;
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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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