BE1-1

Harman-Kardon Consulting Company

Income Statement
Cash collected from customers
Add: Amount owed by debtors at the year end
Sale revenue

Less: Expenses
Rent expense
Salaries expense
Utilities expense
Gas and electricity expense
Total expenses
Net income

Rent expense for the year Total rent payment/2

E1-9
1D
2G
3E
4I
5H
6C
7B
8A
9F

E1-10
1 The economic entity concept
2 The periodicity concept
3 The going concern concept
4 The historical cost principal
5 The realization principal concept
6 The going concern concept
7 Materiality concept

E1-11
1 The historical cost
2 The perioditciy concept
3 Revenue recognition concept
4 The economic entity concept
5 Expense recognition, materiality
6 The full disclosure principle

E3-15
1 Yes. Because it makes investor have more believe in the firm
 2 Yes. Because it is subsequent events
3 Yes. Because this conveys valuable information about accounting methods
4 Yes. Because this transaction is very important for the investor to evaluate company's financial statement
5 Yes. Because it includes information about accounting methods

E3-8
a 50,000 is a current asset because it is used to pay in cash the bonds payable lasted for 4 years
b 12,000 will be recorded as current assets and the remaining will be recorded as non-current assets
c 200,000 is a long-term liabilities because it will be paid in the next 10 year (march 1,2019)
d 12,000 is a long-term liabilities because it is related to the note payable which is last in the next 10 years
e 80,000 is a non-current asset because there is a selling activity next year

E3-9 KORVER SUPPLY COMPANY

Balance Sheet
At December
Assets31, 2018
Current assets
Cash
Accounts receivable
Inventories
Total current assets
Property, plant and equipment
Furniture and fixtures
Accumulated depreciation
Net property, plant and equipment
Total assets
Liabilities and Shareholder's Equity
Current liabilities
Accounts payable
Note payable
Interest payable
Shareholder's equity
Common stock
Retained earnings
Total shareholder's equity
Total liabilities and shareholder's equity

BE3-5 CULVER CITY LIGHTING

Balance Sheet
At December
Assets31, 2018
Current assets
Cash
Accounts receivable
Inventories
Prepaid insurance
Total current assets
Property, plant and equipment
Equipment
Accumulated depreciation-equipment
Net property, plant and equipment
Other non-current assets
Patent
Total assets
Liabilities and Shareholder's Equity
Current liabilities
Accounts payable
Note payable
Interest payable
Shareholder's equity
Common stock
Retained earnings
Total shareholder's equity
Total liabilities and shareholder's equity

BE4-2
Sales revenue $2,106
Less: COGS ($1,240)
Gross profit $866
Less:
Selling expenses ($126)
General and administrative expenses ($105)
Operating income $635

BE4-11
Hilliard Healthcare Co.
Statement of Cash Flows
Net cash flows from operating activities
Cash flows from investing activities
Sale of land
Purchase of equipment
Net cash from investing activities
Cash flows from financing activities
Issuance of common stock
Payment of cash dividends
Net cash from financing activities
Net increase in cash
Cash balance, Dec. 31

E4-12
1.b. Purchase of equipment for cash
2.a. Payment of employee salaries
3.a. Collection of cash from customers
4.c. Cash proceeds from a note payable
5.b. Purchase of common stock of another corporation for cash
6.c. Issuance of common stock for cash
7.b. Sale of equipment for cash
8.a. Payment of interest on note payable
9.d. Issuance of bonds payable in exchange for land and building
10.c. Payment of cash dividends to shareholders
11.c. Payment of principal on note payable

E4-16
Operating Investing Financing
1 $300,000.00
2 ($40,000.00) $30,000.00
3 $90,000.00
4 $70,000.00
($120,000.00)
5 ($5,000.00)
6 ($6,000.00)
7 ($70,000.00)
8 $55,000.00
9 $1,000.00

E7-23
1 2 3 4
C J G H
8 9 10 11
K A M B

BE7-8
It is permissible under IFRS

E7-5
Gross method:
17-Nov A/R 42,000
Sales Revenue 42,000
26-Nov Cash 41,160
Sales Discounts 840
A/R 42,000
15-Dec Cash 42,000
A/R 42,000
Net method
17-Nov A/R 41,160
Sales Revenue 41,160
26-Nov Cash 41,160
A/R 41,160
15-Dec Cash 42,000
Sales Discount Forfeited 840
A/R 41,160

P7-1
1
Bad debt expense
Allowance for uncollectible accounts
Allowance for uncollectible accounts
Accounts receivable
2
Allowance for uncollectible accounts
Beginning balance $54,000
Add: Monthly bad debt accruals $78,600
Deduct: Write-offs (68,000)
Balance before year-end adjustment: 14,600
Required allowance 68,900
Required year-end increase in allowance 54300

Allowance for uncollectible accounts

Bad debt expense
3
Bad debt expense 90,080

Accounts receivable 552,920

BE8-4&5
On December 28, 2018, Videotech Corporation (VTC) purchased 10 units of a new satellite uplink system from Tristar
purchase discounts and a perpetual inventory system. VTC paid the net-of-discount amount on Janu-ary 6, 2019. Prepar
Gross method
28-Dec-18
Inventory 250,000
Accounts payable
6-Jan-19
Accounts payable 250,000
Purchase discounts
Cash

Net method
28-Dec-18
Inventory 247,500
Accounts payable
6-Jan-19
Accounts payable 247,500
Cash

E8-1
1.John’s purchased merchandise on account for $5,000. Freight charges of $300 were paid in cash.
2.John’s returned some of the merchandise purchased in (1). The cost of the merchandise was $600 and John’s accoun
3.Merchandise costing $2,800 was sold for $5,200 in cash.
1
Inventory
Accounts payable
Freight-in
Cash
 2
Accounts payable
Purchase returns and allowances
3
Cash
Sales revenue
COGS
Inventory

E8-6

The Kwok Company’s inventory balance on December 31, 2018, was $165,000 (based on a 12/31/2018 physical coun
1.Goods shipped to Kwok f.o.b. destination on December 20, 2018, were received on January 4, 2019. The invoice co
2.Goods shipped to Kwok f.o.b. shipping point on December 28, 2018, were received on January 5, 2019. The invoic
3.Goods shipped from Kwok to a customer f.o.b. destination on December 27, 2018, were received by the cus-tomer o
4.Goods shipped from Kwok to a customer f.o.b. destination on December 26, 2018, were received by the cus-tomer o
5.Goods shipped from Kwok to a customer f.o.b. shipping point on December 28, 2018, were received by the custom
Required:Determine the correct inventory amount to be reported in Kwok’s 2018 balance sheet.

Physical inventory as on December 31, 2018: 165,000

Add: Goods shipped to Kwok f.o.b. shipping point on December 28,2018: 17,000
Add: Goods shipped to customer f.o.b. destination on December 27,2018: 22,000
Correct inventory balance: 204,000

P9-1
1
Royal Decking
Adjustment Entry
Product Quantity Unit cost Cost
A 1,000 10 10,000
B 800 15 12,000
C 600 3 1,800
D 200 7 1,400
E 600 14 8,400
Total 33,600
2
Inventory carrying value
Royal Decking
Adjustment Entry
Date Explainations
31-Dec-18 COGS
Merchandise inventory

E13-1
Date Description PR Debit
Nov. 1,
Cash 16
2018
Notes payable
(To record issuance of the
note by Quantum
Technology)
Dec. 31, Interest expense (=
0.32
2018 $16*12%/12*2)
Interest payable
(To accrue interest on note
due to Quantum
Technology)
Jul. 31,
Interest payable 0.32
2019
Interest expense
1.12
(=$16*12%/12*7)
Notes payable 16
Cash
(To pay off note and
interest)

Adjusting entry at year-end 16 x .12 x 2/12= 0.32

E13-3
Date Description Debit Credit
1-Feb-18 Cash 5,000,000
Bank loan 5,000,000
(To record bank loan from bank)
1-May-18 Bank loan 5,000,000
Interest expense (=$5,000, 125,000
Cash 5,125,000
(To record payment of bank loan)
1-Dec-18 Cash 10,000,000
Notes payable 10,000,000
31-Dec-18 Interest expense (= $10,000 75,000
Interest payable 75,000
1-Sep-19 Interest payable 75,000
Interest expense (= $10,000 600,000
Notes payable 10,000,000
Cash 10,675,000

13-751
$14mil can be considered current liabilities because the note is due within a year
3
$7mil can be classify as current liabilities because the bond matures within a year.
E18-12

In 2018, Western Transport Company entered into the treasury stock transactions described below. In 2016, West-ern
Required:
Prepare the appropriate journal entry for each of the following transactions:
1.On January 23, 2018, Western Transport reacquired 10 million shares at $20 per share.
2.On September 3, 2018, Western Transport sold 1 million treasury shares at $21 per share.
3.On November 4, 2018, Western Transport sold 1 million treasury shares at $18 per share.

1
Treasury stock 200
Cash
2
Cash 21
Treasury stock
Paid-in capital—share repurchase
3
Cash 18
Paid-in capital—share repurchase 1
Retained earnings 1
Treasury stock

E18-17
1
Date Explainations
Jan. 1 Begining balance
Cash
Retained earnings
Treasury stock
Dividends
Cash
Retained earnings
Common stock dividend distribution
Additional paid-in capital from common stock
Income summary
Retained earnings
2
Balance January 1, 2018
Net income
Less:
Cash dividends
Balance December 31, 2018

E18-19

1-Jun Retained earnings

Common stock dividend distribution
Additional paid-in capital from common stock
y

$340,000.00
$60,000.00
$400,000.00

$20,000.00
$120,000.00
$50,000.00
$2,000.00
$192,000.00
$208,000.00

Total rent payment/2 $40,000/2 $20,000

mpany's financial statement

e lasted for 4 years

d as non-current assets
march 1,2019)
ich is last in the next 10 years

168,000
320,000
250,000
738,000

300,000
170,000
130,000
868,000

180,000
200,000
6,000

100,000
382,000
482,000
868,000

55,000
39,000
45,000
15,000
154,000

100,000
 34,000
66,000

40,000
260,000

12,000
100,000
2,000

70,000
76,000
146,000
260,000

Gain on sale of investments $45

Interest expense ($35)
Nonoperating income $10

$314,000.00

$40,000.00
($120,000.00)
($80,000.00)

$200,000.00
($30,000.00)
$170,000.00
$404,000.00
$404,000.00
 Wainwright Corporation
Statement of Cash Flow
Net cash flow from operating For the year ended Dec. 31, 2018
activities
Cash flows from investing activities
Purchase of equipment
Cash flows from financing activities
Issuance of ordinary shares
Note payable
Net cash flow from financing activities
Net increase in cash
Cash balance, Jan. 1
Cash balance, Dec. 31

5 6 7
I L D
12 13
E F
 78,600
78,600
68,000
68,000

54,300
54,300

ellite uplink system from Tristar Communications for $25,000 each. The terms of each sale were 1/10, n/30. VTC uses the gross met
ount on Janu-ary 6, 2019. Prepare the journal entries on December 28 and January 6 to record the purchase and payment.

250,000

2,500
247,500

247,500

247,500

paid in cash.
dise was $600 and John’s account was credited by the supplier.

$5,000.00
$5,000.00
$300.00
$300.00
 $600.00
$600.00

$5,200.00
$5,200.00
$2,800.00
$2,800.00

d on a 12/31/2018 physical count) before considering the following transactions:

January 4, 2019. The invoice cost was $30,000.
on January 5, 2019. The invoice cost was $17,000.
were received by the cus-tomer on January 3, 2019. The sales price was $40,000 and the merchandise cost $22,000.
were received by the cus-tomer on December 30, 2018. The sales price was $20,000 and the merchandise cost $13,000.
8, were received by the customer on January 4, 2019. The sales price was $25,000 and the merchandise cost $12,000.
nce sheet.

oyal Decking
ustment Entry
Unit selling price Selling price NRV Inventory value
16 16,000 13,600 10,000
18 14,400 12,240 12,000
8 4,800 4,080 1,800
6 1,200 1,020 1,020
13 7,800 6,630 6,630
37,570 31,450

-31,450

Debit Credit
2,150
2,150
Credit ($ million)

16

0.32

17.44
cribed below. In 2016, West-ern Transport had issued 140 million shares of its $1 par common stock at $17 per share.

are.
share.
share.

200

20
1

20

ns Debit Credit
90
20
2
22
33
33
20
4
16
88
88

90
86
-53
123

32
0.8
31.2
 ight Corporation
ent of Cash Flow
ended Dec. 31, 2018 15,000

($40,000.00)

$300,000.00
$30,000.00
$330,000.00
305,000
40,000
345,000
 1/10, n/30. VTC uses the gross method to account for
e purchase and payment.
handise cost $22,000.
erchandise cost $13,000.
rchandise cost $12,000.
stock at $17 per share.