专业英语rcise answer-d.docx

Exercise answerChapter 2 Exercise 2.6 (14th edition)TransactionAssets=Liabilities+Owners EquityaIINEbNE*NENEcDDNEdDDNEeINEIfIINEgINEIhNE*NENEiNE*NENE Exercise 2.8 (14th edition)a.(1)Owners equity:Johanna Small, capital$390,000*$850,000 in assets - $460,000 in liabilities(2)Partners equity:Johanna Small, capital$240,000Mikki Yato, capital150,000Total partners equity$390,000*Yatos capital = $390,000 - Smalls capital, $240,000(3)Stockholders equity:Capital stock$250,000Retained earnings140,000Total stockholders equity$390,000*Capital stock = 25 $10,000. Retained earnings = $390,000 - capital stock.b.Yes; the form of Fellinghams organization is relevant to a lender. If the company is not incorporated, the owner or owners are personally liable for the debts of the business organization. Thus, if the business is organized as a sole proprietorship, it is actually Smalls personal debt-paying ability that determines the collectibility of loans to the business. If the business is a partnership, all of the partners are personally liable for the companys debts.If Fellingham Software is organized as a corporation, however, a lender may look only to the corporate entity for payment.Chapter 3 Exercise 3.2a.Costs of owning and operating an automobile (estimates will vary; the following list is only an example):Insurance$1,000Gasoline (15,000 miles at 30 mpg. $1.80/gal.)900Registration and license100Repairs and maintenance200Depreciation1,200Interest on car loan*500Annual total$3,900Average cost per mile ($3,900 15,000 miles)$0.26b.Although you spent no money during this trip, you incurred significant costs. For example, you have used much of the gasoline in your tank. Also, the more miles you drive, the higher your repair and maintenance costs, depreciation, and insurance. Assuming that it cost you about 26 cents per mile to own and operate your vehicle, about $26 would be a reasonable estimate of your “driving expenses.” Exercise 3.5a.Liabilities at the beginning of the year: $6.0 billion $3.9 billion = $2.1 billionb.Owners equity at the end of the year: $6.3 billion $2.2 billion = $4.1 billionc.Ending owners equity (from part b) $4,100,000,000Less: Beginning owners equity (3,900,000,000)Increase in owners equity $ 200,000,000Less: Increase in capital stock (135,000,000)Net income $ 65,000,000Chapter 4 Exercise 4.8a. The total interest expense over the life of the note is $5,400 ($120,000 .09 612 = $5,400)The monthly interest expense is $900 ($5,400 6 = $900).b. The liability to the bank at December 31, 2005, is $121,800 (Principal, $120,000 + $1,800 accrued interest).c. 2005Oct.31Cash120,000Notes Payable120,000Obtain from bank six-month loan with interest at 9% a year.d. De31Interest Expense900Interest Payable900To accrue interest expense for December on note payable ($120,000 9% 112).e. The liability to the bank at March 31, 2006, is $124,500, consisting of $120,000 principal plus $4,500 accrued interest for five months. Exercise 4.14a.None (or Materiality). Accounting for immaterial items is not “wrong” or a “violation” of generally accepted accounting principles; it is merely a waste of time. The bookkeeper is failing to take advantage of the concept of materiality, which permits charging immaterial costs directly to expense, thus eliminating the need to record depreciation in later periods.b.Matching.c.Realization.Chapter 5 Exercise 5.12a.(1)Lift Ticket Revenue, $210,000 ($850,000 - $640,000)(2)Cash, $116,000b.(1)Lift Ticket Revenue, $960,000 ($990,000 - $30,000)(2)Cash, $138,000c.January was the best month with respect to lift ticket revenue ($640,000 - $200,000 = $440,000). December, however, was the best month with respect to net cash flow ($59,000 - $9,000 = $50,000). Exercise 5.14ErrorNet IncomeTotal AssetsTotal LiabilitiesRetained Earningsa.Recorded a dividend as an expense in the income statement.UNENENEb.Recorded unearned revenue as earned revenue in the income statement.ONEUOc.Failed to record accrued wages payable at the end of the period.ONEUOd.Recorded a declared but unpaid dividend by debiting Dividends and crediting Cash.NEUUNEe.Failed to disclose a pending lawsuit in the notes accompanying the financial statements.NENENENEChapter 6 Exercise 6.8NetSalesBeginningInventoryNetPurchasesEndingInventoryCost ofGoodsSoldGrossProfitExpensesNetIncomeor (Loss)a.b.c.d.e.240,000480,000630,000810,000531,00076,00072,000207,000261,000156,000104,000272,000400,500450,000393,00035,200 80,000166,500135,000153,000144,800264,000441,000576,000396,00095,200216,000189,000234,000135,00072,000196,000148,500270,000150,00023,20020,00040,500(36,000)(15,000)Chapter 7 Exercise 7.8 a.Uncollectible Accounts Expense200,000Allowance for Doubtful Accounts200,000To record estimated uncollectible accounts expense at 2.5% of net credit sales ($8,000,000 2.5% = $200,000).b.Uncollectible Accounts Expense155,000Allowance for Doubtful Accounts155,000To increase balance in allowance account to required $84,000:Credit balance at beginning of yearWrite-offs during yearTemporary debit balanceRequired year-end credit balanceRequired adjustment for year$25,000(96,000)$71,00084,000$155,000c.Uncollectible Accounts Expense96,000Accounts Receivable96,000To record as uncollectible expense only those accounts determined during the year to be uncollectible.d.Adjusting the balance in the Allowance for Doubtful Accounts account based upon the aging schedule will provide to investors and creditors the most accurate assessment of the companys liquidity. This method is the only approach to take into consideration the underlying declining probability of collecting outstanding accounts as they become increasingly past due.Chapter 8 Exercise 8.1 a.Flow assumptionb.Average-cost methodc.Specific identificationd.LIFO methode.FIFO methodf.Retail methodCHAPTER 9 Exercise 9.1a.Two factors have caused the truck to depreciate: (1) physical deterioration and (2) obsolescence. The miles driven during the past six years have caused wear and tear on all of the trucks major components, including its engine, transmission, brakes, and tires. As these components deteriorate, their fair market values, in turn, depreciate. Furthermore, during the time that you have owned the truck, innovations have been developed leading to improved fuel economy, higher horsepower, better handling, and more corrosion-resistant materials. These innovations have made the truck obsolete in many respects. As the design and engineering technologies associated with the truck become more and more outdated, its fair market value will continue to depreciate.b.No. It is not likely that the bank will lend you an additional $5,000, even if you agree to pledge your truck as collateral. Your truck will continue to depreciate in value each year. By the time you begin repayment of your loan, it will be worth less to the bank than its current fair market value.c.Depreciation is a process of cost allocation, not a process of valuation. As such, accounting records do not attempt to show the current fair market values of business assets. Only by coincidence would the balance sheet show $10,000 in accumulated depreciation on this truck. Exercise 9.2a.Capital expenditureb.Revenue expenditurec.Revenue expenditured.Capital expendituree.Revenue expenditure (too small in amount to capitalize regardless of length of useful life)f.Capital expenditureCHAPTER 10 Exercise 10.1You would need to save $7,760, as shown in the following loan amortization table:InterestPeriodAnnualPaymentAnnualInterestExpense 8%Reductionin UnpaidBalanceUnpaidBalanceDate of Graduation$10,000Year 1$1,490$800$6909,310Year 21,4907457458,565Year 31,4906858057,760CHAPTER 11 Exercise 11.2a.Double taxationb.Market valuec.None (Retained earnings is not an amount of cash; it is an element of owners equity.)d.Common stocke.None (Dividends i