Accounting 28th Edition
by Warren, Jonick. Ch 1 to 26
SOLUTIONS MANUAL
,Table of contents
1. Introduction to Accounting and Business.
2. Analyzing Transactions.
3. The Adjusting Process.
4. Completing the Accounting Cycle.
5. Accounting Systems.
6. Accounting for Merchandising Businesses.
7. Inventories.
8. Internal Controls and Cash.
9. Receivables.
10. Long-Term Assets: Fixed and Intangible.
11. Current Liabilities and Payroll.
12. Accounting for Partnerships and Limited Liability
Companies.
13. Corporations: Organization, Stock Transactions, and
Dividends.
14. Long-Term Liabilities: Bonds and Notes.
15. Investments and Fair Value Accounting.
Mornin’ Joe.
16. Statement of Cash Flows.
,17. Financial Statement Analysis.
18. Introduction to Managerial Accounting.
19. Job Order Costing.
20. Process Cost Systems.
21. Cost Behavior and Cost-Volume-Profit Analysis.
22. Budgeting.
23. Evaluating Variances from Standard Costs.
24. Decentralized Operations.
25. Differential Analysis, Product Pricing, and Activity-Based
Costing.
26. Capital Investment Analysis.
, CHAPTER 1
INTRODUCTION TO ACCOUNTING AND BUSINESS
DISCUSSION QUESTIONS
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.In
addition, accounting provides information to others to use in assessing the economic
performance and condition of the business.
3. The corporate form alloẅs 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 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
ẅith the cost concept.
6. a. No. The offer of $2,000,000 and the increase in the assessed value should not be recognizedin
the accounting records because land is recorded on the cost basis.
b. Cash ẅould increase by $2,125,000, land ẅould decrease by $900,000, and oẅner’s equity
ẅould increase by $1,225,000.
7. An account receivable is a claim against a customer for goods or services sold. An account
payable is an amount oẅed 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. (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) Oẅner’s equity at the end of the period
(c) Cash at the end of the period
1-1
by Warren, Jonick. Ch 1 to 26
SOLUTIONS MANUAL
,Table of contents
1. Introduction to Accounting and Business.
2. Analyzing Transactions.
3. The Adjusting Process.
4. Completing the Accounting Cycle.
5. Accounting Systems.
6. Accounting for Merchandising Businesses.
7. Inventories.
8. Internal Controls and Cash.
9. Receivables.
10. Long-Term Assets: Fixed and Intangible.
11. Current Liabilities and Payroll.
12. Accounting for Partnerships and Limited Liability
Companies.
13. Corporations: Organization, Stock Transactions, and
Dividends.
14. Long-Term Liabilities: Bonds and Notes.
15. Investments and Fair Value Accounting.
Mornin’ Joe.
16. Statement of Cash Flows.
,17. Financial Statement Analysis.
18. Introduction to Managerial Accounting.
19. Job Order Costing.
20. Process Cost Systems.
21. Cost Behavior and Cost-Volume-Profit Analysis.
22. Budgeting.
23. Evaluating Variances from Standard Costs.
24. Decentralized Operations.
25. Differential Analysis, Product Pricing, and Activity-Based
Costing.
26. Capital Investment Analysis.
, CHAPTER 1
INTRODUCTION TO ACCOUNTING AND BUSINESS
DISCUSSION QUESTIONS
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.In
addition, accounting provides information to others to use in assessing the economic
performance and condition of the business.
3. The corporate form alloẅs 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 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
ẅith the cost concept.
6. a. No. The offer of $2,000,000 and the increase in the assessed value should not be recognizedin
the accounting records because land is recorded on the cost basis.
b. Cash ẅould increase by $2,125,000, land ẅould decrease by $900,000, and oẅner’s equity
ẅould increase by $1,225,000.
7. An account receivable is a claim against a customer for goods or services sold. An account
payable is an amount oẅed 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. (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) Oẅner’s equity at the end of the period
(c) Cash at the end of the period
1-1
