,Solution manual For Financial Accounting 12e
Weygandt
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
, CHAPTER 1
Accounting in Action
Learning Objectives
1. Identify the activities and users associated with accounting.
2. Explain the building blocks of accounting: ethics, principles, and assumptions.
3. State the accounting equation and define its components.
4. Analyze the effects of business transactions on the accounting equation.
5. Describe the four financial statements and how they are prepared.
*6. Explain the career opportunities in accounting.
© 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only) 1-1
, ANSWERS TO QUESTIONS
1. True. Virtually every organization and person in our society uses accounting information. Businesses,
investors, creditors, government agencies, and not-for-profit organizations must use accounting information
to operate effectively.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
2. The four most common types of data analytics and the basic question each addresses are: Descriptive (What
happened?), Diagnostic (Why did it happen?), Predictive (What is likely to happen?), and Prescriptive (What
should we do about it?).
LO 1 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement , IMA: Performance Measurement
3. Accounting is the process of identifying, recording, and communicating the economic events of an
organization to interested users of the information. The first activity of the accounting process is to identify
economic events that are relevant to a particular business. Once identified and measured, the events are
recorded to provide a history of the financial activities of the organization. Recording consists of keeping a
chronological diary of these measured events in an orderly and systematic manner. The information is
communicated through the preparation and distribution of accounting reports, the most common of which
are called financial statements. A vital element in the communication process is the accountant’s ability and
responsibility to analyze and interpret the reported information.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
4. (a) Internal users are those who plan, organize, and run the business and therefore are officers and other
decision makers.
(b) To assist management, accounting provides internal reports. Examples include financial comparisons
of operating alternatives, projections of income from new sales campaigns, and forecasts of cash needs
for the next year.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
5. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell stock.
(b) Creditors use accounting information to evaluate the risks of granting credit or lending money.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
6. False. Bookkeeping usually involves only the recording of economic events and therefore is just one part of
the entire accounting process. Accounting, on the other hand, involves the entire process of identifying,
recording, and communicating economic events.
LO 1, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
7. Harper Travel Agency should report the land at $85,000 on its December 31, 2027 balance sheet. This is true
not only at the time the land is purchased, but also over the time the land is held. In determining which
measurement principle to use (historical cost or fair value) companies weigh the factual nature of cost figures
versus the relevance of fair value. In general, companies use historical cost. Only in situations where assets
are actively traded do companies apply the fair value principle.
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA: Reporting
1-2 © 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only)
,Questions Chapter 1 (Continued)
8. The monetary unit assumption requires that only transaction data capable of being expressed in terms of
money be included in the accounting records. This assumption enables accounting to quantify (measure)
economic events.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement IMA: Reporting
9. The economic entity assumption requires that the activities of the entity be kept separate and distinct from
the activities of its owners and all other economic entities.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement IMA: Reporting
10. The three basic forms of business organizations are (1) proprietorship, (2) partnership, and
(3) corporation.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
11. One of the advantages Juana would enjoy is that ownership of a corporation is represented by transferable
shares of stock. This would allow Juana to raise money easily by selling a part of her ownership in the
company. Another advantage is that because holders of the shares (stockholders) enjoy limited liability, they
are not personally liable for the debts of the corporate entity. Also, because ownership can be transferred
without dissolving the corporation, the corporation enjoys an unlimited life.
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
12. The basic accounting equation is Assets = Liabilities + Stockholders’ Equity.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
13. (a) Assets are resources owned by a business. Liabilities are creditor claims against assets—that is, existing
debts and obligations. Stockholders’ equity is the ownership claim on total assets.
(b) Stockholders’ equity is affected by stockholders’ investments, dividends, revenues, and expenses.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
14. The liabilities are (b) Accounts Payable and (g) Salaries and Wages Payable.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
15. Yes, a business can enter into a transaction in which only the left side of the accounting equation is affected.
An example would be a transaction where an increase in one asset is offset by
a decrease in another asset. An increase in the Equipment account which is offset by a decrease in the Cash
account is a specific example.
LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
16. Business transactions are the economic events of the enterprise recorded by accountants because they affect
the basic accounting equation.
(a) No, the death of the president of the company is not a business transaction as it does not affect the basic
accounting equation.
(b) Yes, supplies purchased on account is a business transaction as it affects the basic accounting equation.
(c) No, an employee being fired is not a business transaction as it does not affect the basic accounting
equation.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
© 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only) 1-3
,Questions Chapter 1 (Continued)
17. (a) Decrease assets and decrease stockholders’ equity.
(b) Increase assets and decrease assets.
(c) Increase assets and increase stockholders’ equity.
(d) Decrease assets and decrease liabilities.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
18. (a) Income statement. (d) Balance sheet.
(b) Balance sheet. (e) Balance sheet and retained earnings statement.
(c) Income statement. (f) Balance sheet.
LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
19. No, this treatment is not appropriate. While the transaction does involve a receipt of cash, it does not represent
revenues. Revenues are the gross increase in stockholders’ equity resulting from business activities entered
into for the purpose of earning income. This transaction is simply an additional investment made by one of
the owners of the business.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
20. Yes. Net income does appear on the income statement—it is the result of subtracting expenses from revenues.
In addition, net income appears on the retained earnings statement—it is shown as an addition to the
beginning-of-period retained earnings. Indirectly, the net income of a company is also included on the balance
sheet. It is included in the end-of-period retained earnings which appears in the stockholders’ equity section
of the balance sheet.
LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
21. (a) Ending stockholders’ equity balance .............................................................................. $198,000
Beginning stockholders’ equity balance ......................................................................... 158,000
Net income ...................................................................................................................... $ 40,000
(b) Ending stockholders’ equity balance .............................................................................. $198,000
Beginning stockholders’ equity balance ......................................................................... 158,000
40,000
Deduct: Investment ........................................................................................................ 16,000
Net income ...................................................................................................................... $ 24,000
LO 5, BT: AN, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
22. (a) Total revenues ($30,000 + $70,000) ............................................................................... $100,000
(b) Total expenses ($26,000 + $38,000) ............................................................................... $64,000
(c) Total revenues ................................................................................................................. $100,000
Total expenses................................................................................................................. 64,000
Net income ...................................................................................................................... $ 36,000
LO 5, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
23. Apple’s accounting equation (in millions) at September 25, 2021 was $351,002 = $287,912 + $63,090LO 3,
BT: AP, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
1-4 © 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only)
, SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 1.1
(a) 4 Investors in common stock
(b) 3 Marketing managers
(c) 2 Creditors
(d) 5 Chief Financial Officer
(e) 1 Internal Revenue Service
LO 1 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement
BRIEF EXERCISE 1.2
(a) $78,000 – $50,000 = $28,000 (Stockholders’ Equity).
(b) $45,000 + $70,000 = $115,000 (Assets).
(c) $94,000 – $60,000 = $34,000 (Liabilities).
LO 3, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.3
(a) $120,000 + $232,000 = $352,000 (Total assets).
(Liabl. + Stock. equity = Assets)
(b) $190,000 – $86,000 = $104,000 (Total liabilities).
(Assets – Stock. equity = Liabl.)
(c) $600,000 – 0.5($600,000) = $300,000 (Stockholders’ equity).
[Assets – (0.5 × Assets) = Stock. equity]
LO 3, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.4
(a) ($870,000 + $150,000) – ($500,000 – $80,000) = $600,000
(Stockholders’ equity).
[(Beg. assets + incr.) – (Beg. liabl. – decrease) = Stock. equity]
(b) ($500,000 + $100,000) + ($870,000 – $500,000 – $66,000) = $904,000
(Assets).
[(Beg. liabl. + incr.) + (Beg. stock. equity – decr.) = Assets
(c) ($870,000 – $80,000) – ($870,000 – $500,000 + $120,000) = $300,000
(Liabilities).
[(Beg. assets – decr.) – (Beg. stock. equity + incr.) = Liabl.]
LO 3, BT: AP, Difficulty: Easy, TOT: 5 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
© 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only) 1-5
,BRIEF EXERCISE 1.5
Stockholders’ Equity
Common Retained Earnings
Assets = Liabilities + Stock + Revenues – Expenses – Dividends
(a) X = $90,000 + $150,000 + $450,000 – $320,000 – $40,000
X = $90,000 + $240,000
X = $330,000
(Assets = Liabl. + Com. stock + Rev. – Exp. – Div.)
(b) $57,000 = X + $23,000 + $50,000 – $35,000 – $7,000
$57,000 = X + $31,000
X = $26,000 ($57,000 – $31,000)
(Liabl. = Assets – Com. stk. – Rev. + Exp. + Div.)
(c) $600,000 = ($600,000 × 2/3) + X (Stockholders’ equity)
$600,000 = $400,000 + X
X = $200,000
(Stk. equity = Assets – (2/3 × Assets))
LO 3, BT: AP, Difficulty: Moderate, TOT: 6 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.6
A (a) Accounts receivable A (d) Supplies
L (b) Salaries and wages payable SE (e) Dividends
A (c) Equipment L (f) Notes payable
LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.7
Assets Liabilities Stockholders’ Equity
(a) + + NE
(b) + NE +
(c) – NE –
LO 4, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
1-6 © 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only)
,BRIEF EXERCISE 1.8
Assets Liabilities Stockholders’ Equity
(a) + NE +
(b) – NE –
(c) NE* NE NE
*Cash increased and accts. rec. decreased, so tot. assets unchanged.
LO 4, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.9
E (a) Advertising expense D (e) Dividends
R (b) Service revenue R (f) Rent revenue
E (c) Insurance expense E (g) Utilities expense
E (d) Salaries and wages expense
LO 4, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.10
R (a) Received cash for services performed.
NSE (b) Paid cash to purchase equipment.
E (c) Paid employee salaries.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.11
ELLERBY COMPANY
Balance Sheet
December 31, 2027
Assets
Cash ............................................................................................................. $ 44,000
Accounts receivable ................................................................................... 72,500
Total assets ......................................................................................... $116,500
Liabilities and Stockholders’ Equity
Liabilities
Accounts payable ............................................................................... $ 85,000
Stockholders’ equity
Common stock ...................................................................... $21,500
Retained earnings ................................................................... 10,000
Total stockholders’ equity ....................................................... 31,500
Total liabilities and stockholders’ equity ............................... $116,500
(Cash + Accts. rec. = Accts. pay. + Com. stk. + Ret. earn.)
LO 5, BT: AP, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
© 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only) 1-7
, BRIEF EXERCISE 1.12
BS (a) Notes payable
IS (b) Advertising expense
BS (c) Common stock
BS (d) Cash
IS (e) Service revenue
RE (f) Dividends
LO 5, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
1-8 © 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only)
Weygandt
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
, CHAPTER 1
Accounting in Action
Learning Objectives
1. Identify the activities and users associated with accounting.
2. Explain the building blocks of accounting: ethics, principles, and assumptions.
3. State the accounting equation and define its components.
4. Analyze the effects of business transactions on the accounting equation.
5. Describe the four financial statements and how they are prepared.
*6. Explain the career opportunities in accounting.
© 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only) 1-1
, ANSWERS TO QUESTIONS
1. True. Virtually every organization and person in our society uses accounting information. Businesses,
investors, creditors, government agencies, and not-for-profit organizations must use accounting information
to operate effectively.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
2. The four most common types of data analytics and the basic question each addresses are: Descriptive (What
happened?), Diagnostic (Why did it happen?), Predictive (What is likely to happen?), and Prescriptive (What
should we do about it?).
LO 1 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement , IMA: Performance Measurement
3. Accounting is the process of identifying, recording, and communicating the economic events of an
organization to interested users of the information. The first activity of the accounting process is to identify
economic events that are relevant to a particular business. Once identified and measured, the events are
recorded to provide a history of the financial activities of the organization. Recording consists of keeping a
chronological diary of these measured events in an orderly and systematic manner. The information is
communicated through the preparation and distribution of accounting reports, the most common of which
are called financial statements. A vital element in the communication process is the accountant’s ability and
responsibility to analyze and interpret the reported information.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
4. (a) Internal users are those who plan, organize, and run the business and therefore are officers and other
decision makers.
(b) To assist management, accounting provides internal reports. Examples include financial comparisons
of operating alternatives, projections of income from new sales campaigns, and forecasts of cash needs
for the next year.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
5. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell stock.
(b) Creditors use accounting information to evaluate the risks of granting credit or lending money.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
6. False. Bookkeeping usually involves only the recording of economic events and therefore is just one part of
the entire accounting process. Accounting, on the other hand, involves the entire process of identifying,
recording, and communicating economic events.
LO 1, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
7. Harper Travel Agency should report the land at $85,000 on its December 31, 2027 balance sheet. This is true
not only at the time the land is purchased, but also over the time the land is held. In determining which
measurement principle to use (historical cost or fair value) companies weigh the factual nature of cost figures
versus the relevance of fair value. In general, companies use historical cost. Only in situations where assets
are actively traded do companies apply the fair value principle.
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA: Reporting
1-2 © 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only)
,Questions Chapter 1 (Continued)
8. The monetary unit assumption requires that only transaction data capable of being expressed in terms of
money be included in the accounting records. This assumption enables accounting to quantify (measure)
economic events.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement IMA: Reporting
9. The economic entity assumption requires that the activities of the entity be kept separate and distinct from
the activities of its owners and all other economic entities.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement IMA: Reporting
10. The three basic forms of business organizations are (1) proprietorship, (2) partnership, and
(3) corporation.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
11. One of the advantages Juana would enjoy is that ownership of a corporation is represented by transferable
shares of stock. This would allow Juana to raise money easily by selling a part of her ownership in the
company. Another advantage is that because holders of the shares (stockholders) enjoy limited liability, they
are not personally liable for the debts of the corporate entity. Also, because ownership can be transferred
without dissolving the corporation, the corporation enjoys an unlimited life.
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
12. The basic accounting equation is Assets = Liabilities + Stockholders’ Equity.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
13. (a) Assets are resources owned by a business. Liabilities are creditor claims against assets—that is, existing
debts and obligations. Stockholders’ equity is the ownership claim on total assets.
(b) Stockholders’ equity is affected by stockholders’ investments, dividends, revenues, and expenses.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
14. The liabilities are (b) Accounts Payable and (g) Salaries and Wages Payable.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
15. Yes, a business can enter into a transaction in which only the left side of the accounting equation is affected.
An example would be a transaction where an increase in one asset is offset by
a decrease in another asset. An increase in the Equipment account which is offset by a decrease in the Cash
account is a specific example.
LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
16. Business transactions are the economic events of the enterprise recorded by accountants because they affect
the basic accounting equation.
(a) No, the death of the president of the company is not a business transaction as it does not affect the basic
accounting equation.
(b) Yes, supplies purchased on account is a business transaction as it affects the basic accounting equation.
(c) No, an employee being fired is not a business transaction as it does not affect the basic accounting
equation.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
© 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only) 1-3
,Questions Chapter 1 (Continued)
17. (a) Decrease assets and decrease stockholders’ equity.
(b) Increase assets and decrease assets.
(c) Increase assets and increase stockholders’ equity.
(d) Decrease assets and decrease liabilities.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
18. (a) Income statement. (d) Balance sheet.
(b) Balance sheet. (e) Balance sheet and retained earnings statement.
(c) Income statement. (f) Balance sheet.
LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
19. No, this treatment is not appropriate. While the transaction does involve a receipt of cash, it does not represent
revenues. Revenues are the gross increase in stockholders’ equity resulting from business activities entered
into for the purpose of earning income. This transaction is simply an additional investment made by one of
the owners of the business.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
20. Yes. Net income does appear on the income statement—it is the result of subtracting expenses from revenues.
In addition, net income appears on the retained earnings statement—it is shown as an addition to the
beginning-of-period retained earnings. Indirectly, the net income of a company is also included on the balance
sheet. It is included in the end-of-period retained earnings which appears in the stockholders’ equity section
of the balance sheet.
LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
21. (a) Ending stockholders’ equity balance .............................................................................. $198,000
Beginning stockholders’ equity balance ......................................................................... 158,000
Net income ...................................................................................................................... $ 40,000
(b) Ending stockholders’ equity balance .............................................................................. $198,000
Beginning stockholders’ equity balance ......................................................................... 158,000
40,000
Deduct: Investment ........................................................................................................ 16,000
Net income ...................................................................................................................... $ 24,000
LO 5, BT: AN, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
22. (a) Total revenues ($30,000 + $70,000) ............................................................................... $100,000
(b) Total expenses ($26,000 + $38,000) ............................................................................... $64,000
(c) Total revenues ................................................................................................................. $100,000
Total expenses................................................................................................................. 64,000
Net income ...................................................................................................................... $ 36,000
LO 5, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
23. Apple’s accounting equation (in millions) at September 25, 2021 was $351,002 = $287,912 + $63,090LO 3,
BT: AP, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
1-4 © 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only)
, SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 1.1
(a) 4 Investors in common stock
(b) 3 Marketing managers
(c) 2 Creditors
(d) 5 Chief Financial Officer
(e) 1 Internal Revenue Service
LO 1 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement
BRIEF EXERCISE 1.2
(a) $78,000 – $50,000 = $28,000 (Stockholders’ Equity).
(b) $45,000 + $70,000 = $115,000 (Assets).
(c) $94,000 – $60,000 = $34,000 (Liabilities).
LO 3, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.3
(a) $120,000 + $232,000 = $352,000 (Total assets).
(Liabl. + Stock. equity = Assets)
(b) $190,000 – $86,000 = $104,000 (Total liabilities).
(Assets – Stock. equity = Liabl.)
(c) $600,000 – 0.5($600,000) = $300,000 (Stockholders’ equity).
[Assets – (0.5 × Assets) = Stock. equity]
LO 3, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.4
(a) ($870,000 + $150,000) – ($500,000 – $80,000) = $600,000
(Stockholders’ equity).
[(Beg. assets + incr.) – (Beg. liabl. – decrease) = Stock. equity]
(b) ($500,000 + $100,000) + ($870,000 – $500,000 – $66,000) = $904,000
(Assets).
[(Beg. liabl. + incr.) + (Beg. stock. equity – decr.) = Assets
(c) ($870,000 – $80,000) – ($870,000 – $500,000 + $120,000) = $300,000
(Liabilities).
[(Beg. assets – decr.) – (Beg. stock. equity + incr.) = Liabl.]
LO 3, BT: AP, Difficulty: Easy, TOT: 5 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
© 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only) 1-5
,BRIEF EXERCISE 1.5
Stockholders’ Equity
Common Retained Earnings
Assets = Liabilities + Stock + Revenues – Expenses – Dividends
(a) X = $90,000 + $150,000 + $450,000 – $320,000 – $40,000
X = $90,000 + $240,000
X = $330,000
(Assets = Liabl. + Com. stock + Rev. – Exp. – Div.)
(b) $57,000 = X + $23,000 + $50,000 – $35,000 – $7,000
$57,000 = X + $31,000
X = $26,000 ($57,000 – $31,000)
(Liabl. = Assets – Com. stk. – Rev. + Exp. + Div.)
(c) $600,000 = ($600,000 × 2/3) + X (Stockholders’ equity)
$600,000 = $400,000 + X
X = $200,000
(Stk. equity = Assets – (2/3 × Assets))
LO 3, BT: AP, Difficulty: Moderate, TOT: 6 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.6
A (a) Accounts receivable A (d) Supplies
L (b) Salaries and wages payable SE (e) Dividends
A (c) Equipment L (f) Notes payable
LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.7
Assets Liabilities Stockholders’ Equity
(a) + + NE
(b) + NE +
(c) – NE –
LO 4, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
1-6 © 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only)
,BRIEF EXERCISE 1.8
Assets Liabilities Stockholders’ Equity
(a) + NE +
(b) – NE –
(c) NE* NE NE
*Cash increased and accts. rec. decreased, so tot. assets unchanged.
LO 4, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.9
E (a) Advertising expense D (e) Dividends
R (b) Service revenue R (f) Rent revenue
E (c) Insurance expense E (g) Utilities expense
E (d) Salaries and wages expense
LO 4, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.10
R (a) Received cash for services performed.
NSE (b) Paid cash to purchase equipment.
E (c) Paid employee salaries.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
BRIEF EXERCISE 1.11
ELLERBY COMPANY
Balance Sheet
December 31, 2027
Assets
Cash ............................................................................................................. $ 44,000
Accounts receivable ................................................................................... 72,500
Total assets ......................................................................................... $116,500
Liabilities and Stockholders’ Equity
Liabilities
Accounts payable ............................................................................... $ 85,000
Stockholders’ equity
Common stock ...................................................................... $21,500
Retained earnings ................................................................... 10,000
Total stockholders’ equity ....................................................... 31,500
Total liabilities and stockholders’ equity ............................... $116,500
(Cash + Accts. rec. = Accts. pay. + Com. stk. + Ret. earn.)
LO 5, BT: AP, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting
© 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only) 1-7
, BRIEF EXERCISE 1.12
BS (a) Notes payable
IS (b) Advertising expense
BS (c) Common stock
BS (d) Cash
IS (e) Service revenue
RE (f) Dividends
LO 5, BT: C, Difficulty: Easy, TOT: 3 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
1-8 © 2022 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 12e, Solutions Manual (For Instructor Use Only)
