FundamentalhAccountinghPrincipleshVolumeh1hCanadianh15thhEditionhLarsonhSolutionshManual
SOLUTIONS MANUAL h
to accompany
h
Fundamental Accounting Principles h h
15th Canadian Edition
h h
by Larson/Jensen/Dieckmann
h
Revisedhforhtheh15thh Editionhby:
PraisehMa,hKwantlenhPolytechnichUniversity
Technicalhcheckshby:
RhondahHeninger,hSouthernhAlbertahInstitutehofhTechnologyhMichel
lehYoung,hCPA
SolutionshManualhtohaccompanyhFundamentalhAccountinghPrinciples,h15thhCanadianhEdition.h©h2016hMcGraw-HillhEducationhLtd. 2-1
FullhdownloadhallhchaptershinstantlyhpleasehgohtohSolutionshManual,hTesthBankhsite:htestbanklive.com
,Lasthrevised:hJanuaryh23,h2016.
Chapter 2 h
Analyzing and Recordi h h
ng Transactions
h
ChapterhOpeninghCriticalhThinkinghChallengehQuestions*
AlexandrehBilodeauhexperiencedhahhugehsetbackhinhachievinghhishgoalhofhwinninghgoldhinht
heh2006hOlympics.hInhthehfacehofhthishchallenge,hhehreflectedhonhthehexperience,hsethhishper
sonalhgoalhandhhadhahdailyhactionhplanhtohachievehit.hThesehsamehstepshcanhbehappliedhtohy
ourhlife.h Forhinstance,hyouhmayhexperiencehahsetbackhinhthishaccountinghcourse.h Forhinsta
nce,hyouhmayhnothperformhashwellhonhahhomeworkhassignmenthorhexamhashyouhwouldhhaveh
liked.h LikehAlexandrehBilodeau,htakehahmomenthtohunderstandhwhyhyouhmayhhavehexperien
cehthishsetback,hcommithtohahpersonalhgoalhandhhavehahdetailedhactionhplanhtohachievehit.hT
hishmayhincludehreadinghthehchaptershbeforehclass,hsettinghasidehahfewhhoursheachhdayhtoh
workhonhthehhomework,hmeetinghuphwithhahfriendhoncehahweekhtohdiscusshchallenginghtopic
shandhgoinghtohofficehhours.hYouhcanhalsohlearnhfromhAlexandrehBilodeau’shdeterminationhi
nhpursuinghyourhcareerhandhinhfacinghchallengeshinhthehworkplace.
SolutionshManualhtohaccompanyhFundamentalhAccountinghPrinciples,h15thhCanadianhEdition.h©h2016hMcGraw-HillhEducationhLtd. 2-2
,Lasthrevised:hJanuaryh23,h2016.
ConcepthReviewhQuestions
1. WelcomehtohLululemon!hWeharehhappyhtohhavehyouhashahco-
ophstudent.hThehfundamentalhstepshinhthehaccountinghprocessharehthosehinvolvedhinht
hehaccountinghcycle:h Analyzehtransactionshtohdeterminehifhanheconomichexchangehha
shtakenhplacehand,hifhso,hjournalizehandhposththehtransaction.h Anhunadjustedhtrialhbala
ncehishthenhpreparedhtohhelphidentifyhpotentialhadjustments.h Appropriatehadjustinghen
triesharehjournalizedhandhpostedhandhanhadjustedhtrialhbalancehishgeneratedhfromhwhic
hhthehfinancialhstatementsharehprepared.h Closinghentriesharehthenhjournalizedhandhpos
ted.hFinally,hahpost-closinghtrialhbalancehishprepared.
ThehaccountinghcyclehhelpshLululemonhkeephtrackhofhitshbusinesshactivities.h Thesehb
usinesshtransactionshincludehbuyinghfabric,hsellinghyogahclothinghandhpayinghemploy
ees.hThehaccountinghcyclehhelpshproducehfinancialhstatementshwhichhprovidehLulule
monhthehinformationhtohmakehgoodhbusinesshdecisions.
2. Anhaccounthreceivablehishanhamounthduehtohahcompany,hbuththehamounthcanhbehincrea
sedhbyhthehcustomerh(debtor)hbyhmakinghadditionalhpurchases.hAnhaccounthreceivabl
ehishnothahsinglehdocumenthbuthrepresentshthehresulthofhseveralhwritten,horal,horhimplie
dhpromiseshtohpayhthehcreditor.hAhnotehreceivablehishahformalhdocumenththathspecifies
hthehfixedhamounthduehtohahcompanyhonhahfixedhdatehorhonhdemand.
3. FourhdifferenthassethaccountshwouldhincludehanyhofhthehfollowinghfromhDanier’shJuneh
28,h2014hbalancehsheet:hCash,hAccountshreceivable,hIncomehtaxeshrecoverable,hInvent
ories,hPrepaidhexpenses,hPropertyhandhequipment,hComputerhsoftwarehandhDeferredhi
ncomehtaxhasset.hThreehdifferenthliabilityhaccountshwouldhincludehanyhofhthehfollowing
:hPayableshandhaccrualsh(samehashAccountshpayablehandhaccruedh liabilities),hDeferre
dhrevenue,hSaleshreturnhprovisionhandhDeferredhleasehinducementshandhrenthliability.
4. Ahdebithwillhdecreasehandhahcredithwillhincreasehthehfollowinghaccounts:hAccountshPa
yable,hOwner’shcapitalhandhRevenue.h Answershwillhvary,hbuthcanhincludehliabilityh(acc
ountshpayable,hnoteshpayable,hunearnedhrevenuehandhbankhloan),howner’shcapitalhand
hrevenuehaccounts.
5. ThreehdebithbalancehaccountshfromhWestJet’shDecemberh31,h2014hbalancehsheethmight
hincludehanyhofhthehfollowing:hCashhandhcashhequivalents;hRestrictedhcash;h Accountsh
receivable;hPrepaidhexpenses,hdepositshandhother;hInventory;hAssetshheldhforhsale;hPr
opertyhandhequipment;hIntangiblehassets;horhOtherhassets.hThreehcredithbalancehacco
untshmighthincludehanyhofhthehfollowing:hAccountshpayablehandhaccruedhliabilities;hAdv
ancehtickethsales;hNon-
refundablehguesthcredits;hCurrenthportionhofhmaintenancehprovisions;hCurrenthportio
nhofhlong-termhdebt;hMaintenancehprovisions;hLong-
termhdebt;hOtherhliabilities;hDeferredhincomehtax;hSharehcapital;hEquityhreserves;hHed
gehreserves;horhRetainedhearnings.
SolutionshManualhtohaccompanyhFundamentalhAccountinghPrinciples,h15thhCanadianhEdition.h©h2016hMcGraw-HillhEducationhLtd. 2-3
, Lasthrevised:hJanuaryh23,h2016.
6. Whenhahcompanyhsellshserviceshorhgoods,htheyhwillhexchangehtheirhservicehorhgoodhf
orhcash.hWhenhthehcompanyhsellshserviceshorhgoods,htheyhearnhrevenue.hInhthehacco
unthequation,hCashh(Asset)hincreaseshandhRevenueh(Equity)hincreases.hIfhthehcustom
erhdoeshnothpayhtoday,hthehcompanyhrecordshanhaccountshreceivablehinsteadhofhcas
h.hAccountshreceivablehholdshvaluehforhthehcompanyhbecausehithishahpromisehfromhth
ehcustomerhtohpayhinhthehfuture.hWhenhthehcustomerhpayshcash,hthehcompanyhnohlon
gerhhashanhaccountshreceivable.hWithhthehaccountinghequation,hAccountshreceivable
h(Asset)hincreaseshandhRevenueh(Equity)hincreases.
Account (1)h Typehof (2)hNormalh (3)hFinancialhstat (4)h Timehperiod
haccoun Balance ement
t
Accountshre Asset Debit BalancehSheet Ahspecifichpointhinhti
ceivable me
Revenue Equity Credit IncomehStatement Periodhofhtime
7. Owner’shwithdrawalsharehwhenhahbusinesshownerhtakeshouthmoneyhthathwashearnedh i
nhthehbusinesshforhpersonalhuse.h Anhexamplehishwhenhanhownerhneedshtohtakehouthmo
neyhforhahpersonalhvacation.h Anhexpensehoccurshwhenhahcosthishneededhtohrunhthehno
rmalhoperationshofhthehbusiness.h Anhexamplehishthathahbusinesshneedshtohpayhitshemp
loyeeshforhsellinghclotheshathahretailhstore.
Account (5)h Typehof (6)h Normal (7)hFinancialhstate
account Balance ment
Owner’shwithdrawals Equity Debit StatementhofhChange
shinhEquity
Expense Equity Debit IncomehStatement
8. Debitedhaccountsharehrecordedhfirst.hThehcreditedhaccountsharehindented.
9. Ahtransactionhshouldhfirsthbehrecordedhinhahjournalhtohcreatehahcompletehrecordhofhtheh
transactionhinhonehplace.hThenhthehtransactionhishpostedhtohthehledgerhwherehentriesha
rehsummarizedhbyhtype,hi.e.,hcash,haccountshpayable,hinteresthexpense,hetc.,htohenable
hanalysishbyhaccount.hThisharrangementhalsohmeanshthathfewerherrorshwillhbehmadehinh
thehaccounts.
10. Accountinghsoftwarehishahtoolhthathmakeshrecordinghaccountinghtransactionsheasier.h
Youharehstillhtheh“brain”hbehindhthehaccounting.h Youhwillhneedhtohdecidehwhenhtohreco
rdhahtransaction,hhowhtohrecordhthehtransaction,hhowhtohinterpreththehfinancialhstateme
ntshandhwhathbusinesshdecisionshtohmake.hKnowinghhowhtohrecordhaccountinghmanu
allyhwillhhelphyouhunderstandhthehentirehaccountinghprocesshandhwhathhappenshbehin
dhthehsoftware.hTherehareherrorshinhsoftwarehprograms.hOverhrelyinghonhahsoftwarehpr
ogramhcanhresulthinhlargeherrors.h Whenhyouharehwritinghahreporthusinghthehcomputer,h
youhstillhneedhtohknowhhowhtohwritehparagraphshandhhowhtohexplainhyourhcontent.h Jus
thlikehaccountinghsoftware,hthehcomputerhishonlyhahtool.
11. Nothpreparinghahtrialhbalancehcanhcauseherrorshinhthehfinancialhstatements.hThehtrialhba
lancehhelpshtohidentifyhandhcorrectherrors.hIfhthehdebitshdohnothequalhthehcreditshinhtheh
trialhbalance,hthishishahcluehthatherrorshneedhtohbehcorrected.
SolutionshManualhtohaccompanyhFundamentalhAccountinghPrinciples,h15thhCanadianhEdition.h©h2016hMcGraw-HillhEducationhLtd. 2-4
SOLUTIONS MANUAL h
to accompany
h
Fundamental Accounting Principles h h
15th Canadian Edition
h h
by Larson/Jensen/Dieckmann
h
Revisedhforhtheh15thh Editionhby:
PraisehMa,hKwantlenhPolytechnichUniversity
Technicalhcheckshby:
RhondahHeninger,hSouthernhAlbertahInstitutehofhTechnologyhMichel
lehYoung,hCPA
SolutionshManualhtohaccompanyhFundamentalhAccountinghPrinciples,h15thhCanadianhEdition.h©h2016hMcGraw-HillhEducationhLtd. 2-1
FullhdownloadhallhchaptershinstantlyhpleasehgohtohSolutionshManual,hTesthBankhsite:htestbanklive.com
,Lasthrevised:hJanuaryh23,h2016.
Chapter 2 h
Analyzing and Recordi h h
ng Transactions
h
ChapterhOpeninghCriticalhThinkinghChallengehQuestions*
AlexandrehBilodeauhexperiencedhahhugehsetbackhinhachievinghhishgoalhofhwinninghgoldhinht
heh2006hOlympics.hInhthehfacehofhthishchallenge,hhehreflectedhonhthehexperience,hsethhishper
sonalhgoalhandhhadhahdailyhactionhplanhtohachievehit.hThesehsamehstepshcanhbehappliedhtohy
ourhlife.h Forhinstance,hyouhmayhexperiencehahsetbackhinhthishaccountinghcourse.h Forhinsta
nce,hyouhmayhnothperformhashwellhonhahhomeworkhassignmenthorhexamhashyouhwouldhhaveh
liked.h LikehAlexandrehBilodeau,htakehahmomenthtohunderstandhwhyhyouhmayhhavehexperien
cehthishsetback,hcommithtohahpersonalhgoalhandhhavehahdetailedhactionhplanhtohachievehit.hT
hishmayhincludehreadinghthehchaptershbeforehclass,hsettinghasidehahfewhhoursheachhdayhtoh
workhonhthehhomework,hmeetinghuphwithhahfriendhoncehahweekhtohdiscusshchallenginghtopic
shandhgoinghtohofficehhours.hYouhcanhalsohlearnhfromhAlexandrehBilodeau’shdeterminationhi
nhpursuinghyourhcareerhandhinhfacinghchallengeshinhthehworkplace.
SolutionshManualhtohaccompanyhFundamentalhAccountinghPrinciples,h15thhCanadianhEdition.h©h2016hMcGraw-HillhEducationhLtd. 2-2
,Lasthrevised:hJanuaryh23,h2016.
ConcepthReviewhQuestions
1. WelcomehtohLululemon!hWeharehhappyhtohhavehyouhashahco-
ophstudent.hThehfundamentalhstepshinhthehaccountinghprocessharehthosehinvolvedhinht
hehaccountinghcycle:h Analyzehtransactionshtohdeterminehifhanheconomichexchangehha
shtakenhplacehand,hifhso,hjournalizehandhposththehtransaction.h Anhunadjustedhtrialhbala
ncehishthenhpreparedhtohhelphidentifyhpotentialhadjustments.h Appropriatehadjustinghen
triesharehjournalizedhandhpostedhandhanhadjustedhtrialhbalancehishgeneratedhfromhwhic
hhthehfinancialhstatementsharehprepared.h Closinghentriesharehthenhjournalizedhandhpos
ted.hFinally,hahpost-closinghtrialhbalancehishprepared.
ThehaccountinghcyclehhelpshLululemonhkeephtrackhofhitshbusinesshactivities.h Thesehb
usinesshtransactionshincludehbuyinghfabric,hsellinghyogahclothinghandhpayinghemploy
ees.hThehaccountinghcyclehhelpshproducehfinancialhstatementshwhichhprovidehLulule
monhthehinformationhtohmakehgoodhbusinesshdecisions.
2. Anhaccounthreceivablehishanhamounthduehtohahcompany,hbuththehamounthcanhbehincrea
sedhbyhthehcustomerh(debtor)hbyhmakinghadditionalhpurchases.hAnhaccounthreceivabl
ehishnothahsinglehdocumenthbuthrepresentshthehresulthofhseveralhwritten,horal,horhimplie
dhpromiseshtohpayhthehcreditor.hAhnotehreceivablehishahformalhdocumenththathspecifies
hthehfixedhamounthduehtohahcompanyhonhahfixedhdatehorhonhdemand.
3. FourhdifferenthassethaccountshwouldhincludehanyhofhthehfollowinghfromhDanier’shJuneh
28,h2014hbalancehsheet:hCash,hAccountshreceivable,hIncomehtaxeshrecoverable,hInvent
ories,hPrepaidhexpenses,hPropertyhandhequipment,hComputerhsoftwarehandhDeferredhi
ncomehtaxhasset.hThreehdifferenthliabilityhaccountshwouldhincludehanyhofhthehfollowing
:hPayableshandhaccrualsh(samehashAccountshpayablehandhaccruedh liabilities),hDeferre
dhrevenue,hSaleshreturnhprovisionhandhDeferredhleasehinducementshandhrenthliability.
4. Ahdebithwillhdecreasehandhahcredithwillhincreasehthehfollowinghaccounts:hAccountshPa
yable,hOwner’shcapitalhandhRevenue.h Answershwillhvary,hbuthcanhincludehliabilityh(acc
ountshpayable,hnoteshpayable,hunearnedhrevenuehandhbankhloan),howner’shcapitalhand
hrevenuehaccounts.
5. ThreehdebithbalancehaccountshfromhWestJet’shDecemberh31,h2014hbalancehsheethmight
hincludehanyhofhthehfollowing:hCashhandhcashhequivalents;hRestrictedhcash;h Accountsh
receivable;hPrepaidhexpenses,hdepositshandhother;hInventory;hAssetshheldhforhsale;hPr
opertyhandhequipment;hIntangiblehassets;horhOtherhassets.hThreehcredithbalancehacco
untshmighthincludehanyhofhthehfollowing:hAccountshpayablehandhaccruedhliabilities;hAdv
ancehtickethsales;hNon-
refundablehguesthcredits;hCurrenthportionhofhmaintenancehprovisions;hCurrenthportio
nhofhlong-termhdebt;hMaintenancehprovisions;hLong-
termhdebt;hOtherhliabilities;hDeferredhincomehtax;hSharehcapital;hEquityhreserves;hHed
gehreserves;horhRetainedhearnings.
SolutionshManualhtohaccompanyhFundamentalhAccountinghPrinciples,h15thhCanadianhEdition.h©h2016hMcGraw-HillhEducationhLtd. 2-3
, Lasthrevised:hJanuaryh23,h2016.
6. Whenhahcompanyhsellshserviceshorhgoods,htheyhwillhexchangehtheirhservicehorhgoodhf
orhcash.hWhenhthehcompanyhsellshserviceshorhgoods,htheyhearnhrevenue.hInhthehacco
unthequation,hCashh(Asset)hincreaseshandhRevenueh(Equity)hincreases.hIfhthehcustom
erhdoeshnothpayhtoday,hthehcompanyhrecordshanhaccountshreceivablehinsteadhofhcas
h.hAccountshreceivablehholdshvaluehforhthehcompanyhbecausehithishahpromisehfromhth
ehcustomerhtohpayhinhthehfuture.hWhenhthehcustomerhpayshcash,hthehcompanyhnohlon
gerhhashanhaccountshreceivable.hWithhthehaccountinghequation,hAccountshreceivable
h(Asset)hincreaseshandhRevenueh(Equity)hincreases.
Account (1)h Typehof (2)hNormalh (3)hFinancialhstat (4)h Timehperiod
haccoun Balance ement
t
Accountshre Asset Debit BalancehSheet Ahspecifichpointhinhti
ceivable me
Revenue Equity Credit IncomehStatement Periodhofhtime
7. Owner’shwithdrawalsharehwhenhahbusinesshownerhtakeshouthmoneyhthathwashearnedh i
nhthehbusinesshforhpersonalhuse.h Anhexamplehishwhenhanhownerhneedshtohtakehouthmo
neyhforhahpersonalhvacation.h Anhexpensehoccurshwhenhahcosthishneededhtohrunhthehno
rmalhoperationshofhthehbusiness.h Anhexamplehishthathahbusinesshneedshtohpayhitshemp
loyeeshforhsellinghclotheshathahretailhstore.
Account (5)h Typehof (6)h Normal (7)hFinancialhstate
account Balance ment
Owner’shwithdrawals Equity Debit StatementhofhChange
shinhEquity
Expense Equity Debit IncomehStatement
8. Debitedhaccountsharehrecordedhfirst.hThehcreditedhaccountsharehindented.
9. Ahtransactionhshouldhfirsthbehrecordedhinhahjournalhtohcreatehahcompletehrecordhofhtheh
transactionhinhonehplace.hThenhthehtransactionhishpostedhtohthehledgerhwherehentriesha
rehsummarizedhbyhtype,hi.e.,hcash,haccountshpayable,hinteresthexpense,hetc.,htohenable
hanalysishbyhaccount.hThisharrangementhalsohmeanshthathfewerherrorshwillhbehmadehinh
thehaccounts.
10. Accountinghsoftwarehishahtoolhthathmakeshrecordinghaccountinghtransactionsheasier.h
Youharehstillhtheh“brain”hbehindhthehaccounting.h Youhwillhneedhtohdecidehwhenhtohreco
rdhahtransaction,hhowhtohrecordhthehtransaction,hhowhtohinterpreththehfinancialhstateme
ntshandhwhathbusinesshdecisionshtohmake.hKnowinghhowhtohrecordhaccountinghmanu
allyhwillhhelphyouhunderstandhthehentirehaccountinghprocesshandhwhathhappenshbehin
dhthehsoftware.hTherehareherrorshinhsoftwarehprograms.hOverhrelyinghonhahsoftwarehpr
ogramhcanhresulthinhlargeherrors.h Whenhyouharehwritinghahreporthusinghthehcomputer,h
youhstillhneedhtohknowhhowhtohwritehparagraphshandhhowhtohexplainhyourhcontent.h Jus
thlikehaccountinghsoftware,hthehcomputerhishonlyhahtool.
11. Nothpreparinghahtrialhbalancehcanhcauseherrorshinhthehfinancialhstatements.hThehtrialhba
lancehhelpshtohidentifyhandhcorrectherrors.hIfhthehdebitshdohnothequalhthehcreditshinhtheh
trialhbalance,hthishishahcluehthatherrorshneedhtohbehcorrected.
SolutionshManualhtohaccompanyhFundamentalhAccountinghPrinciples,h15thhCanadianhEdition.h©h2016hMcGraw-HillhEducationhLtd. 2-4
