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Accounting Principles Solutions Manual document sample
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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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