Type:
Solution Manual
Resource:
Financial Accounting
Edition:
8th Edition
Author(s):
William Thomas Wendy M. Tietz Greg Berberich Catherine Seguin
INSTRUCTOR’S SOLUTIONS MANUAL Financial Accounting Eighth Canadian Edition C. William (Bill) Thomas Baylor University
Wendy M. Tietz
Kent State University
Greg Berberich
University of Waterloo
Catherine Seguin
University of Toronto
Contents Chapter 1: The Financial Statements ..............................................................................................
1
Chapter 2: Recording Business Transactions..................................................................................
50
Chapter 3: Accrual Accounting and Income ...................................................................................
119
Chapter 4: Cash and Receivables ....................................................................................................
193
Chapter 5: Inventory and Cost of Goods Sold ................................................................................
240
Chapter 6: Property, Plant, and Equipment, and Intangible Assets ................................................
311
Chapter 7: Liabilities.......................................................................................................................
384
Chapter 8: Shareholders’ Equity .....................................................................................................
439
Chapter 9: The Statement of Cash Flows........................................................................................
486
Chapter 10: Financial Statement Analysis ......................................................................................
551
Appendix: Investments and the Time Value of Money ..................................................................
611
Chapter 1 The Financial Statements Short Exercises (5 min.) S 1-1 1. Assets are resources controlled by the company as a result of past events and from which the company expects to receive future economic benefits. Shareholders’ equity represents the insider claims of a business, the claims to the assets held by the owners of the business. Assets and shareholders’ equity differ in that shareholders’ equity is a claim to assets. Assets must be at least as large as shareholders’ equity. Equity can be smaller than assets. 2. Both liabilities and shareholders’ equity are claims to assets. Liabilities are the outsider claims to the assets of a business. Shareholders’ equity represents the insider claims to the assets of the business.
(5 min.) S 1-2 a)
Total assets $300,000
= =
b)
290,000
=
90,000
+
200,000
c)
220,000
=
100,000
+
120,000
.
Total liabilities $150,000
+ +
Shareholders’ equity $150,000
1
Financial Accounting Eighth Canadian Edition Instructor’s Solutions Manual
(continued) S 1-2 A different presentation should be: a) Total assets = Total liabilities + Shareholders’ equity = $150,000 + $150,000 = $300,000 b) Shareholders’ equity = Total assets – Total liabilities = $290,000 – $90,000 = $200,000 c) Total liabilities = Total assets – Shareholders’ equity = $220,000 – $120,000 = $100,000
(5 min.) S 1-3 1. Shareholders’ Equity = Assets – Liabilities It would not change in analyzing a household or a single Dairy Queen restaurant’s information. 2. Liabilities = Assets – Shareholders’ Equity
(5-10 min.) S 1-4 a.
Accounts payable
b.
Common shares
c.
Cash
d.
Retained earnings
e.
Land
f.
Prepaid expenses
L E
A E
A A
g.
Accounts receivable
A
h.
Long-term debt
i.
Merchandise inventories
j.
Notes payable
k.
Accrued expenses payable
l.
Equipment A
L A
L L
(5 min.) S 1-5 1. Income and expenses 2. Net income, or net earnings (or net loss, if negative) 2
.