Solution Manual for College Accounting: A Practical Approach, 14th Edition

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College Accounting
Fourteenth Edition
Jeffrey Slater
Mike Deschamps
Instructor's Resource Manual
for
College Accounting:
A practical Approach
By Carolyn Strauch

1-1
1
Accounting Concepts
and Procedures
ANSWERS TO DISCUSSION QUESTIONS AND
CRITICAL THINKING/ETHICAL CASE
1. The functions of accounting are to analyze, record, classify, summarize, report,
interpret, and communicate financial information.
2. Sole proprietorship—1 owner; unlimited liability; easy to form; limited life
Partnership—2 or more owners; unlimited liability; easy to form; limited life
Corporation—Stockholders; limited liability; difficult to form; unlimited life
3. Businesses are classified as service, merchandise, or manufacturing.
4. Computer technology has greatly reduced the time required for performing the
bookkeeping function.
5. The three elements of the basic accounting equation are assets, liabilities, and
owner's equity.
6. Capital is the owner's current investment or equity in the assets of a business. It is
one subdivision of owner's equity.
7. True. The sum of the left side of the equation (assets) must equal the sum of the
right side of the equation (liabilities and owner's equity).
8. False. That is the income statement.
9. False. Revenue is a subdivision of owner's equity.
10. Owner's equity is subdivided into Capital, Withdrawals, Revenue, and Expenses.
11. False. It is a subdivision of owner's equity and records payments of the owner’s
personal (non-business) expenses or distributions direct to the owner. It is not a
business expense.
12. Reject. As expenses increase, owner's equity decreases.
13. Revenue less Expenses; an income statement shows performance over time.
14. False. It calculates ending capital.
15. The question in this case is whether Paul should be allowed to "pad" his expense
account with an additional $100 of expenses. This would be unethical. Paul should
only expense those items that are business related. Paul's argument that he is
entitled to an additional $100 is not a valid assumption. However, he should be
reimbursed for any business expenses during the weekend.

1-3
SOLUTIONS TO SET A EXERCISES
1A-1. a. $17,500 = $6,000 + $11,500
b. $65,000 = $5,000 + $60,000
c. $15,000 = $12,000 + $3,000
1A-2.
Assets = Liabilities + Owner’s Equity
Cash + Equipment = Accounts +
Payable
Morgan, Capital
a. +124,000 +124,000
b. (1,300) +1,300
c. +900 +900
1A-3.
RABBIT COMPANY CLEANERS
BALANCE SHEET
SEPTEMBER 30, 201X
Assets Liabilities and Owner’s Equity
Cash $67 0 0 0 Liabilities
Equipment 7 0 0 0 Accounts Payable $13 0 0 0
13 0 0 0Total Liabilities
Owner's Equity
B. Rabbit, Capital 61 0 0 0
Total Liabilities and
Total Assets $74 0 0 0 Owner's Equity $74 0 0 0

1-4
EXERCISES (CONTINUED)
1A-4.
ASSETS = LIABILITIES + OWNER'S EQUITY
B. B.
Accounts Computer Accounts Baker, Baker,
Cash + Rec. + Equip. = Payable + Capital – Withd. + Revenues – Expenses
a. +80,000 +80,000
b. +4,000 +4,000
c. (125) +125
d. +13,600 +13,600
e. +30,000 +30,000
f. (4,100) +4,100
g. (1,490) +1,490
Remember, as withdrawals or expenses increase, the end result is to reduce owner's equity.
1A-5.
(a) FREEMAN REALTY
INCOME STATEMENT
MONTH ENDED JUNE 30, 201X
Revenue:
Professional Fees $3 1 0 0
Operating Expenses:
Salaries Expense $ 4 5 0
Utilities Expense 1 5 0
Rent Expense 4 5 0
Total Operating Expenses 1 1 0 5 0
Net Income $2 0 5 0
(b) FREEMAN REALTY
STATEMENT OF OWNER’S EQUITY
MONTH ENDED JUNE 30, 201X
S. Freeman, Capital, June 1, 201X $10 2 4 5
Net Income for June $2 0 5 0
Less: Withdrawals for June (2 2 5)
Increase in Capital 1 8 2 5
S. Freeman, Capital, June 30, 201X $12 0 7 0

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1-5
EXERCISES (CONTINUED)
(c) FREEMAN REALTY
BALANCE SHEET
JUNE 30, 201X
Assets Liabilities and Owner’s Equity
Cash $5 2 0 0 Liabilities
Accounts Receivable 1 3 7 0 Accounts Payable $6 0 0 0
Office Equipment 11 5 0 0 Owner's Equity
S. Freeman, Capital 12 0 7 0
Total Liabilities and
Total Assets $18 0 7 0 Owner's Equity $18 0 7 0
SOLUTIONS TO SET B EXERCISES
1B-1. a. $19,000 = $6,000 + $13,000
b. $100,000 = $4,000 + $96,000
c. $45,000 = $10,000 + $35,000
1B-2.
Assets = Liabilities + Owner’s Equity
Cash + Equipment = Accounts +
Payable
Melody, Capital
a. +128,000 +128,000
b. (1,650) +1,650
c. +1,200 +1,200
1B-3. RAUSCHER COMPANY CLEANERS
BALANCE SHEET
NOVEMBER 30, 201X
ASSETS LIABILITIES AND OWNER’S EQUITY
Cash $65 0 0 0 Liabilities
Equipment 10 0 0 0 Accounts Payable $29 0 0 0
Total Liabilities $29 0 0 0
Owner's Equity
B. Rauscher, Capital $46 0 0 0
Total Liabilities and
Total Assets $75 0 0 0 Owner's Equity $75 0 0 0

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1-6
EXERCISES (CONTINUED)
1B-4. ASSETS = LIABILITIES + OWNER'S EQUITY
B. B.
Accounts Computer Accounts Beadell, Beadell,
Cash + Rec. + Equip. = Payable + Capital – Withdr. + Revenues – Expenses
a. +65,000 +65,000
b. +7,500 +7,500
c. (225) +225
d. +13,500 +13,500
e. +29,600 +29,600
f. (3,800) +3,800
g. (1,530) +1,530
Remember, as withdrawals or expenses increase, the end result is to reduce owner's equity.
1B-5.
(a) FAIRMONT REALTY
INCOME STATEMENT
MONTH ENDED NOVEMBER 30, 201X
Revenue:
Professional Fees $4 0 0 0
Operating Expenses:
Salaries Expense $ 3 0 0
Utilities Expense 2 5 0
Rent Expense 3 0 0
Total Operating Expenses 8 5 0
Net Income $3 1 5 0
(b) FAIRMONT REALTY
STATEMENT OF OWNER'S EQUITY
MONTH ENDED NOVEMBER 30, 201X
S. Fairmont, Capital, November 1, 201X $10 0 1 5
Net Income for November $3 1 5 0
Less: Withdrawals for November (1 7 5)
Increase in Capital 2 9 7 5
S. Fairmont, Capital, November 30, 201X $12 9 9 0

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1-8
SOLUTIONS TO SET A PROBLEMS
PROBLEM 1A-1
MELODY'S NAIL SPA
Transaction Assets = Liabilities + Owner’s Equity
Cash Store Equipment Accounts
Payable
M. Abington,
Capital
a. +19,000 +19,000
b. (3,400) +3,400
c. +6,100 +6,100
d. (1,200) (1,200)
Total 14,400 9,500 4,900 19,000
PROBLEM 1A-2
SIMON’S INTERNET SERVICE
BALANCE SHEET
NOVEMBER 30, 201X
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash $45 0 0 0 Liabilities
Equipment 24 0 0 0 Accounts Payable $16 5 0 0
Building 30 0 0 0
Owner's Equity
B. Simon, Capital 82 5 0 0
Total Liabilities and
Total Assets $99 0 0 0 Owner's Equity $99 0 0 0

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1-9
PROBLEM 1A-3
Expenses
0
0
0
0
+325
325
+220
545
+800
1,345
1,345
–
-
-
-
-
-
-
-
-
-
–
-
–
-
–
-
–
OWNER'S
EQUITY
Computer
Service
Revenue
0
0
+1,300
1,300
+2,200
3,500
3,500
3,500
3,500
3,500
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
FALCO COMPUTER SERVICE
R. Falco,
Withd.
0
0
0
0
0
0
0
+ 300
300
–
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
–
R. Falco,
Capital
+40,000
40,000
40,000
40,000
40,000
40,000
40,000
40,000
40,000
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
LIABILITIES
Accounts
Payable
0
+6,500
6,500
6,500
6,500
6,500
6,500
+800
7,300
7,300
49,155
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
Computer
Equipment
0
+6,500
6,500
6,500
6,500
6,500
6,500
6,500
6,500
49,155
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
ASSETS
Accounts
Receivable
0
0
0
+2,200
2,200
2,200
2,200
2,200
2,200
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
Cash
+40,000
40,000
40,000
+1,300
41,300
41,300
(325)
40,975
(220)
40,755
40,755
(300)
40,455
a.
BALANCE
b.
BALANCE
c.
BALANCE
d.
BALANCE
e.
BALANCE
f.
BALANCE
g.
BALANCE
h.
ENDING BALANCE

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1-10
PROBLEM 1A-4
(a)
WENGLER HOME DECORATING SERVICE
INCOME STATEMENT
MONTH ENDED JUNE 30, 201X
Revenue:
Home Decorating Fees $2 4 0 0
Operating Expenses:
Advertising Expense $ 1 4 5
Repair Expense 5 5
Travel Expense 2 5 0
Supplies Expense 5 5
Rent Expense 3 7 5
Total Operating Expenses 8 8 0
Net Income $1 5 2 0
(b)
WENGLER HOME DECORATING SERVICE
STATEMENT OF OWNER'S EQUITY
MONTH ENDED JUNE 30, 201X
J. Wengler Capital, June 1, 201X $3 8 8 5
Net Income for June $1 5 2 0
Less: Withdrawals for June (1 0 0 0)
Increase in Capital 5 2 0
J. Wengler, Capital, June 30, 201X $4 4 0 5
(c)
WENGLER HOME DECORATING SERVICE
BALANCE SHEET
JUNE 30, 201X
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash $2 3 0 0 Liabilities
Accounts Receivable 1 2 0 0 Accounts Payable $ 2 5 0
Decorating Equipment 1 1 5 5
Owner's Equity
J. Wengler, Capital 4 4 0 5
Total Liabilities and
Total Assets $4 6 5 5 Owner's Equity $4 6 5 5

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1-11
PROBLEM 1A-5
OWNER’ S EQUITY
Expenses
0
0
0
0
0
+690
690
690
690
+60
750
750
750
750
+500
1,250
+550
1,800
–
-
-
-
-
-
-
-
-
-
-
-
–
-
–
-
–
-
–
-
–
-
–
-
–
-
–
-
–
Catering
Revenue
0
0
0
0
+2,400
2,400
2,400
+175
2,575
2,575
2,575
2,575
+1,900
4,475
4,475
4,475
4,475
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
TRUMAN’ S CATERING SERVICE
J.
Truman,
Withd
0
0
0
0
0
0
0
0
0
+90
90
90
90
90
90
–
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
–
-
-
-
–
-
–
-
–
J.
Truman,
Capital
+33,000
33,000
33,000
33,000
33,000
33,000
33,000
33,000
33,000
33,000
33,000
33,000
33,000
33,000
33,000
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
LIABILITIES
Accounts
Payable
0
0
+2,100
2,100
(200)
1,900
1,900
1,900
1,900
1,900
1,900
1,900
1,900
+800
2,700
+500
3,200
3,200
$38,785
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
Equipment
+1,600
1,600
+2,100
3,700
3,700
3,700
3,700
3,700
3,700
3,700
3,700
3,700
+800
4,500
4,500
4,500
$38,785
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
ASSETS
Accounts
Receivable
0
0
0
0
0
0
+175
175
(120)
55
55
55
55
55
55
55
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
Cash
+33,000
33,000
(1,600)
31,400
31,400
(200)
31,200
+2,400
33,600
(690)
32,910
32,910
+120
33,030
(60)
32,970
(90)
32,880
+1,900
34,780
34,780
34,780
(550)
34,230
5/25
BALANCE
5/27
BALANCE
5/28
BALANCE
5/29
BALANCE
6/1
BALANCE
6/5
BALANCE
6/8
BALANCE
6/10
BALANCE
6/15
BALANCE
6/17
BALANCE
6/20
BALANCE
6/25
BALANCE
6/28
BALANCE
6/30
END. BAL.

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1-12
PROBLEM 1A-5 (CONTINUED)
(b)
TRUMAN'S CATERING SERVICE
BALANCE SHEET
MAY 31, 201X
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash $31 2 0 0 Liabilities
Equipment 3 7 0 0 Accounts Payable $1 9 0 0
Owner's Equity
J. Truman, Capital 33 0 0 0
Total Liabilities and
Total Assets $34 9 0 0 Owner's Equity $34 9 0 0
(c)
TRUMAN'S CATERING SERVICE
INCOME STATEMENT
MONTH ENDED JUNE 30, 201X
Revenue:
Catering Revenue $4 4 7 5
Operating Expenses:
Salaries Expense $ 6 9 0
Telephone Expense 6 0
Rent Expense 5 0 0
Supplies Expense 5 5 0
Total Operating Expenses 1 8 0 0
Net Income $2 6 7 5

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1-13
PROBLEM 1-5A(CONCLUDED)
(d)
TRUMAN'S CATERING SERVICE
STATEMENT OF OWNER'S EQUITY
MONTH ENDED JUNE 30, 201X
J. Truman, Capital June 1, 201X $33 0 0 0
Net Income for June $2 6 7 5
Less: Withdrawals for June (9 0)
Increase in Capital 2 5 8 5
J. Truman, Capital, June 30, 201X $35 5 8 5
(e)
TRUMAN'S CATERING SERVICE
BALANCE SHEET
JUNE 30, 201X
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash $34 2 3 0 Liabilities
Accounts Receivable 5 5 Accounts Payable $3 2 0 0
Equipment 4 5 0 0 Owner's Equity
J. Truman, Capital 35 5 8 5
Total Liabilities and
Total Assets $38 7 8 5 Owner's Equity $38 7 8 5

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1-14
SOLUTIONS TO SET B PROBLEMS
PROBLEM 1B-1
MADELINE’S NAIL SPA
Transaction Assets = Liabilities + Owner’s Equity
Cash Store Equipment Accounts
Payable
M. Abdul, Capital
a. +17,000 +17,000
b. (3,900) +3,900
c. +6,200 +6,200
d. (800) (800)
Total 12,300 10,100 5,400 17,000
PROBLEM 1B-2
SAM'S INTERNET SERVICE
BALANCE SHEET
SEPTEMBER 30, 201X
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash $ 5 0 0 0 Liabilities
Equipment 34 0 0 0 Accounts Payable $15 5 0 0
Building 45 0 0 0
Owner's Equity
B. Sam, Capital 68 5 0 0
Total Liabilities and
Total Assets $84 0 0 0 Owner's Equity $84 0 0 0

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1-15
PROBLEM 1B-3
FANNIER COMPUTER SERVICE
RED FUMAN COMPUTER SERVICE Expenses
0
0
0
0
+300
300
+180
480
+1,000
1,480
1,480
–
-
-
-
-
-
-
-
–
-
–
-
–
-
–
-
–
OWNER'S
EQUITY
Computer
Service
Revenue
0
0
+700
700
+1,200
1,900
1,900
1,900
1,900
1,900
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
R.
Fannier
Withd.
0
0
0
0
0
0
0
+800
800
–
-
-
-
-
-
-
-
-
-
-
-
-
-
–
-
–
R.
Fannier,
Capital
+17,000
17,000
17,000
17,000
17,000
17,000
17,000
17,000
17,000
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
LIABILITIES
Accounts
Payable
0
+5,000
5,000
5,000
5,000
5,000
5,000
+1,000
6,000
6,000
$22,620
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
Computer
Equipment
0
+5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
$22,620
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
ASSETS
Accounts
Receivable
0
0
0
+1,200
1,200
1,200
1,200
1,200
1,200
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
Cash
+17,000
17,000
17,000
+700
17,700
17,700
(300)
17,400
(180)
17,220
17,220
(800)
16,420
a.
BALANCE
b.
BALANCE
c.
BALANCE
d.
BALANCE
e.
BALANCE
f.
BALANCE
g.
BALANCE
h.
ENDING
BALANCE

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1-16
PROBLEM 1B-4
(a)
WADDEN HOME DECORATING SERVICE
INCOME STATEMENT
MONTH ENDED SEPTEMBER 30, 201X
Revenue:
Home Decorating Fees $2 4 0 0
Operating Expenses:
Advertising Expense $ 2 5 0
Repair Expense 4 0
Travel Expense 7 5 0
Supplies Expense 9 5
Rent Expense 3 0 0
Total Operating Expenses 1 4 3 5
Net Income $ 9 6 5
(b)
WADDEN HOME DECORATING SERVICE
STATEMENT OF OWNER'S EQUITY
MONTH ENDED SEPTEMBER 30, 201X
J. Wadden, Capital, September 1, 201X $2 6 7 5
Net income for September $ 9 6 5
Less: Withdrawals for September (8 0 0)
Increase in Capital 1 6 5
J. Wadden, Capital, September 30, 201X $2 8 4 0
(c)
WADDEN HOME DECORATING SERVICE
BALANCE SHEET
SEPTEMBER 30, 201X
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash $2 5 0 0 Liabilities
Accounts Receivable 5 5 0 Accounts Payable $ 9 3 5
Decorating Equipment 7 2 5
Owner's Equity
J. Wadden, Capital 2 8 4 0
Total Liabilities and
Total Assets $3 7 7 5 Owner's Equity $3 7 7 5

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1-17
PROBLEM 1B-5
OWNER’ S EQUITY
Expenses
0
0
0
0
0
+1,500
1,500
1,500
1,500
+50
1,550
1,550
1,550
1,550
+550
2,100
+250
2,350
–
-
-
-
-
-
-
-
-
-
-
-
–
-
–
-
–
-
-
-
–
-
-
-
–
-
–
-
–
Catering
Revenue
0
0
0
0
+2,000
2,000
2,000
+150
2,150
2,150
2,150
2,150
+1,000
3,150
3,150
3,150
3,150
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
TRICKETT’ S CATERING SERVICE
J.
Trickett,
Withd
0
0
0
0
0
0
0
0
0
+400
400
400
400
400
400
–
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
–
-
-
-
–
-
–
-
–
J. Trickett,
Capital
+22,000
22,000
22,000
22,000
22,000
22,000
22,000
22,000
22,000
22,000
22,000
22,000
22,000
22,000
22,000
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
LIABILITIES
Accounts
Payable
0
0
+2,100
2,100
(800)
1,300
1,300
1,300
1,300
1,300
1,300
1,300
1,300
+400
1,700
+550
2,250
2,250
$24,650
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
Equipment
0
+700
700
+2,100
2,800
2,800
2,800
2,800
2,800
2,800
2,800
2,800
2,800
+400
3,200
3,200
3,200
$24,650
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
ASSETS
Accounts
Receivable
0
0
0
0
0
0
+150
150
(100)
50
50
50
50
50
50
50
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
Cash
+22,000
22,000
(700)
21,300
21,300
(800)
20,500
+2,000
22,500
(1,500)
21,000
21,000
+100
21,100
(50)
21,050
(400)
20,650
+1,000
21,650
21,650
21,650
(250)
21,400
10/25
BALANCE
10/27
BALANCE
10/28
BALANCE
10/29
BALANCE
11/1
BALANCE
11/5
BALANCE
11/8
BALANCE
11/10
BALANCE
11/15
BALANCE
11/17
BALANCE
11/20
BALANCE
11/25
BALANCE
11/28
BALANCE
11/30
END BAL.

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1-18
PROBLEM 1B-5 (CONTINUED)
(b)
TRICKETT'S CATERING SERVICE
BALANCE SHEET
OCTOBER 31, 201X
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash $20 5 0 0 Liabilities
Equipment 2 8 0 0 Accounts Payable $1 3 0 0
Owner's Equity
J. Trickett, Capital 22 0 0 0
Total Liabilities and
Total Assets $23 3 0 0 Owner's Equity $23 3 0 0
(c)
TRICKETT'S CATERING SERVICE
INCOME STATEMENT
MONTH ENDED NOVEMBER 30, 201X
Revenue:
Catering Revenue $3 1 5 0
Operating Expenses:
Salaries Expense $1 5 0 0
Telephone Expense 5 0
Rent Expense 5 5 0
Supplies Expense 2 5 0
Total Operating Expenses 2 3 5 0
Net Income $ 8 0 0

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1-19
PROBLEM 1B-5(CONCLUDED)
(d)
TRICKETT'S CATERING SERVICE
STATEMENT OF OWNER'S EQUITY
MONTH ENDED NOVEMBER 30, 201X
J. Trickett, Capital, November 1, 201X $22 0 0 0
Net Income for November $ 8 0 0
Less: Withdrawals for November (4 0 0)
Increase in Capital 4 0 0
J. Trickett, Capital, November 30, 201X $22 4 0 0
(e)
TRICKETT'S CATERING SERVICE
BALANCE SHEET
NOVEMBER 30, 201X
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash $21 4 0 0 Liabilities
Accounts Receivable 5 0 Accounts Payable $2 2 5 0
Equipment 3 2 0 0 Owner's Equity
J. Trickett, Capital 22 4 0 0
Total Liabilities and
Total Assets $24 6 5 0 Owner's Equity $24 6 5 0
FINANCIAL REPORT PROBLEM SOLUTION—2016 Amazon’s Annual Report
YEAR Cash and Cash Equivalents
2016 $19,334 million
2015 $15,890 million
Increase $ 3,444 million
Cash and cash equivalents increased $3.4 billion from 2015 to 2016.

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1-20
KEEPING IT REAL--Suarez Computer Center Solution
Expenses
+$800 (Rent)
800
800
800
+100 (Util.)
900
900
$900
OWNER'S EQUITY
–
–
–
–
–
–
–
Service
Revenue
+$1,000
1,000
+700
1,700
1,700
+1,400
3,100
$3,100
+
+
+
+
+
+
Falco,
Withdrawals
+1,500
$1,500
–
–
=LIABILITIES+
Falco,
+Capital
+$12,500
12,500
12,500
12,500
12,500
12,500
12,500
12,500
12,500
12,500
$12,500
$13,800
SUAREZ COMPUTER CENTER
Accounts
Payable
+
+
+
+
+
+
+
+
+
+$500
500
500
500
500
+100
600
600
$600
=
=
=
=
=
=
=
=
=
=
=
=
Office
Equipment
+$1,500
1,500
1,500
1,500
1,500
1,500
1,500
1,500
$1,500
$13,800
+
+
+
+
+
+
+
+
+
Computer
Shop Equipment
+$1,260
1,260
1,260
1,260
1,260
1,260
1,260
1,260
1,260
$1,260
+
+
+
+
+
+
+
+
+
+
ASSETS
Supplies
+$500
500
500
500
500
500
500
$500
+
+
+
+
+
+
+
+
Cash
+$12,500
12,500
–1,260
11,240
–1,500
9,740
9,740
–800
8,940
+1,000
9,940
+700
10,640
10,640
+1,400
12,040
–1,500
$10,540
a.
BALANCE
b.
BALANCE
c.
BALANCE
d.
BALANCE
e.
BALANCE
f.
BALANCE
g.
BALANCE
h.
BALANCE
i.
BALANCE
j.
ENDINGBALA
NCE

Loading page 22...

1-21
SUAREZ COMPUTER CENTER
INCOME STATEMENT
FOR THE MONTH ENDED JULY 31, 201X
Revenue:
Service Revenue $3 1 0 0 00
Operating Expenses:
Rent Expense $ 8 0 0 00
Utilities Expense 1 0 0 00
Total Operating Expenses 9 0 0 00
Net Income $2 2 0 0 00
SUAREZ COMPUTER CENTER
STATEMENT OF OWNER'S EQUITY
FOR MONTH ENDED JULY 31, 201X
T. Falco, Capital, July 1, 201X $ 0 00
Investment for July 12 5 0 0 00
Total investment for July 12 5 0 0 00
Net Income for July $2 2 0 0 00
Less: Withdrawals for July (1 5 0 0 00)
Increase in Capital 7 0 0 00
T. Falco, Capital, July 31, 201X $13 2 0 0 00
SUAREZ COMPUTER CENTER
BALANCE SHEET
JULY 31, 201X
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash $10 5 4 0 00 Liabilities:
Supplies 5 0 0 00 Accounts Payable $ 6 0 0 00
Computer Shop Equipment 1 2 6 0 00
Office Equipment 1 5 0 0 00 Owner’s Equity
T. Falco, Capital 13 2 0 0 00
Total Liabilities and
Total Assets $13 8 0 0 00 Owner's Equity $13 8 0 0 00

Loading page 23...

2-1
2
Debits and Credits:
Analyzing and Recording
Business Transactions
ANSWERS TO DISCUSSION QUESTIONS AND
CRITICAL THINKING/ETHICAL CASE
1. A ledger is a group of accounts that records in monetary value the data from
business transactions.
2. The left-hand side is always the debit side. It is an arbitrary rule.
3. False. Accounts with one entry will not need footings.
4. The financial statements are the end products of the accounting process.
5. The transaction analysis chart is a teaching device that is not used in the regular
accounting process.
6. Which accounts are affected? In which categories do the accounts belong? Are the
accounts increasing or decreasing? What do the rules of debit and credit say? What
does the T-account look like?
7. Disagree. Computers will record debits and credits based on the account type.
8. False. The trial balance is an informal report that does not have the same status as
financial statements. The trial balance is used to verify the equality of total debits
and credits and prepare the financial statements.
9. The financial statements are prepared from the ending balances of the accounts
(debit or credit) in the ledger. The columns on financial statements are used for
listing amounts and for subtotaling.
10. It is easier to prepare the reports from the trial balance rather than the expanded
accounting equation because the trial balance lists all accounts and their balances.
The columns for revenue, expenses, etc., in the expanded accounting equation do
not list specific titles and their balances.
11. The question in this case is whether Joshua should be allowed to put fictitious
figures into the trial balance. I would not support this type of behavior. His behavior
is extremely unprofessional and goes against professional ethical standards.
Instead of putting in fictitious figures, Joshua should stay late and correct the trial
balance. He could also ask for help.

Loading page 24...

2-2
SOLUTIONS TO CONCEPT CHECKS
1. The ending balance in Cash is $19,500(debit balance). The ending balance in C.
Rice, Capital is $18,000(credit balance).
Cash 110
6/24 8,000
6/28 12,000
500 6/26
20,000 500
Bal. 19,500
C. Rice, Capital 311
11,000 6/1
6,000 6/8
1,000 6/22
18,000 Bal.
2.
Category Incr. Decr. Normal Bal.
A. Liability Cr. Dr. Cr.
B. Revenue Cr. Dr. Cr.
C. Asset Dr. Cr. Dr.
D. Capital Cr. Dr. Cr.
E. Withdrawal Dr. Cr. Dr.
F. Asset Dr. Cr. Dr.
G. Expense Dr. Cr. Dr.
3.
Account Category Increase/Decrease Dr. or Cr. T Accounts
Cash Asset ↑ Dr.
Cash
600
Accounts Receivable Asset ↑ Dr.
Acc. Rec.
2,900
Design Fees Earned Revenue ↑ Cr.
Design Fees
Earned
3,500

Loading page 25...

Loading page 26...

2-4
SOLUTIONS TO SET A EXERCISES
2A-1. Balance Sheet Accounts
Assets
111 Cash
112 Accounts Receivable
121 Office Equipment (Microsoft Surface Tablet)
Liabilities
211 Accounts Payable
Owner's Equity
311 L. Janas, Capital
312 L. Janas, Withdrawals
Income Statement Accounts
Revenue
411 Legal Fees
Expenses
511 Salary Expense
512 Repair Expense
513 Advertising Expense
2A-2.
1.
Accounts Affected
2.
Category
3.
↑↓ 4.
Rules
5.
T-Account Update
Computer Equipment
Asset ↑ Dr. Computer Equipment
26,000
Cash
Asset ↓ Cr. Cash
9,000
Accounts Payable
Liability ↑ Cr. Accounts Payable
17,000

Loading page 27...

2-5
EXERCISES (CONTINUED)
2A-3.
ACCOUNT CATEGORY ↑ ↓ FINANCIAL STATEMENT
Computer Supplies Asset Dr. Cr. Balance Sheet
Legal Fees Earned Revenue Cr. Dr. Income Statement
P. Roy, Withdrawals Withdrawal Dr. Cr. Statement of Owner's Equity
Accounts Payable Liability Cr. Dr. Balance Sheet
Salaries Expense Expense Dr. Cr. Income Statement
Auto Asset Dr. Cr. Balance Sheet
2A-4.
Dr. Cr.
A. 8 1
B. 6 1
C. 9 4
D. 1 7
E. 10 1
F. 3 5
G. 2 7
H. 1 2
I. 3 4

Loading page 28...

2-6
EXERCISES (CONTINUED)
2A-5.
(1)
HELM'S CLEANERS
INCOME STATEMENT
FOR MONTH ENDED MARCH 31, 201X
Revenue:
Cleaning Fees $ 4 6 6
Operating Expenses:
Salaries Expense $ 1 2 5
Utilities Expense 1 6 2
Total Operating Expenses 2 8 7
Net Income $ 1 7 9
(2)
HELM'S CLEANERS
STATEMENT OF OWNER'S EQUITY
FOR MONTH ENDED MARCH 31, 201X
J. Helm, Capital, March 1, 201X $ 7 2 6
Net Income for March $ 1 7 9
Less: Withdrawals for March ( 5 5)
Increase in Capital 1 2 4
J. Helm, Capital, March 31, 201X $ 8 5 0
(3)
HELM'S CLEANERS
BALANCE SHEET
MARCH 31, 201X
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash $ 7 5 0 Liabilities
Equipment 5 0 0 Accounts Payable $ 4 0 0
Owner's Equity
J. Helm, Capital 8 5 0
Total Liabilities and
Total Assets $1 2 5 0 Owner's Equity $1 2 5 0

Loading page 29...

2-7
SOLUTIONS TO SET B EXERCISES
2B-1. Balance Sheet Accounts
Assets
111 Cash
112 Accounts Receivable
121 Office Equipment (Apple iPad)
Liabilities
211 Accounts Payable
Owner's Equity
311 L. Jones, Capital
312 L. Jones, Withdrawals
Income Statement Accounts
Revenue
411 Legal Fees Earned
Expenses
511 Salary Expense
512 Rent Expense
513 Advertising Expense
2B-2.
1.
Accounts Affected
2.
Category
3.
↑↓ 4.
Rules
5.
T-Account Update
Computer Equipment
Asset ↑ Dr. Computer Equipment
28,000
Cash
Asset ↓ Cr. Cash
8,000
Accounts Payable
Liability ↑ Cr. Accounts Payable
20,000

Loading page 30...

2-8
EXERCISES (CONTINUED)
2B-3.
ACCOUNT CATEGORY ↑ ↓ FINANCIAL STATEMENT
Office Supplies Asset Dr. Cr. Balance Sheet
Rental Fees Earned Revenue Cr. Dr. Income Statement
A. Troy, Withdrawals Withdrawal Dr. Cr. Statement of Owner's Equity
Accounts Payable Liability Cr. Dr. Balance Sheet
Wage Expense Expense Dr. Cr. Income Statement
Computer Asset Dr. Cr. Balance Sheet
2B-4.
Dr. Cr.
A. 8 1
B. 6 1
C. 9 4
D. 1 7
E. 10 1
F. 3 5
G. 2 7
H. 1 2
I. 3 4

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Solution Manual for College Accounting: A Practical Approach, 14th Edition

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