Financial Accounting Information for Decisions 7th Edition by Wild Solution Manual

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Problem 2-3A (90 minutes)

Part 1

April 1    Cash........................................................ 101     80,000     

              Office Equipment.................................... 163     26,000     

                      Common Stock................................ 307                      106,000

                     Owner invested cash and equipment for stock.

         2    Prepaid Rent........................................... 131       9,000     

                      Cash................................................. 101                          9,000

                     Prepaid twelve months’ rent.

         3    Office Equipment.................................... 163       8,000

              Office Supplies....................................... 124       3,600

                      Accounts Payable............................ 201                        11,600

                     Purchased equip. & supplies on credit.

         6    Cash........................................................ 101       4,000

                      Services Revenue............................ 403                          4,000

                     Received cash for services.

         9    Accounts Receivable............................... 106       6,000

                      Services Revenue............................ 403                          6,000

                     Billed client for completed work.

       13    Accounts Payable................................... 201     11,600

                      Cash................................................. 101                        11,600

                     Paid balance due on account.

       19    Prepaid Insurance................................... 128       2,400     

                      Cash................................................. 101                          2,400

                     Paid premium for insurance.

       22    Cash........................................................ 101       4,400     

                      Accounts Receivable....................... 106                          4,400

                     Collected part of amount owed by client.

       25    Accounts Receivable............................... 106       2,890

                      Services Revenue............................ 403                          2,890

                     Billed client for completed work.

       28    Dividends................................................ 319       5,500

                      Cash................................................. 101                          5,500

                     Paid cash dividends.

       29    Office Supplies....................................... 124         600

                      Accounts Payable............................ 201                             600

                     Purchased supplies on account.

       30    Utilities Expense..................................... 690         435     

                      Cash................................................. 101                             435

                     Paid monthly utility bill.

Problem 2-3A (Continued)

Part 2

Cash						Acct. No. 101
Date		Explanation	PR	Debit	Credit		Balance
April	1		G1	80,000			80,000
	2		G1		9,000		71,000
	6		G1	4,000			75,000
	13		G1		11,600		63,400
	19		G1		2,400		61,000
	22		G1	4,400			65,400
	28		G1		5,500		59,900
	30		G1		435		59,465
Accounts Receivable					Acct. No. 106
Date		Explanation	PR	Debit	Credit		Balance
April	9		G1	6,000			6,000
	22		G1		4,400		1,600
	25		G1	2,890			4,490
Office Supplies					Acct. No. 124
Date		Explanation	PR	Debit	Credit		Balance
April	3		G1	3,600			3,600
	29		G1	600			4,200
Prepaid Insurance					Acct. No. 128
Date		Explanation	PR	Debit	Credit		Balance
April	19		G1	2,400			2,400
Prepaid Rent					Acct. No. 131
Date		Explanation	PR	Debit	Credit		Balance
April	2		G1	9,000			9,000
Office Equipment					Acct. No. 163
Date		Explanation	PR	Debit	Credit		Balance
April	1		G1	26,000			26,000
	3		G1	8,000			34,000

Problem 2-3A (Continued)

Accounts Payable					Acct. No. 201
Date		Explanation	PR	Debit	Credit	Balance
April	3		G1		11,600	11,600
	13		G1	11,600		0
	29		G1		600	600
Common Stock					Acct. No. 307
Date		Explanation	PR	Debit	Credit	Balance
April	1		G1		106,000	106,000
Dividends					Acct. No. 319
Date		Explanation	PR	Debit	Credit	Balance
April	28		G1	5,500		5,500
Services Revenue					Acct. No. 403
Date		Explanation	PR	Debit	Credit	Balance
April	6		G1		4,000	4,000
	9		G1		6,000	10,000
	25		G1		2,890	12,890
Utilities Expense					Acct. No. 690
Date		Explanation	PR	Debit	Credit	Balance
April	30		G1	435		435

Problem 2-3A (Continued)

Part 3

LINKWORKS

Trial Balance

April 30

                                                                                  Debit             Credit

Cash....................................................................   $  59,465                  

Accounts receivable............................................        4,490                  

Office supplies....................................................        4,200                  

Prepaid insurance...............................................        2,400                  

Prepaid rent........................................................        9,000                  

Office equipment................................................      34,000                  

Accounts payable................................................                         $       600

Common stock....................................................                          106,000

Dividends............................................................        5,500                      

Services revenue.................................................                             12,890

Utilities expense.................................................          435                                

Total....................................................................   $119,490         $119,490

Problem 2-4A (90 minutes)

Part 1

NETTLE DISTRIBUTION

Balance Sheet

December 31, 2012

                   Assets                                               Liabilities

Cash.............................    $  64,300      Accounts payable................ $     3,500

Accounts receivable.....        26,240

Office supplies.............          3,160

Trucks..........................      148,000                       Equity

Office equipment..........        44,000      Total equity..........................     282,200

Total assets..................    $285,700      Total liabilities and equity...   $285,700

NETTLE DISTRIBUTION

Balance Sheet

December 31, 2013

                   Assets                                               Liabilities

Cash.............................    $  15,640     Accounts payable..................   $  33,500

Accounts receivable.....        19,390     Note payable.........................      40,000

Office supplies.............          1,960     Total liabilities......................       73,500

Trucks..........................      157,000

Office equipment..........        44,000            

Building........................        80,000                        Equity

Land..............................        60,000     Total equity...........................     304,490

Total assets..................    $377,990     Total liabilities and equity....   $377,990

Part 2

Computation of 2013 net income:

Equity, December 31, 2012.........................................................	$282,200
Equity, December 31, 2013.........................................................	(304,490)
Increase in equity during 2013...................................................	$  22,290
Owner investment......................................................................	35,000
Add net income..........................................................................	?
Deduct dividends ($3,000 x 12)...................................................	(36,000)
Increase in equity during 2013................................................... ..............	$  22,290

    Therefore, net income must equal ($22,290+$36,000-$35,000) =      $  23,290

Part 3

Debt Ratio =  $73,500 / $377,990  = 19.4%

Problem 2-5A   (35 minutes)

Part 1

Min Engineering

Trial Balance

May 31

                                                                                  Debit             Credit

Cash..........................................................     $37,641

Office supplies..........................................           890

Prepaid insurance.....................................        4,600

Office equipment.......................................      12,900

Accounts payable......................................                          $12,900

Common stock..........................................                            18,000

Dividends..................................................        3,329                      

Engineering fees earned............................                            36,000

Rent expense.............................................        7,540                       .

Totals........................................................     $66,900           $66,900

Part 2: Likely transactions (following order of trial balance).

1.    Purchased $890 of office supplies for cash.

2.    Paid $4,600 insurance premium in advance.

3.    Purchased $12,900 of office equipment on credit (with account payable).

4.    Yi Min invested $18,000 cash in the business in exchange for stock.

5.    Paid $3,329 cash for dividends.

6.    Earned $36,000 cash for engineering services.

7.    Paid $7,540 cash for rent expense.

Part 3

Report of Cash Received and Paid

Cash received

  Owner investment ...................................   $18,000

  Engineering fees ......................................     36,000

  Total cash received .................................                       $54,000

Cash paid

  Office supplies ........................................          890

  Insurance premium ..................................       4,600

  Dividends..................................................       3,329

  Rent..........................................................       7,540

  Total cash paid ........................................                        16,359

     Ending balance ..........................................                       $37,641

Problem 2-6A (90 minutes)

Part 1

a.           Cash........................................................ 101     60,000     

              Office Equipment.................................... 163     25,000

                     Common Stock................................ 307                        85,000

                     Owner invested cash and equipment for stock.

b.           Land........................................................ 172     40,000

              Building.................................................. 170   160,000

                      Cash................................................. 101                        30,000

                      Notes Payable.................................. 250                      170,000

                     Purchased land and building with cash and note payable.

c.            Office Supplies....................................... 108       2,000

                      Accounts Payable............................ 201                          2,000

                     Purchased office supplies on account.

d.           Automobiles............................................ 164     16,500

                      Common Stock................................ 307                        16,500

                     Owner contributed automobile for stock.

e.            Office Equipment.................................... 163       5,600

                      Accounts Payable............................ 201                          5,600

                     Purchased office equipment on account.

f.            Salaries Expense..................................... 601       1,800

                      Cash................................................. 101                          1,800

Paid assistant’s salary.

g.           Cash........................................................ 101       8,000     

                      Fees Earned..................................... 402                          8,000

                     Provided services for cash.

h.           Utilities Expense..................................... 602         635     

                      Cash................................................. 101                             635

                     Paid cash for utilities.

Problem 2-6A (Part 1 Continued)

i.            Accounts Payable................................... 201       2,000

                      Cash................................................. 101                          2,000

                     Paid cash on account.

j.            Office Equipment.................................... 163     20,300

                      Cash................................................. 101                        20,300

                     Purchased new equipment with cash.

k.            Accounts Receivable............................... 106       6,250

                      Fees Earned..................................... 402                          6,250

                     Provided services on account.

l.            Salaries Expense..................................... 601       1,800                  

                      Cash................................................. 101                          1,800

                     Paid assistant’s salary.

m.          Cash........................................................ 101       4,000                  

                      Accounts Receivable....................... 106                           4,000

                            Received cash due on account.

n.           Dividends................................................ 319       2,800                  

                      Cash................................................. 101                          2,800

                     Paid cash dividends.

Problem 2-6A (Continued)

Part 2

Cash                                           No. 101						Land                                       No. 172
Date	PR	Debit	Credit	Balance		Date	PR		Debit	Credit	Balance
(a)		60,000		60,000		(b)			40,000		40,000
(b)			30,000	30,000
(f)			1,800	28,200		Accounts Payable                   No. 201
(g)		8,000		36,200		Date		PR	Debit	Credit	Balance
(h)			635	35,565		(c)				2,000	2,000
(i)			2,000	33,565		(e)				5,600	7,600
(j)			20,300	13,265		(i)			2,000		5,600
(l)			1,800	11,465
(m)		4,000		15,465		Notes Payable                         No. 250
(n)			2,800	12,665		Date	PR		Debit	Credit	Balance
						(b)				170,000	170,000
Accounts Receivable                  No. 106
Date	PR	Debit	Credit	Balance
(k)		6,250		6,250		Common Stock                       No. 307
(m)			4,000	2,250		Date	PR		Debit	Credit	Balance
						(a)				85,000	85,000
Office Supplies                           No. 108						(d)				16,500	101,500
Date	PR	Debit	Credit	Balance
(c)		2,000		2,000
						Dividends                               No. 319
Office Equipment                       No. 163						Date	PR		Debit	Credit	Balance
Date	PR	Debit	Credit	Balance		(n)			2,800		2,800
(a)		25,000		25,000
(e)		5,600		30,600		Fees Earned                            No. 402
(j)		20,300		50,900		Date	PR		Debit	Credit	Balance
						(g)				8,000	8,000
						(k)				6,250	14,250
Automobiles                               No. 164						Salaries Expense                    No. 601
Date	PR	Debit	Credit	Balance		Date	PR		Debit	Credit	Balance
(d)		16,500		16,500		(f)			1,800		1,800
						(l)			1,800		3,600
Building                                      No. 170
Date	PR	Debit	Credit	Balance		Utilities Expense                    No. 602
(b)		160,000		160,000		Date	PR		Debit	Credit	Balance
						(h)			635		635

Problem 2-6A (Concluded)

Part 3

HV Consulting

Trial Balance

September 30

                                                                                  Debit            Credit

Cash .........................................................   $  12,665

Accounts receivable..................................        2,250

Office supplies..........................................        2,000

Office equipment.......................................      50,900

Automobiles..............................................      16,500

Building.....................................................     160,000

Land..........................................................      40,000

Accounts payable......................................                         $    5,600

Notes payable............................................                            170,000

Common stock .........................................                            101,500

Dividends..................................................        2,800                      

Fees earned...............................................                             14,250

Salaries expense.......................................        3,600                      

Utilities expense........................................          635                                

Total..........................................................   $291,350         $291,350