Solution ECO
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Transcript of Solution ECO
Comprehensive Problem
(a)General Journal J1
Date Account Titles and Explanation Ref. Debit CreditJuly 1 Cash...................................................... 101 14,000
Share Capital—Ordinary........... 311 14,000
1 Equipment............................................ 157 10,000Cash............................................ 101 3,000Accounts Payable...................... 201 7,000
3 Cleaning Supplies................................ 128 800Accounts Payable...................... 201 800
5 Prepaid Insurance................................ 130 1,800Cash............................................ 101 1,800
12 Accounts Receivable........................... 112 3,800Service Revenue........................ 400 3,800
18 Accounts Payable................................ 201 1,400Cash............................................ 101 1,400
20 Salaries Expense................................. 726 1,600Cash............................................ 101 1,600
21 Cash.....................................................................................................................
101 1,400
Accounts Receivable................ 112 1,400
25 Accounts Receivable........................... 112 1,500Service Revenue........................ 400 1,500
31 Gas & Oil Expense............................... 633 400Cash............................................ 101 400
31 Dividends............................................. 332 600Cash............................................ 101 600
Copyright © 2011 John Wiley & Sons, Inc. Weygandt, IFRS, 1/e, Solutions Manual (For Instructor Use Only) 4-1
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(b) & (c) JULIE’S MAIDS CLEANING SERVICE INC.Worksheet
For the Month Ended July 31, 2011
Account Titles Trial Balance AdjustmentsAdjusted
Trial BalanceIncome
StatementStatement of
Financial Position
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
CashAccounts ReceivableCleaning SuppliesPrepaid InsuranceEquipmentAccounts PayableShare Capital—OrdinaryDividendsService RevenueGas & Oil ExpenseSalaries Expense
TotalDepreciation ExpenseAccum. Depr.—EquipmentInsurance ExpenseCleaning Supplies ExpenseSalaries Payable
TotalsNet Income
Totals
6,600 3,900 800 1,80010,000
600
400 1,60025,700
6,40014,000
5,300
25,700
(a) 1,300
(e) 500
(b) 200
(c) 150(d) 700
2,850
(d) 700(c) 150
(a) 1,300
(b) 200
(e) 5002,850
6,600 5,200 100 1,65010,000
600
400 2,100
200
150 700
27,700
6,40014,000
6,600
200
500 27,700
4002,100
200
150 700
3,5503,0506,600
6,600
6,600
6,600
6,600 5,200 100
1,65010,000
600
24,150
24,150
6,40014,000
200
500 21,100 3,05024,150
Key: (a) Service Revenue; (b) Depreciation Expense; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.
4-86 C
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2011 John
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COMPREHENSIVE PROBLEM (Continued)
(a), (e) & (f)
Cash No. 101
Date Explanation Ref. Debit Credit BalanceJuly 1 J1 14,000 14,000
1 J1 3,000 11,0005 J1 1,800 9,200
18 J1 1,400 7,80020 J1 1,600 6,20021 J1 1,400 7,60031 J1 400 7,20031 J1 600 6,600
Accounts Receivable No. 112
Date Explanation Ref. Debit Credit BalanceJuly 12 J1 3,800 3,800
21 J1 1,400 2,40025 J1 1,500 3,90031 Adjusting J2 1,300 5,200
Cleaning Supplies No. 128
Date Explanation Ref. Debit Credit BalanceJuly3 J1 800 800
31 Adjusting J2 700 100
Prepaid Insurance No. 130
Date Explanation Ref. Debit Credit BalanceJuly 5 J1 1,800 1,800
31 Adjusting J2 150 1,650
Equipment No. 157
Date Explanation Ref. Debit Credit BalanceJuly 1 J1 10,000 10,000
COMPREHENSIVE PROBLEM (Continued)
Accumulated Depreciation—Equipment No. 158
Date Explanation Ref. Debit Credit BalanceJuly 31 Adjusting J2 200 200
Accounts Payable No. 201
Date Explanation Ref. Debit Credit BalanceJuly 1 J1 7,000 7,000
3 J1 800 7,80018 J1 1,400 6,400
Salaries Payable No. 212
Date Explanation Ref. Debit Credit BalanceJuly 31 Adjusting J2 500 500
Share Capital—Ordinary No. 311
Date Explanation Ref. Debit Credit BalanceJuly 1 J1 14,000 14,000
Retained Earnings No. 320
Date Explanation Ref. Debit Credit BalanceJuly 31 Closing J3 3,050 3,050
31 Closing J3 600 2,450
Dividends No. 332
Date Explanation Ref. Debit Credit BalanceJuly 31 J1 600 600
31 Closing J3 600 0
Income Summary No. 350
Date Explanation Ref. Debit Credit BalanceJuly 31 Closing J3 6,600 6,600
31 Closing J3 3,550 3,05031 Closing J3 3,050 0
COMPREHENSIVE PROBLEM (Continued)
Service Revenue No. 400
Date Explanation Ref. Debit Credit BalanceJuly 12 J1 3,800 3,800
25 J1 1,500 5,30031 Adjusting J2 1,300 6,60031 Closing J3 6,600 0
Gas & Oil Expense No. 633
Date Explanation Ref. Debit Credit BalanceJuly 31 J1 400 400
31 Closing J3 400 0
Cleaning Supplies Expense No. 634
Date Explanation Ref. Debit Credit BalanceJuly 31 Adjusting J2 700 700
31 Closing J3 700 0
Depreciation Expense No. 711
Date Explanation Ref. Debit Credit BalanceJuly 31 Adjusting J2 200 200
31 Closing J3 200 0
Insurance Expense No. 722
Date Explanation Ref. Debit Credit BalanceJuly 31 Adjusting J2 150 150
31 Closing J3 150 0
Salaries Expense No. 726
Date Explanation Ref. Debit Credit BalanceJuly 20 J1 1,600 1,600
31 Adjusting J2 500 2,10031 Closing J3 2,100 0
COMPREHENSIVE PROBLEM (Continued)
(d) JULIE’S MAIDS CLEANING SERVICE INC.Income Statement
For the Month Ended July 31, 2011
RevenuesService revenue............................................... $6,600
ExpensesSalaries expense.............................................. $2,100Cleaning supplies expense............................. 700Gas & oil expense............................................ 400Depreciation expense...................................... 200Insurance expense........................................... 150
Total expenses......................................... 3,550Net income............................................................... $3,050
JULIE’S MAIDS CLEANING SERVICE INC.Retained Earnings Statement
For the Month Ended July 31, 2011
Retained earnings, July 1...................................................... $ 0Add: Net income.................................................................. 3,050
3,050Less: Dividends.................................................................... 600 Retained earnings, July 31................................................... $2,450
COMPREHENSIVE PROBLEM (Continued)
JULIE’S MAIDS CLEANING SERVICE INC.Statement of Financial Position
July 31, 2011
AssetsProperty, plant, and equipment
Equipment........................................................ $10,000Less: Accumulated depreciation................... 200 $ 9,800
Current assetsPrepaid insurance............................................ 1,650Cleaning supplies............................................ 100Accounts receivable........................................ 5,200Cash.................................................................. 6,600 13,550
Total assets.............................................................. $23,350
Equity and Liabilities Equity
Share capital—ordinary................................... $14,000Retained earnings............................................ 2,450 $16,450
Current liabilitiesAccounts payable............................................ 6,400Salaries payable............................................... 500 6,900
Total equity and liabilities....................................... $23,350
COMPREHENSIVE PROBLEM (Continued)
(e)General Journal J2
Date Account Titles and Explanation Ref. Debit CreditJuly 31 Accounts Receivable......................... 112 1,300
Service Revenue........................ 400 1,300
31 Depreciation Expense........................ 711 200Accumulated Depreciation— Equipment.............................. 158 200
31 Insurance Expense............................. 722 150Prepaid Insurance..................... 130 150
31 Cleaning Supplies Expense............... 634 700Cleaning Supplies..................... 128 700
31 Salaries Expense................................ 726 500Salaries Payable........................ 212 500
(f)General Journal J3
Date Account Titles and Explanation Ref. Debit CreditJuly 31 Service Revenue................................. 400 6,600
Income Summary....................... 350 6,600
31 Income Summary................................ 350 3,550Salaries Expense....................... 726 2,100Depreciation Expense............... 711 200Insurance Expense.................... 722 150Cleaning Supplies Expense...... 634 700Gas & Oil Expense..................... 633 400
31 Income Summary................................ 350 3,050Retained Earnings..................... 320 3,050
31 Retained Earnings.............................. 320 600Dividends................................... 332 600
COMPREHENSIVE PROBLEM (Continued)
(g) JULIE’S MAIDS CLEANING SERVICE INC.Post-Closing Trial Balance
July 31, 2011
Debit CreditCash...................................................................... $ 6,600Accounts Receivable.......................................... 5,200Cleaning Supplies............................................... 100Prepaid Insurance............................................... 1,650Equipment............................................................ 10,000Accumulated Depreciation—Equipment........... $ 200Accounts Payable................................................ 6,400Salaries Payable.................................................. 500Share Capital—Ordinary..................................... 14,000Retained Earnings............................................... 2,450
$23,550 $23,550
# Questions Ans Dept
1
Which of the following statements about users of accounting information is incorrect?A. Management is an internal user.B. Taxing authorities are external users.C. Present creditors are external users.D. Regulatory authorities are internal users.
D ECO
2
Debits:A. increase both assets and liabilities.B. decrease both assets and liabilities.C. increase assets and decrease liabilities.D. decrease assets and increase liabilities.
C ECO
3
One of the following statements about the accrual-basis of accounting is false. That statement is:A. Events that change a company's financial statements are recorded in the periods in which the events occur.B. To be recognized, revenue must be measurable.C. The accrual basis is in accord with IFRS.D. Revenue is recorded only when cash is received, and expense is recorded only when cash is paid.
D ECO
4
In the unadjusted trial balance of its worksheet for the year ended December 31, 2011, Taitum Company reported Office Equipment of $120,000. The year-end adjusting entries require an adjustment of $15,000 for depreciation expense for the office equipment. After adjustment, the following adjusted amount should be reported:A. A debit of $105,000 for Office Equipment in the statement of financial position column.B. A credit of $15,000 for Depreciation Expense—Office Equipment in the income statement column.C. A debit of $120,000 for Office Equipment in the statement of financial position column.D. A debit of $15,000 for Accumulated Depreciation—Office Equipment in the statement of financial position column.
B ECO
5
The three types of business entities are:A. proprietorships, small businesses, and partnerships.B. proprietorships, partnerships, and corporations.C. proprietorships, partnerships, and large businesses.D. financial, manufacturing, and service companies.
B ECO
6
The expanded accounting equation is:A. Assets + Liabilities = Share Capital + Retained Earnings + Dividends + Revenues + ExpensesB. Assets = Liabilities + Share Capital + Retained Earnings + Dividends + Revenues - ExpensesC. Assets = Liabilities - Share Capital – Retained Earnings - Dividends - Revenues - ExpensesD. Assets = Liabilities + Share Capital + Retained Earnings - Dividends + Revenues – Expenses
D ECO
7 Each of the following is a major type (or category) of adjusting entries except:A. prepaid expenses.B. accrued revenues.
D ECO
C. accrued expenses.D. earned revenues.
8
The closing process involves separate entries to close (1) expenses, (2) dividends, (3) revenues, and (4) income summary. The correct sequencing of the entries is:A. (4), (3), (2), (1)B. (1), (2), (3), (4)C. (3), (1), (4), (2)D. (3), (2), (1), (4)
C ECO
9
As of December 31, 2011, Stoneland Company has assets of €3,500 and equity of €2,000. What are the liabilities for Stoneland Company as of December 31, 2011?A. €1,500.B. €1,000.C. €2,500.D. €2,000.
A ECO
10
The purchase of supplies on account should result in:A. a debit to Supplies Expense and a credit to Cash.B. a debit to Supplies Expense and a credit to Accounts Payable.C. a debit to Supplies and a credit to Accounts Payable.D. a debit to Supplies and a credit to Accounts Receivable.
C ECO
11
Accumulated Depreciation is:A. a contra-asset account.B. an expense account.C. an equity account.D. a liability account.
A ECO
12
The proper order of the following steps in the accounting cycle is:A. prepare unadjusted trial balance, journalize transactions, post to ledger accounts, journalize and post adjusting entries.B. journalize transactions, prepare unadjusted trial balance, post to ledger accounts, journalize and post adjusting entries.C. journalize transactions, post to ledger accounts, prepare unadjusted trial balance, journalize and post adjusting entries.D. prepare unadjusted trial balance, journalize and post adjusting entries, journalize transactions, post to ledger accounts.
C ECO
13
Payment of accounts payable affects the components of the accounting equation in the following way.A. Decreases equity and decreases liabilities.B. Increases assets and decreases liabilities.C. Decreases assets and increases equity.D. Decreases assets and decreases liabilities.
D ECO
14
Before posting a payment of €5,000 to a creditor, the Accounts Payable account of Senator Company has a normal balance of €16,000. The balance after posting the payment is:A. €21,000.B. €5,000.C. €11,000.D. Cannot be determined.
C ECO
15Adjustments for accrued revenues:A. have a liabilities and revenues account relationship.B. have an assets and revenues account relationship.C. decrease assets and revenues.
B ECO
D. decrease liabilities and increase revenues.
16
The correct order of presentation in a classified statement of financial position for the following current assets is:A. accounts receivable, cash, prepaid insurance, inventories.B. cash, inventories, accounts receivable, prepaid insurance.C. prepaid insurance, inventories, accounts receivable, cash,D. inventories, cash, accounts receivable, prepaid insurance.
C ECO
17
The financial statement that reports assets, liabilities, and equity is the:A. income statement.B. retained earnings statement.C. statement of financial position.D. statement of cash flow.
C ECO
18
The trial balance of Clooney Corporation had accounts with the following normal balances: Cash $5,000, Revenue $85,000, Salaries Payable $4,000, Salaries Expense $40,000, Rent Expense $10,000, Share Capital – Ordinary $42,000; Dividends $15,000; Equipment $61,000. In preparing a trial balance, the total in the debit column is:A. $131,000B. $216,000C. $91,000D. $116,000
A ECO
19
The trial balance shows Supplies $0 and Supplies Expense $1,500. If $800 of supplies are on hand at the end of the period, the adjusting entry is:A. Debit Supplies $800 and credit Supplies Expense $800.B. Debit Supplies Expense $800 and credit Supplies $800.C. Debit Supplies $700 and credit Supplies Expense $700.D. Debit Supplies Expense $700 and credit Supplies $700.
A ECO
20
Current assets are listed:A. by the reverse order of their expected conversion to cash.B. by importance.C. by longevity.D. alphabetically.
A ECO