SOLUTIONS MANUAL for Accounting 28th Edition
R R R R R
by Carl Warren, Christine Jonick & Jennifer Schne
R R R R R R R R
ider. (Complete Chapters 1-26)
R R R
, CHAPTERR1
INTRODUCTIONRTORACCOUNTINGRANDRBUSINESS
DISCUSSIONRQUESTIONS
1. SomeR usersR ofR accountingR informationR includeR managers,R employees,R investors,R cre
ditors,Rcustomers,RandR theRgovernment.
2. TheR roleR ofR accountingR isR toR provideR informationR forR managersR toR useR inR operatingR the
R business.RInRaddition,RaccountingRprovidesRinformationRtoRothersRtoRuseRinRassessingRtheR
economicRperformanceRandR conditionR ofR theRbusiness.
3. TheR corporateR formR allowsR theR companyR toR obtainR largeR amountsR ofR resourcesR byR issuin
gR stock.RForRthisRreason,RmostRcompaniesRthatRrequireRlargeRinvestmentsRinRproperty,Rplant,
RandRequipmentRareRorganizedRasRcorporations.
4. No.R TheR businessR entityR conceptR limitsR theR recordingR ofR economicR dataR toR transactions
R directlyRaffectingRtheRactivitiesRofRtheRbusiness.RTheRpaymentRofRtheRinterestRofR$4,500R
isRaRpersonalRtransactionR ofRJoshR ReillyRandR shouldR notR beRrecordedR byR DispatchRDelive
ryR Service.
5. TheR landR shouldRbeR recordedR atR itsR costR ofR $167,500R toRReliableR RepairR Service.R ThisR isR
consistentRwithRtheR costR concept.
6. a.
No.R TheR offerR ofR $2,000,000R andR theR increaseR inRtheR assessedR valueR shouldR notR be
R recognizedRinRtheR accountingR recordsR becauseR landR isRrecordedR onR theR costR basis.
b.
CashR wouldR increaseR byR $2,125,000,R landR wouldR decreaseR byR $900,000,R andR owne
r’sR equityRwouldRincreaseRbyR $1,225,000.
7. AnRaccountRreceivableRisRaRclaimRagainstRaRcustomerRforRgoodsRorRservicesRsold.RAnRacco
untRpayableR isR anRamountR owedRtoRaR creditorR forR goodsR orR servicesR purchased.R Therefor
e,R anRaccountRreceivableR inRtheR recordsR ofR theR sellerR isRanRaccountR payableR inRtheR record
sR ofR theRpurchaser.
8. (b)R TheR businessR realizedR netR incomeR ofR $91,000R ($679,000R –R $588,000).
9. (a)R TheR businessR incurredR aR netR lossR ofR $75,000R ($640,000R –R $715,000).
10. (a)R NetR incomeR orR netR loss
(b) Owner’sR equityR atRtheR endRofR theR period
(c) CashRatRtheR endR ofR theR period
,1-1
,
R R R R R
by Carl Warren, Christine Jonick & Jennifer Schne
R R R R R R R R
ider. (Complete Chapters 1-26)
R R R
, CHAPTERR1
INTRODUCTIONRTORACCOUNTINGRANDRBUSINESS
DISCUSSIONRQUESTIONS
1. SomeR usersR ofR accountingR informationR includeR managers,R employees,R investors,R cre
ditors,Rcustomers,RandR theRgovernment.
2. TheR roleR ofR accountingR isR toR provideR informationR forR managersR toR useR inR operatingR the
R business.RInRaddition,RaccountingRprovidesRinformationRtoRothersRtoRuseRinRassessingRtheR
economicRperformanceRandR conditionR ofR theRbusiness.
3. TheR corporateR formR allowsR theR companyR toR obtainR largeR amountsR ofR resourcesR byR issuin
gR stock.RForRthisRreason,RmostRcompaniesRthatRrequireRlargeRinvestmentsRinRproperty,Rplant,
RandRequipmentRareRorganizedRasRcorporations.
4. No.R TheR businessR entityR conceptR limitsR theR recordingR ofR economicR dataR toR transactions
R directlyRaffectingRtheRactivitiesRofRtheRbusiness.RTheRpaymentRofRtheRinterestRofR$4,500R
isRaRpersonalRtransactionR ofRJoshR ReillyRandR shouldR notR beRrecordedR byR DispatchRDelive
ryR Service.
5. TheR landR shouldRbeR recordedR atR itsR costR ofR $167,500R toRReliableR RepairR Service.R ThisR isR
consistentRwithRtheR costR concept.
6. a.
No.R TheR offerR ofR $2,000,000R andR theR increaseR inRtheR assessedR valueR shouldR notR be
R recognizedRinRtheR accountingR recordsR becauseR landR isRrecordedR onR theR costR basis.
b.
CashR wouldR increaseR byR $2,125,000,R landR wouldR decreaseR byR $900,000,R andR owne
r’sR equityRwouldRincreaseRbyR $1,225,000.
7. AnRaccountRreceivableRisRaRclaimRagainstRaRcustomerRforRgoodsRorRservicesRsold.RAnRacco
untRpayableR isR anRamountR owedRtoRaR creditorR forR goodsR orR servicesR purchased.R Therefor
e,R anRaccountRreceivableR inRtheR recordsR ofR theR sellerR isRanRaccountR payableR inRtheR record
sR ofR theRpurchaser.
8. (b)R TheR businessR realizedR netR incomeR ofR $91,000R ($679,000R –R $588,000).
9. (a)R TheR businessR incurredR aR netR lossR ofR $75,000R ($640,000R –R $715,000).
10. (a)R NetR incomeR orR netR loss
(b) Owner’sR equityR atRtheR endRofR theR period
(c) CashRatRtheR endR ofR theR period
,1-1
,
