西方财务会计课后习题答案

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1、Chapter 1The Financial StatementsCheck Points(5 min.)CP 1-1Store manager decisions:a.What food items to offer and how to market the goodsb.Where to locate a restaurantc.How to finance operationsAccounting helps managers measure the revenue from foodsales,the cost of the food,and the profit(or loss)o

2、n each fooditem.Accounting also helps measure which Taco Bells aremost profitable and which are losing money.Finally,accounting helps managers decide how to finance operations.Items on YUM!Brands*income statement that help decidewhether to invest in the company:The company earned a net income(rather

3、 than a netloss).This years net income is more than last years.Net sales revenue is increasing from year to year.Student responses may vary.(5 min.)CP 1-2Accounting is the information system that measures businessactivities,processes data into reports,and communicatesresults to people.Bookkeeping is

4、 only a part of accounting.Bookkeeping isrelated to accounting as arithmetic is related to mathematics.(5 min.)CP 1-3Standards of professional conduct are designed to producerelevant and reliable information for decision making.Peopleneed relevant and reliable information in order to make wisedecisi

5、ons.If accountants had no ethical guidelines,companies couldreport inaccurate information.This could cause people toinvest in the wrong companies and lose money.2Financial Accounting 5/e Solutions Manual(5 min.)CP 1-41.Novak can be misled into believing that YUM!Brands ownsmore assets than it actual

6、ly has.2.The entity concept appIies.3.Application of the entity concept will separate Novakspersonal assets from the assets of YUM!Brands.This willhelp Novak,investors,and lenders know how much in assetsthe business controls,and this knowledge will help allparties evaluate the business realistically

7、.(5 min.)CP 1-51.Owners*Equity=Assets-LiabilitiesThis way of determining the amount of owners equityapplies to eBay,Coca-Cola,your household,a Pizza Hutrestaurant,or any other organization.2.Liabilities=Assets-Owners*Equity3.Total Assets=Total Liabilities+Total Owners*Equity(5 min.)CP 1-61.Assets ar

8、e the economic resources of a business that areexpected to produce a benefit in the future.Owners1 equity represents the insider claims of a business,the owners*interest in its assetsAssets and owners*equity differ in that owners*equity is aclaim to assets,whereas assets are resources.Assets must be

9、 at least as large as owners equity,so equitycan be smaller than assets.2.Both liabilities and owners equity are claims to assets.Liabilities are the outsider claims to the assets of a business;they are obligations to pay creditors.Owners*equityrepresents the insider claims to the assets of the busi

10、ness,the owners*interest in its assets.4Financial Accounting 5/e Solutions Manual(5-10 min.)CP 1-7a.Accounts receivable A g.Accounts payable _Lb.Long-term debt L h.Common stock Ec.Merchandise inventory _A_ i.Supplies Ad.Notes payable Le.Expenses payable _Lf.Equipment Aj.Retained earnings Ek.Land AI.

11、Prepaid expenses A(5 min.)CP 1-81.Revenues and expenses2.Net income(or net loss)3.Total assets are not used to measure net income.Onlyrevenues and gains,expenses and losses enter into themeasurement of net income.(10 min.)CP 1-920032002Percentage of costof goods sold tocompany sales$2,300$7,441=30.9

12、%$2,109$6,89130.6%This trend is unfavorable for YUM because cost of goods sold(an expense)consumed a higher percentage of sales revenuein 2003.That could cause a decrease in profits.(5 min.)CP 1-10IHOP Corp.Statement of Retained EarningsYear Ended December 31,2003MillionsRetained earnings:Balance,be

13、ginning of year.$274Net income($405-$368).37Less:Dividends.(16)Balance,end of year.$2956Financial Accounting 5/e Solutions Manual(10-15 min.)CP 1-11Toby Landscaping ServicesBalance Sheet_ DecemberL2008_ASSETSCurrent assets:Cash.$13,000Receivables.2,000Inventory.40,000Total current assets.55,000Equip

14、ment.85,000Other assets.10,000Total assets.$150.000LIABILITIESCurrent liabilities:Accounts payable.$8,000Short-term notes payable.12,000Total current liabilities.20,000Long-term liabilities:Long-term debt.80,000STOCKHOLDERS1 EQUITYCommon stock.15,000Retained earnings.35,000*Total stockholders*equity

15、.50,000Total liabilities and stockholders equity.$150.000Computation:Total assets($150,000)-current liabilities($20,000)-longterm debt($80,000)-common stock($15,000)=$35,000(10-15 min.)CP 1-12Clearsource Cable,Inc.Statement of Cash Flows_YeaindDemberSIOOe_Cash flows from operating activities:Net inc

16、ome.$88,000Adjustments to reconcile net income to netcash provided by operating activities.(20,000)Net cash provided by operating activities.68,000Cash flows from investing activities:Purchases of equipment.$(300,000)Sale of equipment.90,000Net cash used for investing activities.(210,000)Cash flows

17、from financing activities:Borrowing.$150,000Payment of dividends.(10,000)Net cash provided by financing activities.140,000Net increase(decrease)in cash.(2,000)Cash balance,December 31,2005.24,000Cash balance,December 31,2006.$22.0008Financial Accounting 5/e Solutions Manual(10 min.)CP 1-131.Cash BS,

18、SCF2.Net cash used for financing activities SCF3.Accounts payable BS4.Common stock BS5.Interest revenue IS6.Long-term debt BS7.Increase or decrease in cash SCF8.Dividends SRE,SCF9.Salary expense IS10.Inventory BS11.Sales revenue IS12.Retained earnings SRE,BS13.Net cash provided by operating activiti

19、es SCF14.Net income(or net loss)IS,SRE,SCFExercises(10-15 min.)E 1-1a.Proprietorship.There is a single owner of the business,sothe owner is answerable to no other owner.b.Partnership.If the partnership fails and cannot pay itsliabilities,creditors can force the partners to pay thebusinesss debts fro

20、m their personal assets.A partnershipaffords more protection for creditors than a proprietorshipbecause there are two or more owners to share this liability.c.Corporation.If the corporation fails and cannot pay itsliabilities,creditors cannot force stockholders to pay thebusinesss debts from their p

21、ersonal assets.Therefore,themost an investor can lose on an investment in a corporationis the amount invested.d.Corporation.Most investors are willing to invest more in acorporation than in a proprietorship or a partnership becauseof their limited personal liability for a corporations debts.10 Finan

22、cial Accounting 5/e Solutions Manual(continued)E 1-1What form of business organization would you choose?The answer depends on your objective.If you want to maintainabsolute control of the business,you may prefer to organize asa proprietorship.If your objective is to maintain a high degreeof control

23、but you need additional money or expertise,apartnership may work for you.If you want the business to growlarge,or if you wish to avoid personal liability for businessdebts,you should organize as a corporation.Student responses may vary.(10 min.)E 1-2The income statement reports the revenues and expe

24、nses ofa particular entity for a period such as a month or a year.Totalrevenues minus total expenses equals net income,or profit.Alender would require this information in order to predictwhether the borrower can generate enough income to repay theloan.The balance sheet reports the assets,liabilities

25、,and owners*equity of the entity at a particular point in time.The assetsshow the resources that the business has to work with.Because borrowers pay loans with assets,a lender wants toknow the businesss assets(especially cash).Liabilities 一debts represent creditors,claims to the businesss assets.Own

26、ers1 equity is the portion of the business assets ownedoutright by the owners.Student responses may vary.12 Financial Accounting 5/e Solutions Manual(5-10 min.)E 1-3a.Entity conceptb.Going-concern conceptc.Cost principled.Entity concept(No,Comer could not determine the successor failure of the busin

27、ess solely from his checkbook.)e.Reliability(Objectivity)principle(PepsiCo,should wait torecord a gain or loss after it sells the land.)(5-15 min.)E 1-4(Amounts in billions)Assets=Liabilities+Owners EquityDell$19$13Pier 1 Imports 0.9 0.3 0.6Boeing 53 45 8Pier 1 appears to have the strongest financia

28、l position becauseits liabilities make up the smallest percentage of companyassets($3/$9=.333).Stated differently,Pier 1*s equity is thehighest percentage of company assets($6/$9=.667).(10-15 min.)E 1-5Req.1Total(Amounts in millions)StockholdersReq.2Assets$14120267$410_Liabilities$6077$137+Eciiiitv+

29、$273-Resources Req.3 AmountReq.4 Actuallyto workowed toowned by thewithcreditorsstockholdersReq.5Krispy Kreme appears able to pay current liabilities of$60million because current assets are over twice as large ascurrent liabilities.Krispy Kreme also appears able to pay total liabilities becausetotal

30、 assets far exceed total liabilities.14 Financial Accounting 5/e Solutions Manual(10-20 min.)E 1-6Total stockholders equityJanuary 31,2003($30-$10).Add:Issuances of stock.Net income.Less:Dividends.Net loss.Total stockholders*equity,January 31,2004($34-$12).*Must solve for these amounts.Situation12Bi

31、llions3$20$20$201-0-51*4*-0-(2)(1)(2)*$22$22$22Situation 2 indicates the strongest results because net incomeis the highest.Situation 3 is the weakest because of the net loss.(10-15 min.)E 1-71.Fossil Inc.(Amounts in millions)Stockholders,Assets=Liabilities+EquityBeginning$483=$142+$341Multiplier fo

32、r increase x1.217Ending$5882.Bed Bath&BeyondBeginning amountNet incomeEnding amount(Amounts in billions)StockholdersAssets 二 Liabilities=Equity$2.2-$0.7=$1.50.4$1.916 Financial Accounting 5/e Solutions Manual(10-15 min.)E 1-8a.Balance sheetb.Income statementc.Balance sheetd.Balance sheete.Statement

33、of retained earnings,Statement of cash flowsf.Income statementg.Balance sheet,Statement of retained earningsh.Income statementi.Balance sheetj.Statement of cash flowsk.Income statementI.Statement of cash flowsm.Balance sheet,Statement of cash flowsn.Balance sheeto.Income statement,Statement of retai

34、ned earnings,Statement of cash flows(10-20 min.)E 1-9Wells Fargo&CompanyBalance Sheet(Adapted;Amounts in billion)December 31.2003ASSETSLIABILITIESCash$16Receivable 253Investment assets 72Property andequipment,net 4Other assets 43Current liabilities$290Long-term liabilities 64Total liabilities 354STO

35、CKHOLDERSEQUITYCommon stock 12Total assetsRetained earningsTotal stockholders*equityTotal liabilities andstockholders*equity22*34Computation of retained earnings:Total assets($388)-Total liabilities($354)-Common stock($12)=$2218 Financial Accounting 5/e Solutions Manual(15-25 min.)E 1-10Req,Wells Fa

36、rgo&CompanyIncome Statement(Adapted)Year Ended December 31,2003BillionsTotal revenue.$32Expenses:Interest expense.$3Salary and other employee expenses.9Other expenses.14Total expenses._26Net income.$6Req.2The statement of retained earnings helps to computedividends,as follows:Statement of Retained E

37、arnings(Adapted)BillionsRetained earnings,beginning of year.$19Add:Net income for the year(Req.1)._ 625Less:Dividends.(3)Retained earnings,end of year(from Exercise 1-9).$22Students are not required to prepare a statement of retainedearnings.(15-20 min.)E 1-11ADP,Inc.Statement of Cash FlowsYear Ende

38、d December 31,2004MillionsCash flows from operating activities:Net income.$395Adjustments to reconcile net income tonet cash provided by operating activities2,330Net cash provided by operating activities.$2,725Cash flows from investing activities:Net cash used for investing activities.(3,140)Cash fl

39、ows from financing activities:Net cash provided by financing activities.420Net increase in cash.5Beginning cash balance.145Ending cash balance.$150Items given that do not appear on the statement of cash flows:Total assets-Balance sheetTotal liabilities-Balance sheet20 Financial Accounting 5/e Soluti

40、ons Manual(15-20 min.)E 1-12KinkosINCOME STATEMENTMONTH ENDED JULY 31,20X6Revenue:Service revenue.$12,400Expenses:Salary expense.$4,000Rent expense.700Utilities expense.200Total expenses.4,900Net income.$7.500KinkosSTATEMENT OF RETAINED EARNINGSMONTH ENDED JULY 31,20X6Retained earnings,June 30,20X6.

41、$-0-Add:Net income for the month.7,5007,500Less:Dividends.(2：000)Retained earnings,July 31,20X6.$5,500(15-20 min.)E 1-13KinkosBALANCE SHEETJULY 31,20X6Assets LiabilitiesCash.$6,500 Accounts payable.$3,200Office supplies.1,200Equipment.36,000 Stockholders*EquityCommon stock.35,000Retained earnings.5,

42、500Total stockholders*equity.40,500Total liabilities andTotal assets.$43.700 stockholders equity.$43.70022 Financial Accounting 5/e Solutions Manual(15-20 min.)E 1-14Kinko*sSTATEMENT OF CASH FLOWSMONTH ENDED JULY 31,20X6Cash flows from operating activities:Net income.$7,500Adjustments to reconcile n

43、et incometo net cash provided by operations.2,000Net cash provided by operating activities.9,500Cash flows from investing activities:Acquisition of equipment.$(36,000)Net cash used for investing activities.(36,000)Cash flows from financing activities:Issuance(sale)of stock to owners.$35,000Payment o

44、f dividends.(2：000)Net cash provided by financing activities.33,000Net increase in cash.$6,500Cash balance,June 30,20X6.0 Cash balance,July 31,20X6.$6.500(10-15 min.)E 1-15TO:Owner of Kinkos storeFROM:Student NameSUBJECT:Opinion of operating results,dividends,financialposition,and cash HowsYour firs

45、t month of operations appears to have beensuccessful.Revenues totaled$12,400 and net income was$7,500.These operating results look very strong.The company was able to pay a$2,000 dividend,and thisshould make you happy with so quick a return on yourinvestment.Your financial position looks secure,with

46、 assets of$43,700and liabilities of only$3,200.Your stockholders*equity is$40,500.Operating activities generated cash of$9,500,which isrespectable.You ended the month with cash of$6,500.Basedon the above facts,I believe you should stay in business.Student responses may vary.24 Financial Accounting 5

47、/e Solutions Manual(15-20 min.)E 1-16a.The single best source of cash for a business is net incomeand the related cash receipts.This source of cash is bestbecause it results from the core operations of the business.b.Borrowing,issuing stock,and selling land,buildings,andequipment can bring in cash e

48、ven when the company haslosses.c.Paying large dividends will cause retained earnings to be low.d.Heavy investing activity and paying off debts can result in acash shortage even if net income has been high.e.You can finance the payment of current liabilities in severalways:Borrow money,issue(sell)sto

49、ck to stockholders,orsell long-term assets such as land,buildings,and equipment.Practice Quiz1.d2.a3.b4.bStockholders,Assets=Liabilities+Equity+$20,000=-$4,000+$24,0005.d6.a7.b8.c9.d10.c11.d12.d13.b14.($140,000-$22,000-$8,000-$3,000=$107,000)($110,000+$95,000-$30,000=$175,000)StockholdersAssets=Liab

50、ilities+EquityBegin.$25,000=$10,000*+$15,000Changes-8,000End.$207)00*=$2,000*+$18,CN3015.cI *Must solve for these amounts.J Total stockholders ecjuits、Begin.$520,000-$200,000=$320,000+Net income X=$160,000-Dividends-30,000End.$750,000-$300,000=$450,00026 Financial Accounting 5/e Solutions ManualProb

51、lemsGroup A(15-30 min.)P 1-1ATO:Investment committeeSUBJECT:Genome Science Corporation request for us to buyits stockI recommend purchasing Genome Science stock because:1.Operations are the main source of Genomes cash,and thecompany is increasing cash without a lot of borrowing.Moreover,Genome has b

52、een investing lots of money in longterm assets,as shown by its investing cash flows.2.Net income has increased dramatically during the past twoyears.3.Total assets have grown from$590,000 to$990,000 duringthe past two years,and liabilities have risen more slowly.I believe Genome has a bright future

53、and that its stock islikely to increase in value.Student responses may vary.(15-20 min.)P 1-2AReq.1General Electric CompanyIncome StatementYear Ended December 31,20X5BillionsSales revenue.$53Other revenue.73Total revenue.$126Cost of goods sold.36Other expenses.70Total expenses.106Income before incom

54、e tax.20Income tax expense($20 x.30).6Net income.$1428 Financial Accounting 5/e Solutions Manual(continued)P 1-2AReq.2a.Reliability(objectivity)principle.Report revenues at theiractual sale value because that amount is more reliable thanwhat management believes the goods are worth.b.Cost principle.A

55、ccount for expenses at their actual cost,nota hypothetical amount that the company might have incurredif the products were purchased outside.c.Cost principle.Account for expenses at their actual cost.d.Entity concept.Each division of the company is a separateentity,and the company as a whole constit

56、utes an entity foraccounting purposes.e.Stable-monetary-unit concept.Accounting in the UnitedStates ignores the effect of inflation.f.Going-concern concept.There is no evidence that GeneralElectric is going out of business,so it seems safe to assumethat the company is a going concern.(30-40 min.)P 1

57、-3AComputed amounts are shown in boxes.Amounts are inbillions.Beginning.Assets-Liabilities=Owners*equityEnding,.Assets-Liabilities=Owners*EquityFedExCoca-ColaFordCorp.CompanyCorp.$12$17$279JZ)110)(228)uO$51$13$19$2693JZ)111)(204)$6$8$651$5+Issuance of stock+$1-$1=$6Issuance of stock=$1Owners1*Equity

58、.Issuance of stock一 DividendsIncome Statement.Revenues-Expenses=Net incomeStatement o f owners，equity.Beginning owners1 equity+Issuance of stock+Net income-Dividends=Ending owners*equity2Net income=$4Revenue-expenses=net income$19-expenses=$4Expenses=$153Assets=liabilities+OEAssets=$204+$65Assets=$2

59、69也厂$0$1(1)(3)(9)$20$19$119119)国_19Z)U$4 一$22$5$7$510110-22_CL)_(3)_(9)$6$8$6530 Financial Accounting 5/e Solutions Manual(continued)P 1-3AFedExCorp.Coca-ColaCompanvFordC o gPercentage of liabilities to assets$7$11$204=$1 3$19$269=53.8%Lowest=57.9%2nd Lowest=75.8%Percentage of net income to revenues

60、$1$4$22-$20$19$119=5%=21.1%Highest=18.5%On these measures,Coca-Cola looks the strongest.Coca-Colahas the second lowest percentage of liabilities to assets andthe highest percentage of net income to revenues.(20-25 min.)P 1-4AReq.1ICON,Inc.Balance SheetJuly 31,20X7ASSETSLIABILITIESCash$15,000Accounts

61、 payable$9,000Accounts receivable12,000Note payable16,000Office supplies1,000Total liabilities25,000Office furniture10,000STOCKHOLDERS,Land44,000EQUITYStockholders equity57,000*Total liabilities andTotal assets$82.000stockholders equity$82.000*Total assets($82,000)-Total liabilities($25,000)=Stockho

62、lders equity($57,000).Req.2ICON,Inc.,is in better financial position than the erroneousbalance sheet reports.True,assets are lower than reported,butby only$10,500($92,500-$82,000).But liabilities are muchlower,and owners1 equity is$36,300 higher than reportedoriginally.Overall,ICON has less debt and

63、 more equity thanfirst reported.Req.3The following accounts are not reported on the balance sheetbecause they are revenues or expenses.These accounts arereported on the income statement.Rent expenseAdvertising expenseService revenueProperty tax expense32 Financial Accounting 5/e Solutions Manual(20-

64、25 min.P 1-5AReq,Marjorie Caballero,Realtor,Inc.Balance SheetNovember 30,2004ASSETS LIABILITIESCash$6,000 Accounts payable$6,000Office supplies 1,000 Note payable 40,000Franchise 20,000 Total liabilities 46,000Furniture 17,000 STOCKHOLDERS1Land 120,000 EQUITYCommon stock 50,000Retained earnings 68,0

65、00*Total stockholders1 equity 118,000Total liabilities and _Total assets$164.000 stockholders*equity$164.000*Total assets($164,000)-Total liabilities($46,000)-Commonstock($50,000)=$68,000.Req.2It appears that Caballeros realty business can pay its debts.Total assets far exceed total liabilities.Req.

66、3Personal items not reported on the balance sheet of thebusiness:a.Personal cash($10,000)b.Personal account payable($1,800)g.Personal residence($160,000)and mortgagepayable($100,000)(30-45 min.)P 1-6AReq.1Hercules,Inc.Income StatementYear Ended December 31,20X8RevenueService revenue.$220,000ExpensesSalary expense.$63,000Rent expense.23,000Advertising expense.13,000Interest expense.9,000Property tax expense.4,000Total expenses.Net income.112,000$108.000Hercules,Inc.Statement of Retained EarningsY