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ACCOUNTING PRINCIPLES 13TH EDITION JERRY J WEYGANDT PAUL D KIMMEL
ACCOUNTING PRINCIPLES 13TH EDITION JERRY J WEYGANDT PAUL D KIMMEL
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,,Accounting Principles
Thirteenth Edition
JERRY J. WEYGANDT PhD, CPA
University of Wisconsin—Madison
Madison, Wisconsin
PAUL D. KIMMEL PhD, CPA
University of Wisconsin—Milwaukee
Milwaukee, Wisconsin
DONALD E. KIES O PhD, CPA
Northern Illinois University
DeKalb, Illinois
, DEDICATED TO
Our wives,
Enid, Merlynn, and Donna, for their love,
support, and encouragement.
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COVER IMAGE Kurt Heim/Stocksy
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ISBN-13: 978-1-119-41101-7
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Printed in America.
10 9 8 7 6 5 4 3 2 1
, Brief Contents
1 Accounting in Action 1-1
2 The Recording Process 2-1
3 Adjusting the Accounts 3-1
4 Completing the Accounting Cycle 4-1
5 Accounting for Merchandising Operations 5-1
5A Accounting for Merchandising Operations (periodic approach)*
6 Inventories 6-1
6A Inventories (perpetual approach)*
7 Accounting Information Systems 7-1
8 Fraud, Internal Control, and Cash 8-1
9 Accounting for Receivables 9-1
10 Plant Assets, Natural Resources, and Intangible Assets 10-1
11 Current Liabilities and Payroll Accounting 11-1
12 Accounting for Partnerships 12-1
13 Corporations: Organization and Capital Stock Transactions 13-1
14 Corporations: Dividends, Retained Earnings, and Income
Reporting 14-1
15 Long-Term Liabilities 15-1
16 Investments 16-1
17 Statement of Cash Flows 17-1
18 Financial Analysis: The Big Picture 18-1
19 Managerial Accounting 19-1
20 Job Order Costing 20-1
20A Job Order Costing (non-debit and credit approach)*
21 Process Costing 21-1
21A Process Costing (non-debit and credit approach)*
iii
,iv Brief Contents
22 Cost-Volume-Profit 22-1
23 Incremental Analysis 23-1
24 Budgetary Planning 24-1
25 Budgetary Control and Responsibility Accounting 25-1
26 Standard Costs and Balanced Scorecard 26-1
27 Planning for Capital Investments 27-1
A P P EN D IC E S
A Specimen Financial Statements: Apple Inc. A-1
B Specimen Financial Statements: PepsiCo, Inc. B-1
C Specimen Financial Statements: The Coca-Cola Company C-1
D Specimen Financial Statements: Amazon.com, Inc. D-1
E Specimen Financial Statements: Wal-Mart Stores, Inc. E-1
F Specimen Financial Statements: Louis Vuitton F-1
G Time Value of Money G-1
H Just-in-Time Processing and Activity-Based Costing H-1
C A S ES FOR M A NAG E RIA L DE CIS IO N M A K ING*
CO MPA N Y INDE X / S U BJE CT INDE X I-1
* Available in WileyPLUS and Wiley Custom.
, From the Authors
Dear Student, WHY THIS TEXT? Your instructor has chosen this text for
you because of the authors’ trusted reputation. The authors have
W H Y T H I S C O U R S E? Remember your biology worked hard to write a text that is engaging, timely, and accurate.
course in high school? Did you have one of those “invis-
ible man” models (or maybe something more high-tech HOW TO SUCCEED? We’ve asked many students and many
than that) that gave you the opportunity to look “inside” instructors whether there is a secret for success in this course.
the human body? This accounting course offers something The nearly unanimous answer turns out to be not much of a
similar. To understand a secret: “Do the homework.” This is one
business, you have to under- course where doing is learning. The
“Whether you are looking at a large multina-
stand the financial insides of more time you spend on the homework
tional company like Apple or Starbucks or
a business organization. An assignments—using the various tools
a single-owner software consulting business that this text provides—the more likely
accounting course will help or coffee shop, knowing the fundamentals of you are to learn the essential concepts,
you understand the essen- accounting will help you understand what is techniques, and methods of accounting.
tial financial components of
happening.” Besides the text itself, WileyPLUS also
businesses. Whether you are
looking at a large multina- offers various support resources.
tional company like Apple or Starbucks or a single-owner
Good luck in this course. We hope you enjoy the experience
software consulting business or coffee shop, knowing the
and that you put to good use throughout a lifetime of success
fundamentals of accounting will help you understand what
the knowledge you obtain in this course. We are sure you will
is happening. As an employee, a manager, an investor, a
not be disappointed.
business owner, or a director of your own personal finances—
any of which roles you will have at some point in your Jerry J. Weygandt
life—you will make better decisions for having taken this Paul D. Kimmel
course. Donald E. Kieso
v
,Author Commitment
Jerry Weygandt Paul Kimmel Don Kieso
J ER RY J. W EYGA N D T , P h D, PAU L D. K I M M E L , PhD, CPA, DONALD E. KIESO, PhD, CPA,
C PA , is Arthur Andersen Alumni Emeritus received his bachelor’s degree from the Uni- received his bachelor’s degree from Aurora Uni-
Professor of Accounting at the University of versity of Minnesota and his doctorate in ac- versity and his doctorate in accounting from the
Wisconsin—Madison. He holds a Ph.D. in counting from the University of Wisconsin. University of Illinois. He has served as chairman
accounting from the University of Illinois. He teaches at the University of Wisconsin— of the Department of Accountancy and is currently
Articles by Professor Weygandt have appeared Milwaukee, and has public accounting expe- the KPMG Emeritus Professor of Accountancy
in The Accounting Review, Journal of Account- rience with Deloitte & Touche (Minneapolis). at Northern Illinois University. He has public
ing Research, Accounting Horizons, Journal of He was the recipient of the UWM School of accounting experience with Price Waterhouse
Accountancy, and other academic and profes- Business Advisory Council Teaching Award, & Co. (San Francisco and Chicago) and Arthur
sional journals. These articles have examined the Reggie Taite Excellence in Teaching Award Andersen & Co. (Chicago) and research experi-
such financial reporting issues as accounting for and a three-time winner of the Outstanding ence with the Research Division of the American
price-level adjustments, pensions, convertible Teaching Assistant Award at the University of Institute of Certified Public Accountants (New
securities, stock option contracts, and interim Wisconsin. He is also a recipient of the Elijah York). He has done post doctorate work as a
reports. Professor Weygandt is author of other Watts Sells Award for Honorary Distinction for Visiting Scholar at the University of California
accounting and financial reporting books and his results on the CPA exam. He is a member of at Berkeley and is a recipient of NIU’s Teach-
is a member of the American Accounting the American Accounting Association and the ing Excellence Award and four Golden Apple
Association, the American Institute of Cer- Institute of Management Accountants and has Teaching Awards. Professor Kieso is the author
tified Public Accountants, and the Wiscon- published articles in The Accounting Review, of other accounting and business books and is a
sin Society of Certified Public Accountants. Accounting Horizons, Advances in Manage- member of the American Accounting Associa-
He has served on numerous committees of ment Accounting, Managerial Finance, Issues tion, the American Institute of Certified Public
the American Accounting Association and in Accounting Education, Journal of Account- Accountants, and the Illinois CPA Society.
as a member of the editorial board of The ing Education, as well as other journals. His He has served as a member of the Board of
Accounting Review; he also has served as Pres- research interests include accounting for finan- Directors of the Illinois CPA Society, then
ident and Secretary-Treasurer of the American cial instruments and innovation in accounting AACSB’s Accounting Accreditation Commit-
Accounting Association. In addition, he has education. He has published papers and given tees, the State of Illinois Comptroller’s Commis-
been actively involved with the American numerous talks on incorporating critical think- sion, as Secretary-Treasurer of the Federation
Institute of Certified Public Accountants and ing into accounting education, and helped pre- of Schools of Accountancy, and as Secretary-
has been a member of the Accounting Standards pare a catalog of critical thinking resources for Treasurer of the American Accounting Associa-
Executive Committee (AcSEC) of that organ- the Federated Schools of Accountancy. tion. Professor Kieso is currently serving on the
ization. He has served on the FASB task force Board of Trustees and Executive Committee of
that examined the reporting issues related to Aurora University, as a member of the Board of
accounting for income taxes and served as a trus- Directors of Kishwaukee Community Hospital,
tee of the Financial Accounting Foundation. Pro- and as Treasurer and Director of Valley West
fessor Weygandt has received the Chancellor’s Community Hospital. From 1989 to 1993 he
Award for Excellence in Teaching and the Beta served as a charter member of the national Ac-
Gamma Sigma Dean’s Teaching Award. He is on counting Education Change Commission. He
the board of directors of M & I Bank of Southern is the recipient of the Outstanding Accounting
Wisconsin. He is the recipient of the Wisconsin Educator Award from the Illinois CPA Society,
Institute of CPA’s Outstanding Educator’s Award the FSA’s Joseph A. Silvoso Award of Merit,
and the Lifetime Achievement Award. In 2001 the NIU Foundation’s Humanitarian Award for
he received the American Accounting Associa- Service to Higher Education, a Distinguished
tion’s Outstanding Educator Award. Service Award from the Illinois CPA Society,
and in 2003 an honorary doctorate from Aurora
vi University.
, Hallmark Features
Accounting Principles, Thirteenth Edition, provides a simple and practical introduction to the
fundamentals of accounting. It explains the concepts you need to know. This edition continues
this approach by offering even more explanations, illustrations, and homework problems to
help students get a firm understanding of the accounting cycle.
DO IT! Exercises
DO IT! Exercises in the body of the text prompt students to stop and review key concepts. They
outline the Action Plan necessary to complete the exercise as well as show a detailed solution.
c04CompletingTheAccountingCycle.indd Page 4-34 18/08/17 3:54 PM f-0162 /208/WB02197/9781119411017/ch04/text_s
DO IT! 3 Correcting Entries ACTION PLAN
• Compare the incorrect
Sanchez Company discovered the following errors made in January 2020.
entry with correct entry.
1. A payment of Salaries and Wages Expense of $600 was debited to Supplies and credited to Cash, • After comparison, make
both for $600. an entry to correct the
2. A collection of $3,000 from a client on account was debited to Cash $200 and credited to Service accounts.
Revenue $200.
3. The purchase of supplies on account for $860 was debited to Supplies $680 and credited to Ac-
counts Payable $680.
Correct the errors without reversing the incorrect entry.
Solution
c15LongTermLiabilities.indd
1. Salaries and WagesPage 15-26 10/9/17 11:15 PM user
Expense 600 /208/WB02197/9781119411017/ch15/text_s
Supplies 600
2. Service Revenue 200
Cash 2,800
Accounts Receivable 3,000
Review and Practice
Each chapter concludes with a Review and Practice section which includes a review of learn-
ing objectives, key terms glossary, practice multiple-choice questions with annotated solu-
tions, practice brief exercises with solutions, practice exercises with solutions, and a practice
problem with a solution.
Practice Brief Exercises
Prepare the current assets section of a 3. (LO 4) Financial Statement The balance sheet debit column of the worksheet for Miguel
balance sheet. Company includes the following accounts: Accounts Receivable $25,000, Prepaid Insurance $7,000,
Cash $8,000, Supplies $11,000, and Stock Investments (short-term) $14,000. Prepare the current
assets section of the balance sheet, listing the accounts in proper sequence.
Solution
3.
Miguel Company
Partial Balance Sheet
Current assets
Cash $ 8,000
Stock investments 14,000
Accounts receivable 25,000
Supplies 11,000
Prepaid insurance 7,000
Total current assets $65,000
vii
, c02TheRecordingProcess.indd Page 2-3 27/09/17 9:42 PM f-0162 /208/WB02197/9781119411017/ch02/text_s
viii Hallmark Features
Infographic Learning
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Over half of the text is visual, providing students alternative ways of learning about accounting.
In addition, a new interior design promotes accessibility.
ILLUSTRATION 2.1
Title of Account Basic form of account
Left or debit side Right or credit side
c04CompletingTheAccountingCycle.indd Page 4-19 18/08/17 3:54 PM f-0162 /208/WB02197/9781119411017/ch04/text_s
Real-World Decision-Making
Real-world examples that illustrate interesting situations in companies and how accounting
information is used are integrated throughout the text, such as in the opening Feature Story as
well as the Insight boxes.
People, Planet, and Profit Insight
Regaining Goodwill with the five corporations that ranked highest within each, are as
follows.
After falling to unforeseen lows
• Social Responsibility: (1) Whole Foods Market, (2) Johnson &
amidst scandals, recalls, and eco-
Johnson, (3) Google, (4) The Walt Disney Company, (5) Procter
nomic crises, the American pub-
& Gamble Co.
lic’s positive perception of the
reputation of corporate America • Emotional Appeal: (1) Johnson & Johnson, (2) Amazon.com,
is on the rise. Overall corporate (3) UPS, (4) General Mills, (5) Kraft Foods
reputation is experiencing reha- • Financial Performance: (1) Google, (2) Berkshire Hathaway,
bilitation as the American public (3) Apple, (4) Intel, (5) The Walt Disney Company
gives high marks overall to cor- • Products and Services: (1) Intel Corporation, (2) 3M Company,
porate America, specific indus- (3) Johnson & Johnson, (4) Google, (5) Procter & Gamble Co.
tries, and the largest number of
individual companies in a dozen
Source: www.harrisinteractive.com.
© Gehringi/iStockphoto years. This is according to the
findings of a Harris Interactive
RQ Study, which measures the reputations of the 60 most visible Name two industries today which are probably rated low on
companies in the United States. the reputational characteristics of “being trusted” and “having
The survey focuses on six reputational dimensions that influence high ethical standards.” (Go to WileyPLUS for this answer and
reputation and consumer behavior. Four of these dimensions, along additional questions.)
Additional Guidance
Throughout the text, marginal notes, such as Helpful Hints, Alternative Terminology, and
Ethics Notes, are provided as additional guidance. In addition, more than 100 new solution
walkthrough videos are now available in WileyPLUS.
Correcting Entries—An Avoidable Step
ETHICS NOTE
Unfortunately, errors may occur in the recording process. Companies should correct errors, as When companies find errors
soon as they discover them, by journalizing and posting correcting entries. If the account- in previously released
ing records are free of errors, no correcting entries are needed. income statements, they
You should recognize several differences between correcting entries and adjusting en- restate those numbers. Per-
tries. First, adjusting entries are an integral part of the accounting cycle. Correcting entries, haps because of the in-
on the other hand, are unnecessary if the records are error-free. Second, companies journalize creased scrutiny caused by
and post adjustments only at the end of an accounting period. In contrast, companies make Sarbanes-Oxley, in a recent
correcting entries whenever they discover an error (see Ethics Note). Finally, adjusting year companies filed a re-
entries always affect at least one balance sheet account and one income statement account. In cord 1,195 restatements
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