SOLUTION MANUAL
Financial Accounting 11th Edition
by Jerry J. Weygandt, Paul D. Kimmel
Chapters 1 - 13 | Complete
,TABLE OF CONTENTS
Chapter 1. Accounting in Action
Chapter 2. The Recording Process
Chapter 3. Adjusting the Accounts
Chapter 4. Completing the Accounting Cycle
Chapter 5. Accounting for Merchandising Operations
Chapter 6. Inventories
Chapter 7. Fraud, Internal Control and Cash
Chapter 8. Accounting for Receivables
Chapter 9. Plant Assets, Natural Resources and Intangible Assets
Chapter 10. Liabilities
Chapter 11. Corporations: Organisations, Stock Transactions and
Stockholders’ Equity
Chapter 12. Statement of Cash Flows
Chapter 13. Financial Analysis: The Big Picture
,CHAPTER 1
Accounting in Action
ASSIGNMENT CLASSIFICATION TABLE
Brief A
Learning Objectives Questions Exercises Do It! Exercises Problems
1. Identify the activities and 1, 2, 3, 4, 5 1 1, 2
users associated with
accounting.
2. Explain the building blocks of 6, 7, 8, 9, 10 2 3, 4
accounting: ethics, principles,
and assumptions.
3. State the accounting 11, 12, 13, 14. 1, 2, 3, 4, 5 3 5
equation, and define its 22
components.
4. Analyze the effects of 15, 16, 18 6, 7, 8, 9 4 6, 7, 8 1A, 2A, 4A,
business transactions on the 5A
accounting equation.
5. Describe the four financial 17, 19, 20, 21, 10, 11 5 8, 9, 10, 11, 2A, 3A, 4A,
statements and how they are 12, 13, 14, 15, 5A
prepared. 16, 17, 18
, ANSWERS TO QUESTIONS
1. True. Virtually every organization and person in our society uses accounting information.
Businesses, investors, creditors, government agencies, and not-for-profit organizations must use
accounting information to operate effectively.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
2. Accounting is the process of identifying, recording, and communicating the economic events of an
organization to interested users of the information. The first activity of the accounting process is to
identify economic events that are relevant to a particular business. Once identified and measured,
the events are recorded to provide a history of the financial activities of the organization. Recording
consists of keeping a chronological diary of these measured events in an orderly and systematic
manner. The information is communicated through the preparation and distribution of accounting
reports, the most common of which are called financial statements. A vital element in the
communication process is the accountant’s ability and responsibility to analyze and interpret the
reported information.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
3. (a) Internal users are those who plan, organize, and run the business and therefore are officers and
other decision makers.
(b) To assist management, accounting provides internal reports. Examples include financial
comparisons of operating alternatives, projections of income from new sales campaigns, and
forecasts of cash needs for the next year.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell stock.
(b) Creditors use accounting information to evaluate the risks of granting credit or lending money.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
5. False. Bookkeeping usually involves only the recording of economic events and therefore is just one
part of the entire accounting process. Accounting, on the other hand, involves the entire process of
identifying, recording, and communicating economic events.
LO 1, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
6. Harper Travel Agency should report the land at $85,000 on its December 31, 2022 balance sheet.
This is true not only at the time the land is purchased, but also over the time the land is held. In
determining which measurement principle to use (historical cost or fair value) companies weigh the
factual nature of cost figures versus the relevance of fair value. In general, companies use historical
cost. Only in situations where assets are actively traded do companies apply the fair value principle.
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:
Reporting
7. The monetary unit assumption requires that only transaction data capable of being expressed in
terms of money be included in the accounting records. This assumption enables accounting to
quantify (measure) economic events.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:Reporting
,Questions Chapter 1 (Continued)
8. The economic entity assumption requires that the activities of the entity be kept separate and
distinct from the activities of its owners and all other economic entities.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:Reporting
9. The three basic forms of business organizations are (1) proprietorship, ( 2) partnership, and
(3) corporation.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
10. One of the advantages Juana would enjoy is that ownership of a corporation is represented by
transferable shares of stock. This would allow Juana to raise money easily by selling a part of her
ownership in the company. Another advantage is that because holders of the shares (stockholders)
enjoy limited liability, they are not personally liable for the debts of the corporate entity. Also,
because ownership can be transferred without dissolving the corporation, the corporation enjoys an
unlimited life.
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
11. The basic accounting equation is Assets = Liabilities + Stockholders’ Equity.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
12. (a) Assets are resources owned by a business. Liabilities are creditor claims against assets— that is,
existing debts and obligations. Stockholders’ equity is the ownership claim on total assets.
(b) Stockholders’ equity is affected by stockholders’ investments, dividends, revenues, and
expenses.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
13. The liabilities are (b) Accounts payable and (g) Salaries and Wages Payable.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
14. Yes, a business can enter into a transaction in which only the left side of the accounting equation is
affected. An example would be a transaction where an increase in one asset is offset by a
decrease in another asset. An increase in the Equipment account which is offset by a decrease in the
Cash account is a specific example.
LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
15. Business transactions are the economic events of the enterprise recorded by accountantsbecause
they affect the basic accounting equation.
(a) No, the death of the president of the company is not a business transaction as it does not
affect the basic accounting equation.
(b) Yes, supplies purchased on account is a business transaction as it affects the basicaccounting
equation.
(c) No, an employee being fired is not a business transaction as it does not affect the basic
accounting equation.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
16. (a) Decrease assets and decrease stockholders’ equity.
(b) Increase assets and decrease assets.
(c) Increase assets and increase stockholders’ equity.
(d) Decrease assets and decrease liabilities.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
© 2020 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 11e, Solutions Manual (For Instructor Use Only) 1-3
,Questions Chapter 1 (Continued)
17. (a) Income statement. (d) Balance sheet.
(b) Balance sheet. (e) Balance sheet and retained earnings statement.
(c) Income statement. (f) Balance sheet.
LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
18. No, this treatment is not appropriate. While the transaction does involve a receipt of cash, it does not
represent revenues. Revenues are the gross increase in stockholders’ equity resulting from business
activities entered into for the purpose of earning income. This transaction is simply an additional
investment made by one of the owners of the business.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
19. Yes. Net income does appear on the income statement—it is the result of subtracting expenses from
revenues. In addition, net income appears on the retained earnings statement—it is shown as an
addition to the beginning-of-period retained earnings. Indirectly, the net income of a company is also
included on the balance sheet. It is included in the end-of-period retained earnings which appears in
the stockholders’ equity section of the balance sheet.
LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
20. (a) Ending stockholders’ equity balance ......................................................................................................... $198,000
Beginning stockholders’ equity balance .................................................................................................. 158,000
Net income....................................................................................................... $ 40,000
(b) Ending stockholders’ equity balance ......................................................................................................... $198,000
Beginning stockholders’ equity balance .................................................................................................. 158,000
40,000
Deduct: Investment ........................................................................................................................................... 16,000
Net income....................................................................................................... $ 24,000
LO 5, BT: AN, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
21. (a) Total revenues ($30,000 + $70,000) ........................................................................................................ $100,000
(b) Total expenses ($26,000 + $38,000)................................................................ $64,000
(c) Total revenues ....................................................................................................................................................... $100,000
Total expenses ....................................................................................................................................................... 64,000
Net income....................................................................................................... $ 36,000
LO 5, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
22. Apple’s accounting equation (in millions) at September 29, 2018 was $365,725 = $258,578 +
$107,147
LO 3, BT: AP, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
, SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 1.1
(a) $78,000 – $50,000 = $28,000 (Stockholders‘ Equity).(b)
$45,000 + $70,000 = $115,000 (Assets).
(c) $94,000 – $60,000 = $34,000 (Liabilities).
LO 3, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.2
(a) $120,000 + $232,000 = $352,000 (Total assets).
(Liabl. + Stock. equity = Assets)
(b) $190,000 – $86,000 = $104,000 (Total liabilities).
(Assets – Stock. equity = Liabl.)
(c) $600,000 – 0.5($600,000) = $300,000 (Stockholders‘ equity).
[Assets – (0.5 x Assets) = Stock. equity]
LO 3, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.3
(a) ($870,000 + $150,000) – ($500,000 – $80,000) = $600,000
(Stockholders‘ equity).
[(Beg. assets + incr.) – (Beg. liabl. – decrease) = Stock. equity]
(b) ($500,000 + $100,000) + ($870,000 – $500,000 – $66,000) = $904,000
(Assets).
[(Beg. liabl. + incr.) + (Beg, stock. equity – decr.) = Assets
(c) ($870,000 – $80,000) – ($870,000 – $500,000 + $120,000) = $300,000
(Liabilities).
[(Beg. assets – decr.) – (Beg. stock. equity + incr.) = Liabl.]
LO 3, BT: AP, Difficulty: Easy, TOT: 5 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
© 2020 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 11e, Solutions Manual (For Instructor Use Only) 1-5
,BRIEF EXERCISE 1.4
Stockholders‘ Equity
Common Retained Earnings
Assets = Liabilities Stock Revenues – Expenses – Dividends
+
+
(a) X = $90,000 + $150,000 + $450,000 – $320,000 – $40,000
X = $90,000 + $240,000
X = $330,000
(Assets = Liabl. + Com. stock + Rev. - Exp. - Div.)
(b) $57,000 = X + $23,000 + $50,000 – $35,000 – $7,000
$57,000 = X + $31,000
X = $26,000 ($57,000 – $31,000)
(Liabl. = Assets - Com. stk. - Rev. + Exp. + Div.)
(c) $600,000 = ($600,000 x 2/3) + X (Stockholders‘ equity)
$600,000 = $400,000 +X
X = $200,000
(Stk. equity = Assets - (2/3 x Assets))
LO 3, BT: AP, Difficulty: Moderate, TOT: 6 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.5
A (a) Accounts receivable A (d) Supplies
L (b) Salaries and wages payable SE (e) Dividends
A (c) Equipment L (f) Notes payable
LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.6
Assets Liabilities Stockholders‘ Equity
(a) + + NE
(b) + NE +
(c) – NE –
LO 4, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.7
Assets Liabilities Stockholders‘ Equity
(a) + NE +
(b) – NE –
(c) NE* NE NE
*Cash increased and accts. rec. decreased, so tot. assets unchanged.
,LO 4, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
© 2020 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 11e, Solutions Manual (For Instructor Use Only) 1-7
, BRIEF EXERCISE 1.8
E (a) Advertising expense D (e) Dividends
R (b) Service revenue R (f) Rent revenue
E (c) Insurance expense E (g) Utilities expense
E (d) Salaries and wages expense
LO 4, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.9
R (a) Received cash for services performed.
NSE (b) Paid cash to purchase equipment.
E (c) Paid employee salaries.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.10
ELLERBY COMPANY
Balance Sheet
December 31, 2022
Assets
Cash .................................................................................................. $ 44,000
Accounts receivable........................................................................ 72,500
Total assets .............................................................................. $116,500
Liabilities and Stockholders‘ Equity
Liabilities
Accounts payable .................................................................... $ 85,000
Stockholders‘ equity
Common stock .................................................................................... $21,500
Retained earnings ................................................................................ 10,000
Total stockholders‘ equity .............................................. 31,500
Total liabilities and stockholders‘ equity ...................... $116,500
(Cash + Accts. rec. = Accts. pay. + Com. stk. + Ret. earn.)
LO 5, BT: AP, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.11
BS (a) Notes payable
IS (b) Advertising expense
BS (c) Common stock
BS (d) Cash
IS (e) Service revenue
RE (f) Dividends
LO 5, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
