Solution manual financial accounting 4e by wild appendi xe

When copies of the sales invoices are used as a sales journal, each invoice total is posted to the proper customer account in the subsidiary Accounts Receivable Ledger, after which the i

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2 The five components of an accounting system are: source documents, input devices, information processors, information storage, and output devices

3 Source documents contain data about business transactions or events that are put into the accounting system and processed Examples of source documents are invoices from suppliers, checks received from customers, and payroll forms filled out by employees

4 An input device is used to transfer data from source documents to the information processor(s) Examples of input devices for computer systems include keyboards, scanners, and bar-code readers

5 Data stored "off-line" are not immediately available to the information processor(s), while "online" data are immediately available

6 Output devices provide the means by which information is taken from the accounting system and made available for use

7 Four types of transactions usually recorded in special journals are: (a) sales on credit, (b) purchases on credit, (c) cash receipts, and (d) cash disbursements

8 The (a) initial and (b) page number of the journal from which the amount is posted is entered in the Posting Reference column of the ledger account

9 The double posting does not cause the trial balance to be out of balance because only one credit is posted to the general ledger—the subsidiary ledger posting and its balances are not part of a trial balance (they give details of general ledger accounts)

10 When copies of the sales invoices are used as a sales journal, each invoice total is posted to the proper customer account in the subsidiary Accounts Receivable Ledger, after which the invoices are bound in numerical order Then at the end of the period the bound invoice copies are totaled and the total is debited to Accounts

Receivable and credited to Sales This method is called direct posting of sales

invoices

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11 Both kinds of credits must not be placed in the same column because the sum of the credits to the customer accounts must be posted to the Accounts Receivable controlling account (the Other Accounts column total is not posted—instead, each amount is individually posted to its general ledger account) Placing these credits in separate columns makes it possible to post the Accounts Receivable column total to its controlling account

12 Immediate recording and posting of credit sales and cash receipts from customers provides up-to-date information for use in decisions about granting credit to customers Also, up-to-date account balances are needed if customers inquire about their balances

13 In its note 10, Best Buy discusses its two reportable segments, Domestic and International Domestic is by far the larger of the two segments

14 No Information regarding the net income earned by business segments is not found on Circuit City’s Consolidated Statement of Operations (Income Statement) However, notes to the financial statements include the information regarding business segments, domestic and international

15 No Information regarding any assets owned by Apple’s business segments is not reported on the balance sheet However, the information is detailed in the notes to its financial statements

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Quick Study E-3 (15 minutes)

c Cash Disbursements Journal

d Cash Receipts Journal

e Cash Receipts Journal

f Purchases Journal

g Cash Disbursements Journal

h Cash Disbursements Journal

General Journal

Nov 2 [In Purchases Journal]

Nov 12 Automobiles 17,000

Common Stock 17,000

Owner contributed an auto to the business

Nov 16 [In Sales Journal]

Nov 19 Sales Returns and Allowances 175

Accounts Receivable—K Myer 175

Customer returned (worthless) merchandise

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Segment

Segment Income

Average Segment Assets

Segment return

on Assets Americas $465 $529 87.9%

Europe 280 256 109.4

Japan 115 122 94.3

Interpretation: The European segment reports the highest return on

segment assets However, each of its other segments has a relatively high return on segment assets as well

Product Product Sales Percent of Total Sales

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Sales Cr

Cost of Goods Sold Dr

Inventory Cr

Mar 7 J Dryer 5704 1,250 800

12 R Lamb 5705 340 200

25 T Taylor 5706 750 500

Exercise E-2 (10 minutes)

Mar 2 Cash Receipts Journal

5 Purchases Journal

7 Sales Journal

8 Cash Receipts Journal

12 Sales Journal

CASH RECEIPTS JOURNAL

Date Account Credited Explanation PR

Cash

Dr

Sales Discount

Dr

Accounts Recble

Cr

Sales

Cr

Other Accounts

Cr

Cost of Goods Sold Dr Inventory Cr

18 Sales Cash sale 330 330 250

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Nov 3 Purchases Journal

7 Sales Journal

22 Cash Disbursements Journal

Exercise E-6 A (25 minutes)

CASH RECEIPTS JOURNAL

Cr

18 Sales Cash sale 330 330

Accounts Payable

Cr

Inventory

Dr

Office Supplies

Dr

Other Accounts

June 1 Purchases Journal

8 Sales Journal

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PURCHASES JOURNAL

Date Account

Date

of Invoice Terms PR

Cr

Purchases

Dr

Office Supplies

Dr

Other Accounts

CASH DISBURSEMENTS JOURNAL

Dr

Dr Apr 9 210 Kitt Corp Store Supplies 650 650

17 211 City Bank Notes Payable 1,400 1,400

28 212 Lite Lite 4,410 90 4,500

29 213 B Dock Sa laries Expense 1,800 1,800

30 214 Seth, Inc Seth, Inc 2,950 2,950

April 3 Purchases Journal

12 Sales Journal

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CASH DISBURSEMENTS JOURNAL

Cr

Other Accounts

Dr

Dr Apr 9 210 Kitt Corp Store Supplies 650 650

17 211 City Bank Notes Payable 1,400 1,400

28 212 Lite Lite 4,410 90 4,500

29 213 B Dock Salaries Expense 1,800 1,800

30 214 Seth Inc Seth, Inc 2,950 2,950

a (i) The June 5 purchase would be recorded in the Purchases Journal

(ii) The June 14 payment would be recorded in the Cash

Disbursements Journal

b The error in journalizing the June 14 transaction should be discovered

in the process of crossfooting the Cash Disbursements Journal

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Part 1

ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER

Part 2

GENERAL LEDGER

Sales Returns and Allowances

May 31 Anna Page $ 1,500 Sara Reed 4,280 Aaron Reckers 3,880 Total accounts receivable $ 9,660

Accounts Receivable Controlling Account Total debit $10,010 Credit for return (350) Balance as of May 31 $ 9,660

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Part 1

ACCOUNTS RECEIVABLE LEDGER

June 30 Eric Horner $ 7,100 Hong Jiang 21,500 Joe Mack 12,900 Tess Cox 26,600 Total accounts receivable $68,100

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1 When the schedule of accounts payable is prepared

2 When crossfooting the Purchases Journal

3 When the trial balance is prepared

Segment Income (in $ mil.)

Segment Assets (in $ mil.)

General Merchandise

South America 42 46 315 284 14.0% United States 17 18 62 45 31.8% Europe 15 13 24 22 65.2% Subtotal 74 77 401 351

Total $218 $204 $1,267 $1,033

Analysis and interpretation: This company shows solid profitability in all

segments based on segment return on assets

For the specialty segments, the ―Other Specialty‖ has the highest segment return on assets at 51.9% in 2007, whereas the skiing segment has the lowest return on segment assets at 13.8%

For the geographic segments, the highest segment return on assets is produced by the European segment with 65.2% in 2007, whereas the South American segment has the lowest return of 14.0%

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PROBLEM SET A

Problem E-1A (70 minutes)

Parts 1, 2 and 3

Date Account Debited

Invoice Number PR

Date Account Credited Explanation PR

Cash

Dr

Sales Discount

Dr

Accounts Receivable

Cr

Sales

Cr

Other Accts

Cr

Inventory Cr

Apr.13 Page Alistair Sale of 4/3  3,920 80 4,000

14 Paula Kohr Sale of 4/5  7,840 160 8,000

16 Sales Cash Sales  52,840 52,840 35,880

18 L T Notes Payable Note to bank 251 60,000 60,000

20 Nic Nelson Sale of 4/11  10,290 210 10,500

23 Page Alistair Sale of 4/13  4,998 102 5,100

30 Sales Cash sales  73,975 _ _ 73,975 _ 58,900

30 Totals 213,863 552 27,600 126,815 60,000 94,780

(101) (415) (106) (413) () (502/119)

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Problem E-1A (Continued)

Parts 2 and 3

GENERAL LEDGER

Accounts Receivable Acct No 106

Long-Term Notes Payable Acct No 251

Sales Acct No 413

Sales Discounts Acct No 415

Cost of Goods Sold Acct No 502

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Parts 2 and 3 (continued)

Debit Credit Cash $298,863

Accounts receivable 9,870

Inventory 3,295

Long-term notes payable $270,000 Sales 164,285 Sales discounts 552

Cost of goods sold 121,705 _ Totals $434,285 $434,285

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Problem E-1A (Concluded)

Part 4 (continued)

WISET COMPANY Schedule of Accounts Receivable

April 30 Paula Kohr $3,170 Nic Nelson 6,700 Total accounts receivable $9,870

Part 5

Analysis component

To find the error(s), first re-add the account balances on the schedule of accounts receivable to confirm that the addition is correct Then, trace the balances listed on the schedule of accounts receivable back to the subsidiary accounts to confirm that they are listed correctly on the schedule Next, recalculate the balance of each subsidiary account to confirm that the additions and subtractions are correct Next, trace the postings from each subsidiary account and from the controlling account back to the appropriate journals Since the sales and cash receipts journals were footed and crossfooted before posting, the previous steps should disclose the error

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Problem E-2A A (70 minutes)

Parts 1 and 2

SALES JOURNAL Page 3

Dr

Cr

Sales

Cr

Other Accounts

Cr Apr 13 Page Alistair Sale of 4/3  3,920 80 4,000

14 Paula Kohr Sale of 4/5  7,840 160 8,000

18 L.T Notes

Payable

Note to bank

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Problem E- 2A A (Continued)

Parts 2 and 3

GENERAL LEDGER

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Problem E- 2A A (Continued)

Parts 2 and 3—continued

Debit Credit Cash $298,863

Accounts receivable 9,870

Inventory 125,000

Long-term notes payable $270,000 Sales 164,285 Sales discounts 552 _ Totals $434,285 $434,285

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Problem E- 2A A (Concluded)

Part 4—continued

WISET COMPANY Schedule of Accounts Receivable

April 30 Paula Kohr $3,170 Nic Nelson 6,700 Total accounts receivable $9,870

Part 5

Analysis component

To find the error(s), first re-add the account balances on the schedule of accounts receivable to confirm that the addition is correct Then, trace the balances listed on the schedule of accounts receivable back to the subsidiary accounts to confirm that they are listed correctly on the schedule Next, recalculate the balance of each subsidiary account to confirm that the additions and subtractions are correct Next, trace the postings from each subsidiary account and from the controlling account back to the appropriate journals Since the sales and cash receipts journals were footed and crossfooted before posting, the previous steps should disclose the error

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Cr

Inventory

Dr

Office Supplies

Dr

Other Accounts

Dr

Apr 4 587 World View Advertising Expense 655 899 899

12 588 Noth Company Noth Company  14,014 286 14,300

16 589 Payroll Sales Salaries Expense 621 10,750 10,750

26 590 Grant Company Grant Company  12,740 260 13,000

30 591 Payroll Sales Salaries Expense 621 10,750 _ 10,750 _

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GENERAL JOURNAL Page 3 Apr 6 Accounts Payable Custer Inc 201/ 80

Inventory Acct No 119

Office Supplies Acct No 124

Store Supplies Acct No 125

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General Ledger—continued

Store Equipment Acct No 165

Accounts Payable Acct No 201

Sales Salaries Expense Acct No 621

Advertising Expense Acct No 655

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Accounts Payable Ledger—continued

Debit Credit Cash $ 35,847

Long-term notes payable 210,000

Sales salaries expense 21,500

Advertising expense 899

Totals $235,730 $235,730

WISET COMPANY Schedule of Accounts Payable

April 30 Custer Inc $ 1,400

Hal’s Supply 12,955

Noth Company 11,375

Total accounts payable $25,730

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Cr

Purchases

Dr

Office Supplies

Dr

Other Accounts

Dr

Cr

Other Accounts

Dr

Apr 4 587 World View Advertising Expense 655 899 899

12 588 Noth Company Noth Company  14,014 286 14,300

26 590 Grant Company Grant Company  12,740 260 13,000

30 591 Payroll Sales Salaries Expense 621 10,750 _ 10,750 _

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Problem E-4A A (Continued)

GENERAL JOURNAL Page 3 Apr 6 Accounts Payable—Custer, Inc 201/ 80

Office Supplies 124 80

Received a credit memorandum

23 Accounts Payable—Grant Co 201/ 750

P urchase Returns and Allowances 506 750

Received a credit memorandum

Parts 2 and 3

GENERAL LEDGER

Store Equipment Acct No 165

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General Ledger—continued

Purchases Acct No 505

Purchase Returns and Allowances Acct No 506

Purchases Discounts Acct No 507

Advertising Expense Acct No 655

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ACCOUNTS PAYABLE LEDGER

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Problem E-4A A (Concluded)

Part 3—continued

WISET COMPANY Trial Balance April 30

April 30 Custer, Inc $ 1,400

Hal’s Supply 12,955

Noth Company 11,375

Total accounts payable $25,730

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Parts 1 and 2

Cr

Inventory

Dr

Office Supplies

Dr

Other Accounts

Dr

Trang 30

Dr

Cr

Sales

Cr

Other Accts

Cr

Inventory Cr

Mar 6 L.T Notes Pay Note to bank 251 82,000 82,000

12 Min Cho Invoice, 3/2  16,464 336 16,800

13 Linda Witt Invoice 3/3  9,996 204 10,200

15 Sales Cash sales  34,680 34,680 20,210

20 Jovita Albany Invoice, 3/10  5,488 112 5,600

31 Sales Cash sales  30,180 _ _ 30,180 _ 16,820

Dr

Mar 13 416 Van Industries Van Industries  42,728 872 43,600

15 417 Payroll S ales Salaries Expense 621 18,300 18,300

23 418 The CD Co The CD Company  29,596 604 30,200

31 419 Payroll S ales Salaries Expense 621 18,300 18,300 _

To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com

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GENERAL JOURNAL Page 2 Mar 17 Accounts Payable—CD Co 201/ 2,425

Cash Acct No 101

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Office Equipment Acct No 163

Common Stock Acct No 307

Retained Earnings Acct No 318

Cost of Goods Sold Acct No 502

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Part 3

CHURCH COMPANY Trial Balance March 31

Cost of goods sold 64,630

Sales salaries expense 36,600

Totals $232,905 $232,905

CHURCH COMPANY Schedule of Accounts Receivable

March 31 Jovita Albany $14,910 Linda Witt 4,315 Total accounts receivable $19,225

CHURCH COMPANY Schedule of Accounts Payable

March 31 Gabel Company $ 3,000 Spell Supply 21,220 Total accounts payable $24,220

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Parts 1 and 2

Cr

Purchases

Dr

Office Supplies

Dr

Other Accounts

Dr

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Parts 1 and 2 —continued

Dr

Cr

Sales

Cr

Other Accounts

Cr

Mar 6 L.T Notes Pay Note to bank 251 82,000 82,000

12 Min Cho Invoice, 3/2  16,464 336 16,800

13 Linda Witt Invoice 3/3  9,996 204 10,200

15 Sales Cash sales  34,680 34,680

20 Jovita Albany Invoice, 3/10  5,488 112 5,600

31 Sales Cash sales  30,180 _ _ 30,180 _

Cr

Other Accounts

Dr

Mar.13 416 Van Industries Van Industries  42,728 872 43,600

23 418 The CD Co The CD Company  29,596 604 30,200

31 419 Payroll Sales Salaries Expense 621 18,300 18,300 _

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GENERAL JOURNAL Page 2 Mar 17 Accounts Payable—CD Co 201/ 2,425

Purchases Returns and Allowances 506 2,425

Received a credit memo for returns

Cash Acct No 101

Office Equipment Acct No 163

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