Solutions Manual for Accounting 28th Edition by Carl Warren, Christine Jonick & Jennifer Schneider. ISBN 9781337913256. (Complete Chapters 1-26)Rated A+

, CHAPTER .1
INTRODUCTION .TO .ACCOUNTING .AND .BUSINESS

DISCUSSION .QUESTIONS

1. Some .users .of .accounting .information .include .managers, .employees, .investors,
.creditors, .customers, .and .the .government.

2. The .role .of .accounting .is .to .provide .information .for .managers .to .use .in .operating .the
.business. . In .addition, .accounting .provides .information .to .others .to .use .in .assessing .the
.economic .performance .and .condition .of .the .business.

3. The . corporate . form . allows . the . company . to . obtain . large . amounts . of . resources . by
. issuing . stock. .For .this .reason, .most .companies .that .require .large .investments .in .property,
.plant, .and .equipment .are .organized .as .corporations.

4. No. .The .business .entity .concept .limits .the .recording .of .economic .data .to .transactions
.directly .affecting .the .activities .of .the .business. .The .payment .of .the .interest .of .$4,500 .is .a
.personal .transaction .of .Josh .Reilly .and .should .not .be .recorded .by .Dispatch .Delivery
.Service.

5. The .land .should .be .recorded .at .its .cost .of .$167,500 .to .Reliable .Repair .Service. .This .is
.consistent . with .the .cost .concept.

6. a. No. .The .offer .of .$2,000,000 .and .the .increase .in .the .assessed .value .should .not .be
.recognized . in .the .accounting .records .because .land .is .recorded .on .the .cost .basis.

b. Cash .would .increase .by .$2,125,000, .land .would .decrease .by .$900,000, .and .owner’s
.equity .would .increase .by .$1,225,000.

7. An .account .receivable .is .a .claim .against .a .customer .for .goods .or .services .sold. .An .account
.payable .is .an .amount .owed .to .a .creditor .for .goods .or .services .purchased. .Therefore, .an
.account .receivable .in .the .records .of .the .seller .is .an .account .payable .in .the .records .of .the
.purchaser.

8. (b) . The . business . realized . net . income . of . $91,000 . ($679,000 . – . $588,000).
9. (a) . . The . business . incurred . a . net . loss . of . $75,000 . ($640,000 . – . $715,000).

10. (a) . . Net . income .or .net . loss
(b) Owner’s .equity . at . the . end .of . the . period
(c) Cash . at . the . end . of . the . period




1-2

, CHAPTER .1 Introduction .to .Accounting .and
.Business

PE .1-3B PRACTICE . EXERCISES
PE .1-1A
$597,000. .Under .the .cost .concept, .the .land .should .be .recorded .at .the .cost .to .Boulder
.Repair .Service.



PE .1-1B
$369,500. .Under .the .cost .concept, .the .land .should .be .recorded .at .the .cost .to
.Clementine .Repair .Service.



PE .1-2A
a. A = L . + . OE
$518,000 = $165,000 .+ .OE
OE = $353,000

b. A = L . + . OE
+$86,200 = +$25,000 .+ .OE
OE = +$61,200
OE .on .December .31, = $353,000 .+ .$61,200
.20Y9
= $414,200


PE .1-2B
a. A = L . + . OE
$382,000 = $94,000 .+ .OE
OE = $288,000

b. A = L . + . OE
.– = +$35,000 .+ .OE .–
$63,000 = $98,000
OE = $288,000 .– .$98,000
OE .on .December .31, .20Y9 = $190,000


PE .1-3A
(2) Asset .(Accounts .Receivable) .increases .by .$22,400;
Owner’s .Equity .(Delivery .Service .Fees) .increases .by .$22,400.
(3) Liability .(Accounts .Payable) .decreases .by
.$4,100; .Asset .(Cash) .decreases .by .$4,100.

(4) Asset .(Cash) .increases .by .$14,700;
Asset .(Accounts .Receivable) .decreases .by .$14,700.
(5) Asset .(Cash) .decreases .by .$1,600;
Owner’s .Equity .(Terry .Young, .Drawing) .decreases .by .$1,600.

,