Accounting Volume 1 8th Canadian Edition Charles T. Horngren, Walter T. Harrison, M. Suzanne Oliver, Peter R. Norwood, Jo-Ann L. Johnston - Solutions

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Describe the purpose of the balance sheet.
[Based on Appendix 2C] Explain the difference between the general ledger and a subsidiary ledger.
[Based on Appendix 2C] What is the purpose of special journals? In what ways do they simplify the recording process?
[Based on Appendix 2B] Define reversing entries and discuss their purpose.
[Based on Appendix 2A] What is the purpose of a worksheet? In a columnar worksheet similar to Illustration 2A–1, what would be the result of incorrectly transferring the balance in a liability account to column I, the credit column under Income Statement?
Describe the purpose of each of the four primary financial statements.
Define accrued liabilities. What adjusting journal entry is required to record accrued liabilities?
Deferred revenues represent liabilities recorded when cash is received from customers in advance of providing a good or service. What adjusting journal entry is required at the end of a period to recognize the amount of deferred revenues that were recognized during the period?
Define prepaid expenses and provide at least two examples.
Define closing entries and their purpose.
Define adjusting entries and discuss their purpose.
What is an unadjusted trial balance? An adjusted trial balance?
Describe the events that correspond to the following two journal entries: 1. Inventory... 20,000 Accounts payable 20,000 2. Accounts receivable.. 30,000 Sales revenue... 30,000 Cost of goods sold.. 18,000 Inventory........ 18,000
Describe what is meant by posting, the fourth step in the processing cycle.
Describe what is meant by transaction analysis.
What is the first step in the accounting processing cycle? What role do source documents fulfill in this step?
Describe how debits and credits affect temporary owners’ equity accounts.
Describe how debits and credits affect assets, liabilities, and permanent owners’ equity accounts.
Explain the difference between permanent accounts and temporary accounts. Why does an accounting system include both types of accounts?
What is the purpose of a journal? What is the purpose of a general ledger?
Each economic event or transaction will have a dual effect on financial position. Explain what is meant by this dual effect.
Explain the difference between external events and internal events. Give an example of each type of event.
Rockville 50% of the sales price in advance.Indicate the organization related to IFRS that performs each of the following functions:1. Obtains funding for the IFRS standard-setting process.2. Determines IFRS.3. Oversees the IFRS Foundation.4. Provides input about the standard-setting agenda.5.
For each of the following situations, (1) indicate whether you agree or disagree with the financial reporting practice employed and (2) state the accounting concept that is applied (if you agree) or violated (if you disagree).1. Winderl Corporation did not disclose that it was the defendant in a
Identify the accounting concept that was violated in each of the following situations.1. Astro Turf Company recognizes an expense, cost of goods sold, in the period the product is manufactured.2. McCloud Drug Company owns a patent that it purchased three years ago for $2 million. The controller
Listed below are several statements that relate to financial accounting and reporting. Identify the accounting concept that applies to each statement.1. SiriusXM Radio Inc. files its annual and quarterly financial statements with the SEC.2. The president of Applebee’s International, Inc., travels
For each of the following items, identify the appropriate financial statement element or elements: (1) probable future sacrifices of economic benefits; (2) probable future economic benefits owned by the company; (3) inflows of assets from ongoing, major activities; (4) decrease in equity from
Cash flows during the first year of operations for the Harman-Kardon Consulting Company were as follows:Cash collected from customers, $340,000; Cash paid for rent, $40,000; Cash paid to employees for services rendered during the year, $120,000; Cash paid for utilities, $50,000.In addition, you
What is the standard-setting body responsible for determining IFRS? How does it obtain its funding?
What are the functions of the conceptual framework under IFRS?
Distinguish between the revenue/expense and the asset/liability approaches to setting financial reporting standards.
What measurement attributes are commonly used in financial reporting?
Briefly describe the inputs that companies should use when determining fair value. Organize your answer according to preference levels, from highest to lowest priority.
In addition to the financial statement elements arrayed in the basic financial statements, what are some other ways to disclose financial information to external users?
What are the four different approaches to implementing expense recognition? Give an example of an expense that is recognized under each approach.
Describe how revenue recognition relates to transferring goods or services.
What are two advantages to basing the valuation of assets and liabilities on their historical cost?
What are four key accounting practices that often are referred to as principles in current GAAP?
Explain the periodicity assumption.
What is the going concern assumption?
What are the four basic assumptions underlying GAAP?
Briefly define the financial accounting elements: (1) assets, (2) liabilities, (3) equity, (4) investments by owners,(5) distributions to owners, (6) revenues, (7) expenses, (8) gains, (9) losses, and (10) comprehensive income.
What is meant by the term materiality in financial reporting?
Explain what is meant by: The benefits of accounting information must exceed the costs.
What are the components of relevant information? What are the components of faithful representation?
Discuss the terms relevance and faithful representation as they relate to financial accounting information.
What is the purpose of the FASB’s conceptual framework?
Why does the FASB undertake a series of elaborate information-gathering steps before issuing a substantive accounting standard?
Explain what is meant by adverse economic consequences of new or changed accounting standards.
List at least three key provisions of the Sarbanes-Oxley Act of 2002.
Explain the role of the auditor in the financial reporting process.
Explain the roles of the SEC and the FASB in setting accounting standards.
What is meant by GAAP? Why should all companies follow GAAP in reporting to external users?
Define net operating cash flows. Briefly explain why periodic net operating cash flows may not be a good indicator of future operating cash flows.
What is the primary objective of financial accounting?
What must a company do in the long run to be able to provide a return to investors and creditors?
Identify two important variables to consider when making an investment decision.
What is meant by the phrase efficient allocation of resources? What mechanism fosters the efficient allocation of resources in the United States?
What is the function and primary focus of financial accounting?
Why do some companies use a special payroll bankaccount?
1. Suppose you are ready to invest in a small resort property. Two locations look promising: Nootka Resort in Victoria, British Columbia, and Critter Cove Resort in Nova Scotia. Each place has its appeal, but Nootka Resort wins out. The main allure is that the price is better. The property owners
Financial Statement Case 2 Details about a company’s current and contingent liabilities appear in a number of places in the annual report. Use the Sun-Rype Products Ltd. financial statements in Appendix B to answer the following questions.1. Give the breakdown of Sun-Rype’s current liabilities
1. Maquinna Construction is a large road-building business in Ontario. The owner is Neil Maquinna, who oversees all company operations. He employs 15 work crews, each made up of 6 to 10 members. Construction supervisors, who report directly to Maquinna, lead the crews. Most supervisors are
Problem 11–2C There is no consensus on the proper amount for airlines to record with respect to frequentflier expense. Two alternative scenarios are presented below:a. The person claiming a ticket under the frequent-flier program would use a seat that otherwise would be empty.b. The person
Problem 11–1C Public accounting firms acting as auditors of companies are very careful to ensure that all of the company’s accounts payable are recorded in the proper period. In other words, they want to ensure that all payables relating to the year under review are recorded as a liability at
Problem 11–9B Standard Technologies produces and sells customized network systems in Nova Scotia. The company offers a 60-day, all software and labour—and an extra 90-day, parts-only—warranty on all of its products. The company had the following transactions in 2010:Jan. 31 Sales for the
Problem 11–8B Mogul Mountain, an Alberta company, is a ski resort with the following information available:• Goods and Services Tax: 5-percent GST is applicable to all purchases and sales (assumed for this Problem).• Employer Payroll Costs: the employer’s shares of CPP and EI are 1.0 times
Problem 11–7B Following are six pertinent facts about events during the year at Manitoba Manufacturing, a farm-equipment company:a. On June 30, Manitoba Manufacturing signed a nine-month, 5-percent note payable to purchase a machine costing $120,000. The note requires payment of principal and
Problem 11–6B Assume that payroll records of a branch of Indigo Books provided the following information for the weekly pay period ended December 18, 2009:Year-to-Date 40-Hour Canada Employ- Earnings Hours Weekly Income Pension ment United at End of Employee Worked Earnings Tax Plan Insurance Way
Problem 11–5B Grafton Hardware’s general ledger at June 30, 2010, the end of the company’s fiscal year, includes the following account balances before adjusting entries. Parentheses indicate a debit balance.Note Payable, Short-Term............... $ 74,000 Employee Insurance Accounts Payable
Problem 11–3B The partial monthly records of Perfecto Products show the following figures:Employee Earnings Dental and Regular earnings ..................... a drug insurance......................... $ 1,556 Overtime pay........................... $13,994 Total deductions
Problem 11–2B Deborah Landers provides skating lessons for children ages 8 through 15. Most students are beginners. Landers rents ice time from the local arena. Because this is a new business venture, Landers wants to save money and does not want to purchase insurance. She seeks your advice about
Problem 11–1B The following transactions of Prairie Technology of Edmonton, Alberta, occurred during 2009 and 2010. The company’s year end is December 31.2009 Mar. 3 Purchased a machine for $66,000, signing a six-month, 4.5-percent note payable.31 Recorded the month’s sales of $134,500,
Problem 11–9A Eastern Explorations produces and sells customized mining equipment in New Brunswick. The company offers a 60-day, all parts and labour—and an extra 90-day, parts-only—warranty on all of its products. The company had the following transactions in 2010:Jan. 31 Sales for the month
Problem 11–8A Seaward Marine of St. John’s, Newfoundland operates a marine supply company with the following information available:• 13 percent HST is applicable to all purchases and sales (assumed for this Problem).• Payroll costs—the employer’s shares of CPP and EI are 1.0 times and
Problem 11–7A Following are five pertinent facts about events during the current year at Island Fisheries, a Prince Edward Island fisheries supply company:a. Sales of $911,000 were covered by Island Fisheries’ product warranty. At January 1, the estimated warranty payable was $14,600. During
Problem 11–6A The payroll records of Scotia Video Productions Inc. provide the following information for the weekly pay period ended September 21.Year-to-Date Hourly Canada Employ- Earnings Hours Earnings Income Pension ment United at End of Employee Worked Rate Tax Plan Insurance Way Previous
Problem 11–5A The general ledger of Shell Storage Units at June 30, 2010, the end of the company’s fiscal year, includes the following account balances before adjusting entries.Notes Payable, Short-Term.... $ 20,000 Employee Insurance Accounts Payable.................... 235,620 Benefits
Problem 11–4A Assume that Raji Patel is a vice-president in Maple Capital’s leasing operations. During 2009, she worked for the company all year at a $7,500 monthly salary. She also earned a year-end bonus equal to 10 percent of her salary.Patel’s federal income tax withheld during 2009 was
Problem 11–3A The partial monthly records of Westwood Golf Shop show the following figures:Employee Earnings Employment Insurance.......... $ 956 Regular employee earnings... $39,894 Medical insurance................... 1,082 Overtime pay........................... a Total deductions
Problem 11–2A Morgan Motors is the Morgan dealer located in Victoria, British Columbia, and the only dealer in Western Canada. The dealership repairs and restores Morgan vintage cars. Hal Irwin, the general manager, is considering changing insurance companies because of a disagreement with Len
Problem 11–1A The following selected transactions of Truestar Communications, a Saskatchewan company, occurred during 2009 and 2010. The company’s year end is December 31.2009 Jan. 3 Purchased a machine at a cost of $350,000 plus 5-percent GST, signing a 3-percent, six-month note payable for
Many companies, such as Campeau Corporation, borrowed heavily during the 1970s and 1980s to exploit the advantage of financing operations with debt. At first, the companies were able to earn operating income much higher than their interest expense and were therefore quite profitable. However, when
Beyond the Numbers 11–2 The following questions are not related.a. A warranty is like a contingent liability in that the amount to be paid is not known at year end. Why are warranties payable shown as a current liability, whereas contingent liabilities are reported in the notes to the financial
Beyond the Numbers 11–1 Suppose a large manufacturing company is the defendant in numerous lawsuits claiming unfair trade practices. The company has strong incentives not to disclose these contingent liabilities. However, GAAP require companies to report their contingent liabilities.Required 1.
Exercise 11–17 Gamma Company recently reported notes payable and accrued payrolls and benefits as follows:December 31, 2010 2009(in millions of dollars)Current liabilities (partial):Notes payable .................................................. $ 26 $ 78 Accrued payrolls and benefits
Exercise 11–16 Suppose the balance sheets of a corporation for two years reported these figures:Billions 2010 2009 Total current assets ............................................. $ 14.50 $12.92 Property, plant, and equipment, net ................ 44.74 40.96$59.24 $53.88 Total current
Exercise 11–15 In Chapter 3, on page 148, we learned that Haupt Consulting had hired a part-time secretary to be paid $1,500 salary on the 20th day of each month. The following additional payroll information is available for the January 20, 2011, pay date:Federal income tax to be
Exercise 11–14 Study the Employee Earnings Record for J.C. Jenkins in Exhibit 11–8, page 574. In addition to the amounts shown in the exhibit, the employer also paid all employee benefits plus(a) an amount equal to 5 percent of gross pay into Jenkins’ pension retirement account, and (b)
Exercise 11–13 Greenlife Manufacturing incurred salary expense of $95,000 for September. The company’s payroll expense includes CPP of 4.95 percent and EI of 1.4 times the employee payment, which is 1.73 percent of earnings. Also, the company provides the following fringe benefits for
Exercise 11–12 Brad Jackson works for a Bob’s Burgers takeout for straight-time earnings of $10.50 per hour, with time and a half for hours in excess of 35 per week. Jackson’s payroll deductions include income tax of 20 percent, CPP of 4.95 percent on earnings (account for the $3,500 basic
Exercise 11–11 Sylvia Chan is a clerk in the shoe department of The Bay in Winnipeg. She earns a base monthly salary of $1,875 plus a 7-percent commission on her sales. Through payroll deductions, Chan donates $15 per month to a charitable organization and pays dental insurance premiums of
Exercise 11–10 Refer to the Teale Security Systems situation in the preceding exercise. Suppose that Teale Security Systems’ lawyers advise that preliminary judgment of $150,000 has been rendered against the company. The company will appeal the decision.Required Describe how to report this
Exercise 11–9 Teale Security Systems is a defendant in lawsuits brought against the monitoring service of its installed systems. Damages of $500,000 are claimed against Teale Security Systems but the company denies the charges and is vigorously defending itself. In a recent newspaper interview,
Exercise 11–8 The accounting records of Harroy Industries included the following at January 1, 2010:Estimated Warranty Payable Jan. 1, 2010 12,400 In the past, Harroy Industries’ warranty expense has been 3 percent of sales. During 2010, Harroy Industries made sales of $519,000 and paid $13,950
Exercise 11–7 Assume The Globe and Mail completed the following transactions for one subscriber during 2009:Oct. 1 Sold a six-month subscription, collecting cash of $150 plus PST of 7 percent and GST of 5 percent.Nov. 15 Remitted (paid) the PST to the Province of British Columbia and the GST to
Exercise 11–6 The law firm Garner & Brown received from a large corporate client an annual retainer fee of $120,000 on January 2, 2010. The fee is based on anticipated monthly services of $10,000.Required 1. Using the account title Retainer Fees for unearned revenue, journalize (1) Garner
Exercise 11–5 The management of Aero Marketing Services examines the following company accounting records at August 29, immediately before the end of the year, August 31:Total current assets ............................................. $ 325,000 Property, plant, and
Exercise 11–4 Assume Vesper Electronics completed these selected transactions during December 2009:1. Music For You Inc., a chain of music stores, ordered $105,000 worth of CD players. With its order, Music For You Inc. sent a cheque for $105,000. Vesper Electronics will ship the goods on January
Exercise 11–3 Suppose Jupitor Technologies borrowed $2,000,000 on December 31, 2006, by issuing 5-percent long-term debt that must be paid in four equal annual instalments plus interest each January 2, commencing in 2008.Required Insert the appropriate amounts in the following excerpts from the

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Accounting Volume 1 8th Canadian Edition Charles T. Horngren, Walter T. Harrison, M. Suzanne Oliver, Peter R. Norwood, Jo-Ann L. Johnston - Solutions

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