SOLUTION MANUAL
Financial Accounting Fundamentals, 8th Edition
By John Wild, Chapter 1 - 13 with appendix B&C
,Chapter 1: Accounting in Business
Chapter 2: Accounting for Business Transactions
Chapter 3: Adjusting Accounts for Financial Statements
Chapter 4: Accounting for Merchandising Operations
Chapter 5: Inventories and Cost of Sales
Chapter 6: Cash, Fraud, and Internal Control
Chapter 7: Accounting for Receivables
Chapter 8: Accounting for Long-Term Assets
Chapter 9: Accounting for Current Liabilities
Chapter 10: Accounting for Long-Term Liabilities
Chapter 11: Corporate Reporting and Analysis
Chapter 12: Reporting Cash Flows
Chapter 13: Analysis of Financial Statements
,Chapter 1
Accounting in Business
QUICK STUDIES
Quick Study 1-1 (10 minutes)
1. f Artificial Intelligence
2. c Recording
3. h Recordkeeping (bookkeeping)
Quick Study 1-2 (10 minutes)
a. External user g. External user
b. External user h. External user
c. External user i. Internal user
d. External user j. External user
e. Internal user k. External user
f. External user l. External user
Quick Study 1-3 (10 minutes)
1. Opportunity 4. Opportunity
2. Pressure 5. Pressure
3. Rationalization 6. Rationalization
Quick Study 1-4 (5 minutes)
,1. Principle 3. Assumption
2. Assumption 4. Principle
Quick Study 1-5 (10 minutes)
Attribute Present Proprietorship Partnership Corporation LLC
1. Business taxed no no yes no
2. Limited liability no no yes yes
3. Legal entity no no yes yes
Quick Study 1-6 (10 minutes)
1. Revenue recognition principle
2. Measurement (cost) principle
3. Business entity assumption
Quick Study 1-7 (5 minutes)
Assets = Liabilities + Equity
$700,000 (a) $280,000 $420,000
$500,000 (b) $250,000 (b) $250,000
Quick Study 1-8 (10 minutes)
1.
Assets = Liabilities + Equity
$75,000 (a) $35,000 $40,000
(b) $95,000 $25,000 $70,000
$85,000 $20,000 (c) $65,000
2.
+ Common
Assets = Liabilities - Dividends + Revenues - Expenses
Stock
$40,000 $16,000 $20,000 $ 0 (a) $12,000 $ 8,000
$80,000 $32,000 $44,000 (b) $2,000 $24,000 $18,000
,Quick Study 1-9 (5 minutes)
a. Increase
b. Decrease
c. Increase
d. Decrease
Quick Study 1-10 (15 minutes)
Assets = Liabilities + Equity
Accounts Accounts Common
Cash + = + - Dividends + Revenues - Expenses
Recble. Payable Stock
(a) $5,500 = $5,500
Consulting
(b) + $4,000 = + 4,000
Commission
Bal. 5,500 + 4,000 = + 9,500
(c) -1,400 = - $1,400
Wages
Bal. 4,100 + 4,000 = + 9,500 - 1,400
(d) +1,000 + - 1,000 = -
Bal. 5,100 + 3,000 = + 9,500 - 1,400
(e) -700 + = - 700
Cleaning
Bal. $4,400 + $3,000 = + $9,500 - $2,100
Quick Study 1-11 (15 minutes)
Assets = Liabilities + Equity
Accts. Common Divi-
Cash + Supplies + Equip. + Land = + - + Rev. - Exp.
Pay. Stock dends
(a) $15,000 = $15,000
(b) -500 + $500 =
Bal. 14,500 + 500 = + 15,000
, (c) + $10,000 = 10,000
Bal. 14,500 + 500 + 10,000 = + 25,000
(d) + 200 = +$200
Bal. 14,500 + 700 + 10,000 = 200 + 25,000
(e) -9,000 + $9,000 =
Bal. $5,500 + $700 + $10,000 + $9,000 = $200 + $25,000
Quick Study 1-12 (10 minutes)
a. Balance sheet e. Balance sheet
b. Statement of cash flows f. Statement of cash flows
c. Balance sheet g. Income statement
d. Income statement h. Balance sheet
Quick Study 1-13 (5 minutes)
1. Expenses 4. Dividends 7. Expenses
2. Revenues 5. Expenses 8. Revenues
3. Expenses 6. Revenues
Quick study 1-14 (5 minutes)
1. Assets 3. Assets 5. Assets
2. Liabilities 4. Liabilities 6. Assets
Quick Study 1-15 (15 minutes)
HAWKIN
Income Statement
For Month Ended December 31
Revenues
Services revenue ................................ $16,000
Expenses
,Wages expense ....................................... $8,000
Rent expense....................................... 1,500
, Utilities expense.................................. 700
Total expenses .................................... 10,200
Net income .................................................. $ 5,800
Quick Study 1-16 (15 minutes)
HAWKIN
Statement of Retained Earnings
For Month Ended December 31
Retained earnings, December 1...................... $4,000
Add: Net income ......................................... 5,800
9,800
Less: Dividends ........................................... (1,000)
Retained earnings, December 31.................... $8,800
Quick Study 1-17 (15 minutes)
HAWKIN
Balance Sheet
December 31
Assets Liabilities
Cash............................... $ 5,100 Accounts payable ................. $ 6,000
Accounts receivable .... 600 Total liabilities ....................... 6,000
Supplies ........................ 2,000 Equity
Equipment ..................... 14,000 Common stock ...................... 6,900
Retained earnings................. 8,800
.
Total equity............................ 15,700
Total assets................... $21,700 Total liabilities and equity.... $21,700
Quick Study 1-18 (15 minutes)
STUDIO ONE
Statement of Cash Flows
For Month Ended December 31
Cash flows from operating activities
Cash received from customers .......................................... $23,500
Cash paid for expenditures ............................................... (6,000)
Net cash provided by operating activities ................ 17,500
Cash flows from investing activities
, Cash paid for equipment ............................................ (3,000)
Cash paid for truck...................................................... (22,000)
Net cash used by investing activities ....................... (25,000)
Cash flows from financing activities
Cash investments from shareholders ....................... 11,000
Cash dividends to shareholders................................ (2,000)
Net cash provided by financing activities ................ 9,000
Net increase in cash.................................................... $ 1,500
Cash balance, December 1......................................... 1,000
Cash balance, December 31....................................... $ 2,500
Quick Study 1-19 (10 minutes)
1. Investing activities 5. Operating activities
2. Investing activities 6. Operating activities
3. Operating activities 7. Operating activities
4. Operating activities 8. Financing activities
Quick Study 1-20 (5 minutes)
Improve
Explanation: Deutsche Auto‘s return on assets increased in each of the years shown,
which is a positive finding. It suggests the company is more effectively using its
assets to generate net income.
Quick Study 1-21 (10 minutes) a.
Net income $8 billion
Return on assets = Average total assets = $42 billion = 19.0%
b. Better
Explanation: The company‘s 19.0% return on assets exceeds the 11.0% return of
its competitor. This is a positive result. It suggests the company
, is more effectively using its assets to generate net income in comparison to its
competitor.
