FULL SOLUTION MANUAL FOR b b b
Financial And Managerial Accounting 4th Edition by Jerry J b b b b b b b b
Weygandt, Paul DKimmel, Jill E Mitchel
b b b b b b b
CHAPTER1 b
Accounting in Action b b
ASSIGNMENTCLASSIFICATION TABLE b b
Brief A
Learning Objectives b Questions b Exercises Do It! b Exercises Problems
1. Identify the activities and b b b 1, 2, 3, 4, 5
b b b b 1 1, 2b
users associated with
b b b
accounting.
b
2. Explain the building blocks of 6, 7, 8, 9, 10
b b b b b b b b b 2 3, 4b
accounting: ethics, principles,
b b b
and assumptions.b b
3. State the accountingb b 11, 12, 13, 14. b b b 1, 2, 3, 4, 5
b b b b 3 5
equation, and define its
b b b b 22
components.
b
4. Analyze the effects of b b b 15, 16, 18 b b 6, 7, 8, 9
b b b 4 6, 7, 8
b b 1A, 2A, 4A,
b b
business transactions on the
b b b b 5A
accounting equation.
b b
5. Describe the four financial b b b
17, 19, 20, 21, b b b 10, 11 b 5 8, 9, 10, 11,
b b b 2A, 3A, 4A,
b b
statements and how they are
b b b b b
12, 13, 14, 15,
b b b 5A
prepared.
b 16, 17, 18
b b
© 2021 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted,in anyform
b b b b b b b b b b b b b b b b b b b b b b b b b b b
or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law. Advice on how to
b b b b b b b b b b b b b b b b b b b
obtain permission toreusethis materialis available at http://www.wiley.com/go/permissions.
b b b b b b b b b
, ANSWERS TO QUESTIONS b b
1. True. Virtually every organization and person in our society uses accounting information. Businesses,
b b b b b b b b b b b b
investors, creditors, government agencies, and not-for-profit organizations must use accounting
b b b b b b b b b b
information to operate effectively.
b b b b
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
2. Accounting is the process of identifying, recording, and communicating the economic events of an b b b b b b b b b b b b b
organization to interested users of the information. The first activity of the accounting process is to
b b b b b b b b b b b b b b b b
identify economic events that are relevant to a particular business. Once identified and measured, the
b b b b b b b b b b b b b b b
events are recorded to provide a history of the financial activities of the organization. Recording
b b b b b b b b b b b b b b b
consists of keeping a chronological diary of these measured events in an orderly and systematic
b b b b b b b b b b b b b b b
manner. The information is communicated through the preparation and distribution of accounting
b b b b b b b b b b b b
breports, the most common of which are called financial statements. A vital element in the
b b b b b b b b b b b b b b
communication process is the accountant’s ability and responsibility to analyze and interpret the
b b b b b b b b b b b b b
reported information.
b b
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
3. (a) Internal users are those who plan, organize, and run the business and therefore are officers and
b b b b b b b b b b b b b b b b
other decision makers. b b b
(b) To assist management, accounting provides internal reports. Examples include financial
b b b b b b b b b
comparisons of operating alternatives, projections of income from new sales campaigns, and
b b b b b b b b b b b b
forecasts of cash needs for the next year.
b b b b b b b b
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
4. (a) Investors (owners) use accounting information to make decisionsto buy, hold, or sell stock. b b b b b b b b b b b b b
(b) Creditorsuseaccountinginformationtoevaluatetherisksofgrantingcreditorlendingmoney. b b b b b b b b b b b b b
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
5. False. Bookkeeping usually involves only the recording of economic events and therefore is just one
b b b b b b b b b b b b b b
part of the entire accounting process. Accounting, on the other hand, involves the entire process of
b b b b b b b b b b b b b b b b
identifying, recording, and communicating economic events.
b b b b b b
LO 1, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
6. Harper Travel Agency should report the land at $85,000 on its December 31, 2022 balance sheet.
b b b b b b b b b b b b b b b
This is true not only at the time the land is purchased, but also over the time the land is held. In determining
b b b b b b b b b b b b b b b b b b b b b b b
which measurement principle to use (historical cost or fair value) companies weigh the factual nature of
b b b b b b b b b b b b b b b b
cost figures versus the relevance of fair value. In general, companies use historical cost. Only in
b b b b b b b b b b b b b b b b
situations where assets are actively traded do companies apply the fair value principle.
b b b b b b b b b b b b b
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:
b b b b b b b b b b b b b b b b b
Reporting b
7. The monetary unit assumption requires that only transaction data capable of being expressed in terms
b b b b b b b b b b b b b b
of money be included in the accounting records. This assumption enables accounting to quantify
b b b b b b b b b b b b b b
(measure) economic events.
b b b
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:Reporting
b b b b b b b b b b b b b b b b b b
1-2 © 2021 John Wiley & Sons, Inc. All rights reserved.
b b b b b b b b b b Weygandt, Financial & Managerial Accounting 4e, Solutions Manual (For Instructor Use Only)
b b b b b b b bb b b b b
,QuestionsChapter 1 (Continued) b b b
8. The economic entity assumption requires that the activities of the entity be kept separate anddistinct
b b b b b b b b b b b b b b b
fromthe activities of its owners and all other economic entities.
b b b b b b b b b b b
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:Reporting
b b b b b b b b b b b b b b b b b b
9. The three basic forms of business organizations are (1) proprietorship, (2) partnership, and
b b b b b b b b b b b b
(3) corporation.b
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
10. One of the advantages Juana would enjoy is that ownership of a corporation is represented by
b b b b b b b b b b b b b b b
transferable shares of stock. This would allow Juana to raise money easily by selling a part of her
b b b b b b b b b b b b b b b b b b
ownership in the company. Another advantage is that because holders of the shares (stockholders)
b b b b b b b b b b b b b b
enjoy limited liability, they are not personally liable for the debts of the corporate entity. Also, because
b b b b b b b b b b b b b b b b b
ownershipcanbetransferredwithoutdissolvingthecorporation,thecorporationenjoys an unlimited life.
b b b b b b b b b b b b b b
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
11. The basicaccounting equation is Assets = Liabilities +Stockholders’ Equity.
b b b b b b b b b b
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
12. (a) Assets are resources owned by a business. Liabilities are creditor claims against assets— that is,
b b b b b b b b b b b b b b b b b b
existing debts and obligations. Stockholders’ equity is the ownership claim on total assets.
b b b b b b b b b b b b b
(b) Stockholders’ equity is affected by stockholders’ investments, dividends, revenues, and b b b b b b b b b
expenses. b
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
13. The liabilitiesare (b) Accountspayable and (g)Salaries andWages Payable.
b b b b b b b b b b b
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
14. Yes, a business can enter into a transaction in which only the left side of the accounting equation is
b b b b b b b b b b b b b b b b b b
affected. An example would be a transaction where an increase in one asset is offset by a
b b b b b b b b b b b b b b b b b
decrease in another asset. An increase in the Equipment account which is offset by a decrease in the
b b b b b b b b b b b b b b b b b b
Cash account is a specific example.
b b b b b b
LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
15. Business transactions are the economic events of the enterprise recorded by accountantsbecause
b b b b b b b b b b b b
they affect the basic accounting equation.
b b b b b b
(a) No, the death of the president of the company is not a business transaction as it does not
b b b b b b b b b b b b b b b b b
affect the basic accounting equation. b b b b b
(b) Yes, supplies purchased on account is a business transaction as it affects the basicaccounting
b b b b b b b b b b b b b b
equation. b
(c) No, an employee being fired is not a business transaction as it does not affect the basic
b b b b b b b b b b b b b b b b
accountingequation. b b
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
16. (a) Decreaseassets and decreasestockholders’equity. b b b b b
(b) Increase assets and decrease assets. b b b b
(c) Increaseassetsand increase stockholders’equity. b b b b b
(d) Decreaseassets and decreaseliabilities. b b b b
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
© 2021 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial & Managerial Accounting 4e, Solutions Manual (For Instructor Use Only)
b b b b b b b b b bb b b b b b b b b bb b b b b b 1-3
, QuestionsChapter 1 (Continued) b b b
17. (a) Income statement. b (d) Balance sheet. b
(b) Balance sheet. b (e) Balancesheetandretainedearningsstatement. b b b b b
(c) Income statement. b (f) Balance sheet. b
LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
18. No, this treatment is not appropriate. While the transaction does involve a receipt of cash, it does not
b b b b b b b b b b b b b b b b b
represent revenues. Revenues are the gross increase in stockholders’ equity resulting from business
b b b b b b b b b b b b b
activities entered into for the purpose of earning income. This transaction is simply an additional
b b b b b b b b b b b b b b b
investment made by one of the owners of the business.
b b b b b b b b b b
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
19. Yes. Net income does appear on the income statement—it is the result of subtracting expenses from
b b b b b b b b b b b b b b b
revenues. In addition, net income appears on the retained earnings statement—it is shown as an
b b b b b b b b b b b b b b b
addition to the beginning-of-period retained earnings. Indirectly, the net income of a company is also
b b b b b b b b b b b b b b b
included on the balance sheet. It is included in the end-of-period retained earnings which appears in the
b b b b b b b b b b b b b b b b b
stockholders’ equity section of the balance sheet.
b b b b b b b
LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
20. (a) Ending stockholders’equity balance...................................................................................$198,000
b b b
Beginningstockholders’equitybalance .............................................................................158,000
b b b
Net income.......................................................................................................
b $ 40,000 b
(b) Ending stockholders’equity balance...................................................................................$198,000
b b b
Beginningstockholders’equitybalance .............................................................................158,000
b b b
40,000
Deduct: Investment ............................................................................................... 16,000
b
Net income.......................................................................................................
b $ 24,000 b
LO 5, BT: AN, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
21. (a) Total revenues ($30,000 + $70,000) ......................................................................... $100,000
b b b b
(b) Total expenses ($26,000 + $38,000)................................................................
b b b b $64,000
(c) Total revenues ........................................................................................................ $100,000
b
Total expenses ....................................................................................................... 64,000
b
Net income.......................................................................................................
b $ 36,000 b
LO 5, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
22. Apple’s accounting equation (in millions) at September 29, 2018 was $365,725 = $258,578 +
b b b b b b b b b b b b b
$107,147
LO 3, BT: AP, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
1-4 © 2021 John Wiley & Sons, Inc. All rights reserved.
b b b b b b b b b b Weygandt, Financial & Managerial Accounting 4e, Solutions Manual (For Instructor Use Only)
b b b b b b b bb b b b b
Financial And Managerial Accounting 4th Edition by Jerry J b b b b b b b b
Weygandt, Paul DKimmel, Jill E Mitchel
b b b b b b b
CHAPTER1 b
Accounting in Action b b
ASSIGNMENTCLASSIFICATION TABLE b b
Brief A
Learning Objectives b Questions b Exercises Do It! b Exercises Problems
1. Identify the activities and b b b 1, 2, 3, 4, 5
b b b b 1 1, 2b
users associated with
b b b
accounting.
b
2. Explain the building blocks of 6, 7, 8, 9, 10
b b b b b b b b b 2 3, 4b
accounting: ethics, principles,
b b b
and assumptions.b b
3. State the accountingb b 11, 12, 13, 14. b b b 1, 2, 3, 4, 5
b b b b 3 5
equation, and define its
b b b b 22
components.
b
4. Analyze the effects of b b b 15, 16, 18 b b 6, 7, 8, 9
b b b 4 6, 7, 8
b b 1A, 2A, 4A,
b b
business transactions on the
b b b b 5A
accounting equation.
b b
5. Describe the four financial b b b
17, 19, 20, 21, b b b 10, 11 b 5 8, 9, 10, 11,
b b b 2A, 3A, 4A,
b b
statements and how they are
b b b b b
12, 13, 14, 15,
b b b 5A
prepared.
b 16, 17, 18
b b
© 2021 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted,in anyform
b b b b b b b b b b b b b b b b b b b b b b b b b b b
or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law. Advice on how to
b b b b b b b b b b b b b b b b b b b
obtain permission toreusethis materialis available at http://www.wiley.com/go/permissions.
b b b b b b b b b
, ANSWERS TO QUESTIONS b b
1. True. Virtually every organization and person in our society uses accounting information. Businesses,
b b b b b b b b b b b b
investors, creditors, government agencies, and not-for-profit organizations must use accounting
b b b b b b b b b b
information to operate effectively.
b b b b
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
2. Accounting is the process of identifying, recording, and communicating the economic events of an b b b b b b b b b b b b b
organization to interested users of the information. The first activity of the accounting process is to
b b b b b b b b b b b b b b b b
identify economic events that are relevant to a particular business. Once identified and measured, the
b b b b b b b b b b b b b b b
events are recorded to provide a history of the financial activities of the organization. Recording
b b b b b b b b b b b b b b b
consists of keeping a chronological diary of these measured events in an orderly and systematic
b b b b b b b b b b b b b b b
manner. The information is communicated through the preparation and distribution of accounting
b b b b b b b b b b b b
breports, the most common of which are called financial statements. A vital element in the
b b b b b b b b b b b b b b
communication process is the accountant’s ability and responsibility to analyze and interpret the
b b b b b b b b b b b b b
reported information.
b b
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
3. (a) Internal users are those who plan, organize, and run the business and therefore are officers and
b b b b b b b b b b b b b b b b
other decision makers. b b b
(b) To assist management, accounting provides internal reports. Examples include financial
b b b b b b b b b
comparisons of operating alternatives, projections of income from new sales campaigns, and
b b b b b b b b b b b b
forecasts of cash needs for the next year.
b b b b b b b b
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
4. (a) Investors (owners) use accounting information to make decisionsto buy, hold, or sell stock. b b b b b b b b b b b b b
(b) Creditorsuseaccountinginformationtoevaluatetherisksofgrantingcreditorlendingmoney. b b b b b b b b b b b b b
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
5. False. Bookkeeping usually involves only the recording of economic events and therefore is just one
b b b b b b b b b b b b b b
part of the entire accounting process. Accounting, on the other hand, involves the entire process of
b b b b b b b b b b b b b b b b
identifying, recording, and communicating economic events.
b b b b b b
LO 1, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
6. Harper Travel Agency should report the land at $85,000 on its December 31, 2022 balance sheet.
b b b b b b b b b b b b b b b
This is true not only at the time the land is purchased, but also over the time the land is held. In determining
b b b b b b b b b b b b b b b b b b b b b b b
which measurement principle to use (historical cost or fair value) companies weigh the factual nature of
b b b b b b b b b b b b b b b b
cost figures versus the relevance of fair value. In general, companies use historical cost. Only in
b b b b b b b b b b b b b b b b
situations where assets are actively traded do companies apply the fair value principle.
b b b b b b b b b b b b b
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:
b b b b b b b b b b b b b b b b b
Reporting b
7. The monetary unit assumption requires that only transaction data capable of being expressed in terms
b b b b b b b b b b b b b b
of money be included in the accounting records. This assumption enables accounting to quantify
b b b b b b b b b b b b b b
(measure) economic events.
b b b
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:Reporting
b b b b b b b b b b b b b b b b b b
1-2 © 2021 John Wiley & Sons, Inc. All rights reserved.
b b b b b b b b b b Weygandt, Financial & Managerial Accounting 4e, Solutions Manual (For Instructor Use Only)
b b b b b b b bb b b b b
,QuestionsChapter 1 (Continued) b b b
8. The economic entity assumption requires that the activities of the entity be kept separate anddistinct
b b b b b b b b b b b b b b b
fromthe activities of its owners and all other economic entities.
b b b b b b b b b b b
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:Reporting
b b b b b b b b b b b b b b b b b b
9. The three basic forms of business organizations are (1) proprietorship, (2) partnership, and
b b b b b b b b b b b b
(3) corporation.b
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
10. One of the advantages Juana would enjoy is that ownership of a corporation is represented by
b b b b b b b b b b b b b b b
transferable shares of stock. This would allow Juana to raise money easily by selling a part of her
b b b b b b b b b b b b b b b b b b
ownership in the company. Another advantage is that because holders of the shares (stockholders)
b b b b b b b b b b b b b b
enjoy limited liability, they are not personally liable for the debts of the corporate entity. Also, because
b b b b b b b b b b b b b b b b b
ownershipcanbetransferredwithoutdissolvingthecorporation,thecorporationenjoys an unlimited life.
b b b b b b b b b b b b b b
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
11. The basicaccounting equation is Assets = Liabilities +Stockholders’ Equity.
b b b b b b b b b b
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
12. (a) Assets are resources owned by a business. Liabilities are creditor claims against assets— that is,
b b b b b b b b b b b b b b b b b b
existing debts and obligations. Stockholders’ equity is the ownership claim on total assets.
b b b b b b b b b b b b b
(b) Stockholders’ equity is affected by stockholders’ investments, dividends, revenues, and b b b b b b b b b
expenses. b
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
13. The liabilitiesare (b) Accountspayable and (g)Salaries andWages Payable.
b b b b b b b b b b b
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
14. Yes, a business can enter into a transaction in which only the left side of the accounting equation is
b b b b b b b b b b b b b b b b b b
affected. An example would be a transaction where an increase in one asset is offset by a
b b b b b b b b b b b b b b b b b
decrease in another asset. An increase in the Equipment account which is offset by a decrease in the
b b b b b b b b b b b b b b b b b b
Cash account is a specific example.
b b b b b b
LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
15. Business transactions are the economic events of the enterprise recorded by accountantsbecause
b b b b b b b b b b b b
they affect the basic accounting equation.
b b b b b b
(a) No, the death of the president of the company is not a business transaction as it does not
b b b b b b b b b b b b b b b b b
affect the basic accounting equation. b b b b b
(b) Yes, supplies purchased on account is a business transaction as it affects the basicaccounting
b b b b b b b b b b b b b b
equation. b
(c) No, an employee being fired is not a business transaction as it does not affect the basic
b b b b b b b b b b b b b b b b
accountingequation. b b
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
16. (a) Decreaseassets and decreasestockholders’equity. b b b b b
(b) Increase assets and decrease assets. b b b b
(c) Increaseassetsand increase stockholders’equity. b b b b b
(d) Decreaseassets and decreaseliabilities. b b b b
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
b b b b b b b b b b b b b b b
© 2021 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial & Managerial Accounting 4e, Solutions Manual (For Instructor Use Only)
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, QuestionsChapter 1 (Continued) b b b
17. (a) Income statement. b (d) Balance sheet. b
(b) Balance sheet. b (e) Balancesheetandretainedearningsstatement. b b b b b
(c) Income statement. b (f) Balance sheet. b
LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
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18. No, this treatment is not appropriate. While the transaction does involve a receipt of cash, it does not
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represent revenues. Revenues are the gross increase in stockholders’ equity resulting from business
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activities entered into for the purpose of earning income. This transaction is simply an additional
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investment made by one of the owners of the business.
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LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
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19. Yes. Net income does appear on the income statement—it is the result of subtracting expenses from
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revenues. In addition, net income appears on the retained earnings statement—it is shown as an
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addition to the beginning-of-period retained earnings. Indirectly, the net income of a company is also
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included on the balance sheet. It is included in the end-of-period retained earnings which appears in the
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stockholders’ equity section of the balance sheet.
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LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
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20. (a) Ending stockholders’equity balance...................................................................................$198,000
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Beginningstockholders’equitybalance .............................................................................158,000
b b b
Net income.......................................................................................................
b $ 40,000 b
(b) Ending stockholders’equity balance...................................................................................$198,000
b b b
Beginningstockholders’equitybalance .............................................................................158,000
b b b
40,000
Deduct: Investment ............................................................................................... 16,000
b
Net income.......................................................................................................
b $ 24,000 b
LO 5, BT: AN, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
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21. (a) Total revenues ($30,000 + $70,000) ......................................................................... $100,000
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(b) Total expenses ($26,000 + $38,000)................................................................
b b b b $64,000
(c) Total revenues ........................................................................................................ $100,000
b
Total expenses ....................................................................................................... 64,000
b
Net income.......................................................................................................
b $ 36,000 b
LO 5, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
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22. Apple’s accounting equation (in millions) at September 29, 2018 was $365,725 = $258,578 +
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$107,147
LO 3, BT: AP, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
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1-4 © 2021 John Wiley & Sons, Inc. All rights reserved.
b b b b b b b b b b Weygandt, Financial & Managerial Accounting 4e, Solutions Manual (For Instructor Use Only)
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