Solutions Manual For
Accounting 28th Edition By Carl Warren, Christine
Jonick & Jennifer Schneider.
, CHAPTER 1 Introduction to Accounting and Business
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 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 $4,50 0 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 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 Cost Basis.
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
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. (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) Owner’s Equity At The End Of The Period
(C) Cash At The End Of The Period
, CHAPTER 1 Introduction to Accounting and Business
Practice Exercises
Pe 1-1aPE 1-3B
$597,000. Under The Cost Concept, The Land Should Be Recorded At The Cost To
Boulder
Repair Service.
Pe 1-1b
$369,500. Under The Cost Concept, The Land Should Be Recorded At The Cost To
Clementine Repair Service.
Pe 1-2a
A. A = L + Oe
$518,000 = $165,000 + Oe
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 + Oe
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.
(3) Liability (Accounts Payable) Decreases By $4,100;
Asset (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.
, CHAPTER 1 Introduction to Accounting and Business
(2) Owner’s Equity (Advertising Expense, Increases) Decreases By $6,750;
Asset (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)
Accounting 28th Edition By Carl Warren, Christine
Jonick & Jennifer Schneider.
, CHAPTER 1 Introduction to Accounting and Business
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 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 $4,50 0 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 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 Cost Basis.
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
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. (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) Owner’s Equity At The End Of The Period
(C) Cash At The End Of The Period
, CHAPTER 1 Introduction to Accounting and Business
Practice Exercises
Pe 1-1aPE 1-3B
$597,000. Under The Cost Concept, The Land Should Be Recorded At The Cost To
Boulder
Repair Service.
Pe 1-1b
$369,500. Under The Cost Concept, The Land Should Be Recorded At The Cost To
Clementine Repair Service.
Pe 1-2a
A. A = L + Oe
$518,000 = $165,000 + Oe
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 + Oe
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.
(3) Liability (Accounts Payable) Decreases By $4,100;
Asset (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.
, CHAPTER 1 Introduction to Accounting and Business
(2) Owner’s Equity (Advertising Expense, Increases) Decreases By $6,750;
Asset (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)
