Accounting Principles Solutions Manual - DOC by bqy69086

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									   Larson/Jensen, Fundamental Accounting Principles, Twelfth Canadian
                                Edition

                                         Errata

Instructors: Where appropriate, please see the Solutions Manual for updates.

Chapter 3, Exhibit 3.10, Page 89
Should include: Step 3: Post entry to ledger.
Chapter 3, Working Papers, Serial Problem – Echo Systems:
See corrected document under Working Papers for Chapter 3.

Chapter 3, Quick Study Solutions
This has also been updated in the Student’s documents for QSS.


Quick Study 3-1
A 1. Buildings            R 11. Advertising Fees        L   21. Unearned Rent
                            Earned                          Revenue
E 2. Building             R 12. Interest Earned         A   22. Prepaid Rent
  Repair Expense
E 3. Wages         E 13. Interest Expense               L   23. Rent Payable
  Expense
L 4. Wages Payable L 14. Interest Payable               R 24. Service Fees
                                                          Earned
A 5. Notes                R 15. Earned                 W 25. Jan Sted,
  Receivable                Subscription Fees             Withdrawals
L 6. Notes Payable        L 16. Unearned               OE 26. Jan Sted, Capital
                            Subscription Fees
A 7. Prepaid              A 17. Prepaid                 E   27. Salaries Expense
  Advertising               Subscription Fees
E 8. Advertising          A 18. Supplies                L   28. Salaries Payable
  Expense
L 9. Advertising          E 19. Supplies                A   29. Furniture
  Payable                   Expense
L 10. Unearned            R 20. Rent Revenue            A   30. Equipment
  Advertising
    Chapter 4

    Checkpoint #8, page 151:

    Should read:
          8. Revenue recognition will be violated because revenues earned have not been
             recognized. Matching will also be violated because revenues earned will not
             be assigned to the correct accounting period.



    Chapter 5, Page 219, QS 5-2:

    Accounts payable should read: Accounts receivable (and should be listed after Cash)




    Quick Study 5-2 Solution

                                                                                           Balance Sheet
                     Unadjusted                      Adjusted                              & Statement of
                    Trial Balance   Adjustments    Trial Balance     Income Statement      Owner's Equity
Account              Dr       Cr     Dr    Cr      Dr        Cr        Dr        Cr         Dr       Cr
Cash                   15                  15                  15
Supplies               25             10   15                  15
Accounts payable       22                  22                  22
Ed Wolt, capital            40                  40                  40
Ed Wolt, withdrawals   12                  12                  12
Fees earned                 48                  48        48
Supplies expense       14        10        24        24
Totals                 88   88   10   10   88   88   24   48   64   40
                                                     24             24
Net income                                           48   48   61   64
Quick Study 5-3 AND 5-4
Delete the 7,000 here and the 4,500 here, please (these are okay as is):
Chapter 7, Page 375, Exercise 7-7




                                                                                                 should be 87




Chapter 8

Problem 8-9A
Check figures:
Perpetual: 5. Trial balance = $796,764.10
Periodic: 5. Trial balance = $800,625.10

Problem 8-9B
Check figures:
Perpetual: 5. Trial balance = $408,893.96
Periodic: 5. Trial balance = $409,656.96


Chapter 9


Exercise 9-8

25             Cash ..........................................................................      82,320
               Sales Discounts .........................................................             1,680
                   Accounts Receivable – Edson CHC ...................                                          84,000
                 To record collection of Oct. 10 credit sale;
                 2% x 84,000 = 1,680.
Exercise 9-10
Deduct:
 Outstanding cheques:
    #14: $ 1,200
     #54:        280 ..............................   1,480


Focus on Financial Statements 9-1

FFS 9-1 (concluded)
Calculations:
    1. Petty Cash has been combined with Cash = ($15,500 + $500) –
       $1,500 NSF cheque = $14,500
    2. Accounts receivable = $27,000 + $1,500 NSF cheque = $28,500
    3. Prepaid rent = $10,250 – $7,000 unexpired rent = $3,250 expired or used
    4. Accumulated amortization = $82,000 + $8,200 amortization = $90,200
    5. Rent expense = $92,000 + $3,250 expired rent for December = $95,250
    6. Amortization expense = $0 + $8,200 amortization = $8,200


Chapter 11, page 568, first paragraph of mid-Chapter Demonstrationg Problem,
numbers should read:

On January 27, the end of its fourth weekly pay period in 2006, Saskat Company's payroll record
showed that its one office employee and two sales employees had earned $481 (claim code 1),
$645 (claim code 1), and $868 (claim code 1) respectively. Each employee has $40 of hopsital
insurance premiums withheld plus $15 of union dues.



Chapter 11, page 569, the March 10 entry should read:

EI Expense (1.4 X $66.65).......................................93.31 (not 133.30)
CPP (or QPP) Expense..........................................156.66
     EI Payable..................................................                93.31 (not 133.30)
     CPP (or QPP) Payable................................                         156.66

Then, in the EI Payable T-account at the bottom of page 569, there are two corrections:
133.30** should be 93.31**
199.95 should be 159.96


Chapter 11, page 570, the March 11 entry:

EI Payable should be 159.96 (not 199.95)
Cash should be 1,093.68 (not 1,133.67)

Chapter 13, Page 677, Glossary:

Harmonized Sales Tax (HST) definition should read 14%, not 15%.
Problem 13-5A (30 minutes) - SOLUTION
                               NISSEN COMPANY
                           Statement of Owner’s Equity
                          For Year Ended June 30, 2011
              Jen Nissen, capital, June 30, 2010 ...................                      $ 598,000
                                  1
              Less: Net loss ..........................................................      45,840
                    Withdrawals ....................................................        100,000
              Jen Nissen, capital June 30, 2011..............................              $452,160


Chapter 15

Problem 15-7B

Analysis component:

                                               2011                         2012                      2013

Net Assets = A-L or E                     $700,000 +                  $1,158,000 +              $1,751,450
                                           $40,000 +                   $400,000 +             (Total Shareholders’
                                          $445,000 -                    $98,000 =              Equity from Part 3)
                                           $27,000 =                   $1,656,000
                                          $1,158,000

The trend in terms of the net assets held by Solar Energy is favourable given that it has
increased from 2011 to 2013.


Chapter 17, Page 869, Appendix 17A:

See replacement page on PV Tables

Chapter 19

Problem 19-9B Solution (30 minutes)
                                        PELZER CORPORATION
                                           Cash Flow Statement
                               For Year Ended December 31, 2011
                                             (millions of dollars)
Cash flows from operating activities:
 Net income ........................................................................ $ 340
 Adjustments to reconcile net income to net cash
  inflows from operating activities:
   Increase in accounts receivable1 ...................................                (30)
   Increase in prepaid insurance2 ......................................                (8)
   Increase in accounts payable3 .......................................                17
   Decrease in salaries payable4 ........................................               (5)
   Decrease in income tax payable5 ...................................                 (33)
   Amortization expense .....................................................           80
 Net cash inflow from operating activities..........................                           $ 361
Cash flows from investing activities:
 Receipt from sale of equipment6                                                                 17
Cash flows from financing activities8:
 Payment to reduce long-term notes payable7 ...................                       $(296)
 Net cash outflow from financing activities........................                             (296)
Net increase in cash .............................................................             $ 82
Cash at beginning of year ....................................................                    15
Cash at end of year ...............................................................            $ 97
    1.   100 - 70
    2.   12 - 4
    3.   31 - 14
    4.   9–4
    5.   50 - 17
    6.   149 – 107 = 42; 17 + 80 – 72 = 25; 42 – 25 = 17
    7.   331 - 35
    8.   Share dividends are not disclosed on the cash flow statement.

Analysis component:
Receivables:
— increase caused by sales on account
Prepaid Insurance:
— increase caused by the purchase of additional insurance in advance
Accumulated Amortization:
— increase caused by the recording of amortization expense
Accounts Payable:
— increase caused by purchases on credit
Common Shares:
— increase caused by the issuance of shares and/or distribution of share dividends


Quick Study 19-13 Solution (20 minutes)

                                            PARKER CONSULTING
                                             Cash Flow Statement
                                        For Year Ended March 31, 2011
Cash flows from operating activities:
 Net income .........................................................................   $ 15
   Adjustments to reconcile net income to net cash
  inflows from operating activities:
    Amortization expense .....................................................            25
    Increase in accounts receivable1 ...................................                 (45)
    Decrease in office supplies2 ...........................................               7
    Increase in prepaid rent3 ................................................           (30)
    Decrease in accounts payable4 ......................................                  (5)
    Increase in unearned fees5 .............................................               8
 Net cash outflow from operating activities .......................                              $ (25)
Cash flows from investing activities:
 Payment for new equipment ..............................................               $ (20)
 Net cash outflow from investing activities ........................                              (20)
Cash flows from financing activities:
 Issued common shares6 .....................................................            $ 110
 Payment of cash dividends7 ...............................................               (30)
 Net cash inflow from financing activities ..........................                              80
Net increase in cash .............................................................               $ 35
Cash at beginning of year ....................................................                      5
Cash at end of year ...............................................................              $ 40
Calculations:
1. 85 – 40 = 45 increase in accounts receivable
2. 15 – 22 = 7 decrease in office supplies
3. 30 – 0 = 30 increase in prepaid rent
4. 25 – 30 = 5 decrease in accounts payable
5. 20 – 12 = 8 increase in unearned fees
6. 190 – 80 = 110 issuance of shares
7. 60 + 15 – x = 45; x = 30 dividend payment




Chapter 20, Page 1039, Exercise 20-1:

Under Trend Percentages, replace the 2011 and 2010 percentages for both ‘Cost of goods
sold’ and ‘Expenses’ as follows:

                 Common-Size Percentages                    Trend Percentages
                   2011     2010      2009                      2011       2010         2009
Sales                100      100       100                    106.5      105.3          100
COGS                64.5       63      60.2                    114.1      110.2          100
Expenses            16.4     15.9      16.2                    107.8      103.4          100



Chapter 20, Page 1042, Exercise 20-10:
Analysis component, top of page 1043: remove 'merchandise inventory' from the
question.

Chapter 23, Page 1146, Problem 23-1A, Introductory Paragraph:


Indirect labour should be $19,600 instead of $27,440.


Chapter 27, Page 1340, Problem 27-2A, Introductory sentence:

NewSound Company has a cash balance of $60,000 on June 1. The company’s product
sells for $150 per unit. Actual and projected sales are:

								
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