,Solution manual for Intermediate Accounting,
13e Canadian, Volume 2 Kieso
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, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
CHAPTER 13
NON-FINANCIAL AND CURRENT LIABILITIES
Learning Objectives
1. Understand the importance of non-financial and current
liabilities from a business perspective.
2. Define liabilities, distinguish financial liabilities from other
liabilities, and identify how they are measured.
3. Define current liabilities and identify and account for common
types of current liabilities.
4. Identify and account for the major types of employee-related
liabilities.
5. Explain the recognition, measurement, and disclosure
requirements for decommissioning and restoration
obligations.
6. Explain the issues and account for product guarantees, other
customer program obligations, and unearned revenue.
7. Explain and account for contingencies and uncertain
commitments, and identify the accounting and reporting
requirements for guarantees and commitments.
8. Indicate how non-financial and current liabilities are
presented and analyzed.
9. Identify differences in accounting between IFRS and ASPE,
and what changes are expected in the near future.
Solutions Manual 13-1 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
Summary of Questions by Learning Objectives and Bloom’s Taxonomy
Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT
Brief Exercises
1. 1 C 8. 3 AP 15. 4 AP 22. 5,9 AP 29. 6,9 AP
2. 3 AP 9. 3 AP 16. 4 AP 23. 6 AP 30. 7,9 AP
3. 3 AP 10. 3 AP 17. 4 AP 24. 6 AP 31. 7 AP
4. 3 AP 11. 3 AP 18. 4 AP 25. 6 AP 32. 8 AN
5. 3 AP 12. 3 AP 19. 4 AP 26. 6 AP 33. 8 AN
6. 2,3 AP 13. 3,9 C 20. 2,5 AP 27. 6 AP 34. 8 AN
7. 3 AP 14. 3,9 C 21. 5,9 AP 28. 6 AP 34. 8 AN
Exercises
1. 2,9 C 8. 3,8,9 AP 15. 5,9 AP 22. 6,9 AP 29. 7,9 C
2. 3 AP 9. 3,8,9 AP 16. 5,9 AP 23. 6,9 AP 30. 8 AN
3. 3 AP 10. 4 AP 17. 6 AP 24. 6,9 AP 31. 8 AN
4. 3,9 AP 11. 4 AP 18. 3,4,6 AP 25. 6 AP 32. 8 AN
5. 3 AP 12. 4 AP 19. 6,9 AP 26. 6,9 AP
6. 3,9 AP 13. 4 AP 20. 6,8,9 AP 27. 6 AP
7. 3,4,6,7,9 C 14. 4,9 AN 21. 6,9 AP 28. 6 AP
Problems
1. 2,3,5,9 AP 5. 4 AP 9. 6,7,9 AP 13. 6,9 AP 17. 7,8,9 AP
2. 2,3 AP 6. 4 AP 10. 6,7,10 AP 14. 6,8,9 AP
3. 2,3,4,6,9 AP 7. 4,9 AN 11. 6,8 AP 15. 6,9 AP
4. 2,3,5,6 AP 8. 5,7 AP 12. 6,7,9 AP 16. 7,8 AP
Cases
1. 6,9 AN 2. 3.
Integrated Cases
1. 7 AN 2. 7 AP 3. 7 AP
Research and Analysis
1. 5,6,7 AP 3. 6,7,8 AP 5. 6,7 AP 6. 4,8 AP 7. 2,6,7 AN
2. 3,7,8 AP 4. 3,5,6,8 AP
Solutions Manual 13-2 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
Legend: The following abbreviations will appear throughout the solutions
manual file.
LO Learning objective
BT Bloom's Taxonomy
K Knowledge
C Comprehension
AP Application
AN Analysis
S Synthesis
E Evaluation
Difficulty: Level of difficulty
S Simple
M Moderate
C Complex
Time: Estimated time to complete in minutes
AACSB Association to Advance Collegiate Schools of Business
Communication Communication
Ethics Ethics
Analytic Analytic
Tech. Technology
Diversity Diversity
Reflec. Thinking Reflective Thinking
CPA CM CPA Canada Competency Map
Ethics Professional and Ethical Behaviour
PS and DM Problem-Solving and Decision-Making
Comm. Communication
Self-Mgt. Self-Management
Team & Lead Teamwork and Leadership
Reporting Financial Reporting
Stat. & Gov. Strategy and Governance
Mgt. Accounting Management Accounting
Audit Audit and Assurance
Finance Finance
Tax Taxation
DAIS Data Analytics and Information Systems
Solutions Manual 13-3 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
ASSIGNMENT CLASSIFICATION TABLE
Brief
Topics Exercises Exercises Problems
1& Concept of liabilities; 1, 6, 20 1 1, 2, 3, 4, 7
2. definition, measurement, and
classification.
3. Current liabilities including 2, 3, 4, 5, 6, 2, 3, 4, 5, 6, 7, 8, 1, 2, 3, 4
accounts and notes payable, 7, 8, 9, 10, 9,18
dividends payable, sales and 11, 12, 13,
income tax payable, refund 14
liabilities, and short-term
obligations expected to be
refinanced.
4. Employee-related liabilities. 15, 16, 17, 7, 9, 10, 11, 12, 3, 5, 6, 7
18, 19 13, 14, 18
5. Asset retirement obligations. 20, 21, 22 15, 16 1, 4, 8
6. Unearned revenue. 23, 24 7, 17, 18 8, 9, 16
6. Product guarantees, 25, 26, 27, 7, 19, 20, 21, 22, 3, 4, 10, 11, 12,
warranties, and other 28, 29 23, 24, 25, 26, 27, 13, 14, 15
customer programs. 28
7. Contingencies, guarantees, 30, 31 7, 29 8, 9, 12, 16, 17
and uncertain commitments.
8. Presentation and analysis. 32, 33, 34, 8, 9, 20, 30, 31, 32 3, 8, 9, 11, 16,
35 17
9. IFRS and ASPE compared. 13,14, 21, 1, 4, 6, 7, 8, 9, 14, 1, 3, 7, 9, 12,
22, 29, 30, 15, 16, 19, 20, 21, 13, 14, 15, 17
31 22, 24, 29
Solutions Manual 13-4 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
ASSIGNMENT CHARACTERISTICS TABLE
Level of Time
Item Description Difficulty (minutes)
E13.1 Balance sheet classification of various Simple 10-15
liabilities
E13.2 Accounts and notes payable Simple 10-15
E13.3 Notes payable and reversing entry Moderate 15-20
E13.4 Liability for returnable containers Moderate 15-20
E13.5 Entries for sales taxes Moderate 25-35
E13.6 Income tax Moderate 15-20
E13.7 Financial statement impact of liability Moderate 30-35
transactions
E13.8 Refinancing of short-term debt Moderate 20-25
E13.9 Refinancing of short-term debt Simple 10-15
E13.10 Payroll tax entries Moderate 15-20
E13.11 Compensated absences–vacation and Moderate 40-45
sick pay
E13.12 Compensated absences–vacation and Moderate 25-30
sick pay
E13.13 Compensated absences–parental Moderate 20-25
benefits
E13.14 Bonus calculation and income Complex 15-20
statement preparation
E13.15 Asset retirement obligation Moderate 40-45
E13.16 Asset retirement obligation Moderate 40-50
E13.17 Unearned revenue Simple 10-15
E13.18 HST and payroll Moderate 15-20
E13.19 Warranties–assurance-type and cash Simple 10-15
basis
E13.20 Warranties–assurance-type Moderate 15-20
E13.21 Warranties–assurance-type and Moderate 20-25
service-type
E13.22 Warranties–assurance-type and Moderate 25-30
service-type
E13.23 Customer loyalty programs Moderate 15-20
E13.24 Premium entries Moderate 15-20
E13.25 Premiums Moderate 20-30
E13.26 Premiums Simple 10-15
E13.27 Coupons and rebates Moderate 15-20
E13.28 Customer returns Simple 10-15
E13.29 Contingencies and commitments Moderate 20-30
E13.30 Ratio calculations and discussion Simple 15-20
E13.31 Ratio calculations and analysis Simple 20-25
E13.32 Ratio calculations and effect of Moderate 15-25
transactions
Solutions Manual 13-5 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
ASSIGNMENT CHARACTERISTICS TABLE (CONTINUED)
Level of Time
Item Description Difficulty (minutes)
P13.1 Current liability entries and adjustments Simple 40-50
P13.2 Instalment notes Moderate 40-45
P13.3 Current liabilities: various Complex 45-55
P13.4 Asset retirement obligation and Moderate 25-35
warranties
P13.5 Payroll tax entries Moderate 25-35
P13.6 Payroll tax entries Moderate 35-45
P13.7 Bonus calculation Moderate 35-40
P13.8 Loss contingencies: entries and essay. Moderate 45-50
P13.9 Advances, self-insurance, loss Moderate 35-40
contingencies, guarantees, and
commitments
P13.10 Assurance-type warranties and cash Simple 25-30
basis
P13.11 Assurance-type and service-type Moderate 20-30
warranties
P13.12 Warranty calculations Moderate 30-35
P13.13 Premium entries Moderate 30-45
P13.14 Premium entries and financial statement Moderate 30-45
presentation
P13.15 Warranties and premiums Simple 35-40
P13.16 Guarantees and contingencies Complex 35-45
P13.17 Loss contingencies: entries and essays Moderate 45-50
Solutions Manual 13-6 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 13.1
(a) Working capital is the excess of total current assets over total
current liabilities. It represents the liquid buffer that is
available to meet the financial demands of the company’s
operating cycle. Current liabilities place a demand on the
company’s current assets. Management of the due dates of
current liabilities and management of current assets to
generate cash on a timely basis are important for effective
management of business operations. Effective management
of working capital to achieve high liquidity may also
contribute to positive cash from operating activities, as seen
on the statement of cash flows.
(b) Wellson can improve its management of working capital by
focusing on the management of current liabilities as well as
current assets. For example, if Wellson has a cash flow
shortage, it can take advantage of the full credit period
extended by its suppliers. As another example, Wellson may
also time the due dates of short-term notes payable to
coincide with expected periods of positive cash flow.
LO 1 BT: C Difficulty: M Time: 10 min. AACSB: None CPA: cpa-t001 CM: Reporting
Solutions Manual 13-7 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
BRIEF EXERCISE 13.2
07/01 Purchases .................................................. 60,000
Accounts Payable............................ 60,000
To record purchase on account
Freight in.................................................... 1,200
Cash .................................................. 1,200
To record freight on purchase
07/03 Accounts Payable ..................................... 6,000
Purchase Returns and Allowances 6,000
07/10 Accounts Payable ..................................... 54,000
Cash ($54,000 X 98%) ...................... 52,920
Purchase Discounts......................... 1,080
LO 3 BT: AP Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
BRIEF EXERCISE 13.3
07/01 Inventory .................................................... 60,000
Accounts Payable............................ 60,000
To record purchase on account
Inventory .................................................... 1,200
Cash .................................................. 1,200
To record freight on purchase
07/03 Accounts Payable ..................................... 6,000
Inventory........................................... 6,000
07/10 Accounts Payable ..................................... 54,000
Cash ($54,000 X 98%) ...................... 52,920
Inventory........................................... 1,080
LO 3 BT: AP Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
Solutions Manual 13-8 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
13e Canadian, Volume 2 Kieso
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
CHAPTER 13
NON-FINANCIAL AND CURRENT LIABILITIES
Learning Objectives
1. Understand the importance of non-financial and current
liabilities from a business perspective.
2. Define liabilities, distinguish financial liabilities from other
liabilities, and identify how they are measured.
3. Define current liabilities and identify and account for common
types of current liabilities.
4. Identify and account for the major types of employee-related
liabilities.
5. Explain the recognition, measurement, and disclosure
requirements for decommissioning and restoration
obligations.
6. Explain the issues and account for product guarantees, other
customer program obligations, and unearned revenue.
7. Explain and account for contingencies and uncertain
commitments, and identify the accounting and reporting
requirements for guarantees and commitments.
8. Indicate how non-financial and current liabilities are
presented and analyzed.
9. Identify differences in accounting between IFRS and ASPE,
and what changes are expected in the near future.
Solutions Manual 13-1 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
Summary of Questions by Learning Objectives and Bloom’s Taxonomy
Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT
Brief Exercises
1. 1 C 8. 3 AP 15. 4 AP 22. 5,9 AP 29. 6,9 AP
2. 3 AP 9. 3 AP 16. 4 AP 23. 6 AP 30. 7,9 AP
3. 3 AP 10. 3 AP 17. 4 AP 24. 6 AP 31. 7 AP
4. 3 AP 11. 3 AP 18. 4 AP 25. 6 AP 32. 8 AN
5. 3 AP 12. 3 AP 19. 4 AP 26. 6 AP 33. 8 AN
6. 2,3 AP 13. 3,9 C 20. 2,5 AP 27. 6 AP 34. 8 AN
7. 3 AP 14. 3,9 C 21. 5,9 AP 28. 6 AP 34. 8 AN
Exercises
1. 2,9 C 8. 3,8,9 AP 15. 5,9 AP 22. 6,9 AP 29. 7,9 C
2. 3 AP 9. 3,8,9 AP 16. 5,9 AP 23. 6,9 AP 30. 8 AN
3. 3 AP 10. 4 AP 17. 6 AP 24. 6,9 AP 31. 8 AN
4. 3,9 AP 11. 4 AP 18. 3,4,6 AP 25. 6 AP 32. 8 AN
5. 3 AP 12. 4 AP 19. 6,9 AP 26. 6,9 AP
6. 3,9 AP 13. 4 AP 20. 6,8,9 AP 27. 6 AP
7. 3,4,6,7,9 C 14. 4,9 AN 21. 6,9 AP 28. 6 AP
Problems
1. 2,3,5,9 AP 5. 4 AP 9. 6,7,9 AP 13. 6,9 AP 17. 7,8,9 AP
2. 2,3 AP 6. 4 AP 10. 6,7,10 AP 14. 6,8,9 AP
3. 2,3,4,6,9 AP 7. 4,9 AN 11. 6,8 AP 15. 6,9 AP
4. 2,3,5,6 AP 8. 5,7 AP 12. 6,7,9 AP 16. 7,8 AP
Cases
1. 6,9 AN 2. 3.
Integrated Cases
1. 7 AN 2. 7 AP 3. 7 AP
Research and Analysis
1. 5,6,7 AP 3. 6,7,8 AP 5. 6,7 AP 6. 4,8 AP 7. 2,6,7 AN
2. 3,7,8 AP 4. 3,5,6,8 AP
Solutions Manual 13-2 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
Legend: The following abbreviations will appear throughout the solutions
manual file.
LO Learning objective
BT Bloom's Taxonomy
K Knowledge
C Comprehension
AP Application
AN Analysis
S Synthesis
E Evaluation
Difficulty: Level of difficulty
S Simple
M Moderate
C Complex
Time: Estimated time to complete in minutes
AACSB Association to Advance Collegiate Schools of Business
Communication Communication
Ethics Ethics
Analytic Analytic
Tech. Technology
Diversity Diversity
Reflec. Thinking Reflective Thinking
CPA CM CPA Canada Competency Map
Ethics Professional and Ethical Behaviour
PS and DM Problem-Solving and Decision-Making
Comm. Communication
Self-Mgt. Self-Management
Team & Lead Teamwork and Leadership
Reporting Financial Reporting
Stat. & Gov. Strategy and Governance
Mgt. Accounting Management Accounting
Audit Audit and Assurance
Finance Finance
Tax Taxation
DAIS Data Analytics and Information Systems
Solutions Manual 13-3 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
ASSIGNMENT CLASSIFICATION TABLE
Brief
Topics Exercises Exercises Problems
1& Concept of liabilities; 1, 6, 20 1 1, 2, 3, 4, 7
2. definition, measurement, and
classification.
3. Current liabilities including 2, 3, 4, 5, 6, 2, 3, 4, 5, 6, 7, 8, 1, 2, 3, 4
accounts and notes payable, 7, 8, 9, 10, 9,18
dividends payable, sales and 11, 12, 13,
income tax payable, refund 14
liabilities, and short-term
obligations expected to be
refinanced.
4. Employee-related liabilities. 15, 16, 17, 7, 9, 10, 11, 12, 3, 5, 6, 7
18, 19 13, 14, 18
5. Asset retirement obligations. 20, 21, 22 15, 16 1, 4, 8
6. Unearned revenue. 23, 24 7, 17, 18 8, 9, 16
6. Product guarantees, 25, 26, 27, 7, 19, 20, 21, 22, 3, 4, 10, 11, 12,
warranties, and other 28, 29 23, 24, 25, 26, 27, 13, 14, 15
customer programs. 28
7. Contingencies, guarantees, 30, 31 7, 29 8, 9, 12, 16, 17
and uncertain commitments.
8. Presentation and analysis. 32, 33, 34, 8, 9, 20, 30, 31, 32 3, 8, 9, 11, 16,
35 17
9. IFRS and ASPE compared. 13,14, 21, 1, 4, 6, 7, 8, 9, 14, 1, 3, 7, 9, 12,
22, 29, 30, 15, 16, 19, 20, 21, 13, 14, 15, 17
31 22, 24, 29
Solutions Manual 13-4 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
ASSIGNMENT CHARACTERISTICS TABLE
Level of Time
Item Description Difficulty (minutes)
E13.1 Balance sheet classification of various Simple 10-15
liabilities
E13.2 Accounts and notes payable Simple 10-15
E13.3 Notes payable and reversing entry Moderate 15-20
E13.4 Liability for returnable containers Moderate 15-20
E13.5 Entries for sales taxes Moderate 25-35
E13.6 Income tax Moderate 15-20
E13.7 Financial statement impact of liability Moderate 30-35
transactions
E13.8 Refinancing of short-term debt Moderate 20-25
E13.9 Refinancing of short-term debt Simple 10-15
E13.10 Payroll tax entries Moderate 15-20
E13.11 Compensated absences–vacation and Moderate 40-45
sick pay
E13.12 Compensated absences–vacation and Moderate 25-30
sick pay
E13.13 Compensated absences–parental Moderate 20-25
benefits
E13.14 Bonus calculation and income Complex 15-20
statement preparation
E13.15 Asset retirement obligation Moderate 40-45
E13.16 Asset retirement obligation Moderate 40-50
E13.17 Unearned revenue Simple 10-15
E13.18 HST and payroll Moderate 15-20
E13.19 Warranties–assurance-type and cash Simple 10-15
basis
E13.20 Warranties–assurance-type Moderate 15-20
E13.21 Warranties–assurance-type and Moderate 20-25
service-type
E13.22 Warranties–assurance-type and Moderate 25-30
service-type
E13.23 Customer loyalty programs Moderate 15-20
E13.24 Premium entries Moderate 15-20
E13.25 Premiums Moderate 20-30
E13.26 Premiums Simple 10-15
E13.27 Coupons and rebates Moderate 15-20
E13.28 Customer returns Simple 10-15
E13.29 Contingencies and commitments Moderate 20-30
E13.30 Ratio calculations and discussion Simple 15-20
E13.31 Ratio calculations and analysis Simple 20-25
E13.32 Ratio calculations and effect of Moderate 15-25
transactions
Solutions Manual 13-5 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
ASSIGNMENT CHARACTERISTICS TABLE (CONTINUED)
Level of Time
Item Description Difficulty (minutes)
P13.1 Current liability entries and adjustments Simple 40-50
P13.2 Instalment notes Moderate 40-45
P13.3 Current liabilities: various Complex 45-55
P13.4 Asset retirement obligation and Moderate 25-35
warranties
P13.5 Payroll tax entries Moderate 25-35
P13.6 Payroll tax entries Moderate 35-45
P13.7 Bonus calculation Moderate 35-40
P13.8 Loss contingencies: entries and essay. Moderate 45-50
P13.9 Advances, self-insurance, loss Moderate 35-40
contingencies, guarantees, and
commitments
P13.10 Assurance-type warranties and cash Simple 25-30
basis
P13.11 Assurance-type and service-type Moderate 20-30
warranties
P13.12 Warranty calculations Moderate 30-35
P13.13 Premium entries Moderate 30-45
P13.14 Premium entries and financial statement Moderate 30-45
presentation
P13.15 Warranties and premiums Simple 35-40
P13.16 Guarantees and contingencies Complex 35-45
P13.17 Loss contingencies: entries and essays Moderate 45-50
Solutions Manual 13-6 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 13.1
(a) Working capital is the excess of total current assets over total
current liabilities. It represents the liquid buffer that is
available to meet the financial demands of the company’s
operating cycle. Current liabilities place a demand on the
company’s current assets. Management of the due dates of
current liabilities and management of current assets to
generate cash on a timely basis are important for effective
management of business operations. Effective management
of working capital to achieve high liquidity may also
contribute to positive cash from operating activities, as seen
on the statement of cash flows.
(b) Wellson can improve its management of working capital by
focusing on the management of current liabilities as well as
current assets. For example, if Wellson has a cash flow
shortage, it can take advantage of the full credit period
extended by its suppliers. As another example, Wellson may
also time the due dates of short-term notes payable to
coincide with expected periods of positive cash flow.
LO 1 BT: C Difficulty: M Time: 10 min. AACSB: None CPA: cpa-t001 CM: Reporting
Solutions Manual 13-7 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
, Kieso, Weygandt, Warfield, Wiecek, McConomy Intermediate Accounting, Thirteenth Canadian Edition
BRIEF EXERCISE 13.2
07/01 Purchases .................................................. 60,000
Accounts Payable............................ 60,000
To record purchase on account
Freight in.................................................... 1,200
Cash .................................................. 1,200
To record freight on purchase
07/03 Accounts Payable ..................................... 6,000
Purchase Returns and Allowances 6,000
07/10 Accounts Payable ..................................... 54,000
Cash ($54,000 X 98%) ...................... 52,920
Purchase Discounts......................... 1,080
LO 3 BT: AP Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
BRIEF EXERCISE 13.3
07/01 Inventory .................................................... 60,000
Accounts Payable............................ 60,000
To record purchase on account
Inventory .................................................... 1,200
Cash .................................................. 1,200
To record freight on purchase
07/03 Accounts Payable ..................................... 6,000
Inventory........................................... 6,000
07/10 Accounts Payable ..................................... 54,000
Cash ($54,000 X 98%) ...................... 52,920
Inventory........................................... 1,080
LO 3 BT: AP Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
Solutions Manual 13-8 Chapter 13
Copyright © 2022 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
