Chapter 1 Solutions - Chapter 1 INTRODUCTION TO ACCOUNTING...

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Chapter 1 INTRODUCTION TO ACCOUNTING AND BUSINESS PRACTICE EXERCISES PE 1–1A $81,000. Under the cost concept, the land should be recorded at the cost to Snap Repair Service. PE 1–1B $44,000. Under the cost concept, the land should be recorded at the cost to Terrier Repair Service. PE 1–2A a. A = L + OE b. A = L + OE $475,000 = $115,000 + OE +$90,000 = $28,000 + OE OE = $360,000 OE = +$62,000 OE on December 31, 2010 = $422,000 = $360,000 + $62,000 PE 1–2B a. A = L + OE b. A = L + OE $750,000 = $293,000 + OE +$75,000 = –$30,000 + OE OE = $457,000 OE = +$105,000 OE on December 31, 2010 = $562,000 = $457,000 + $105,000 PE 1–3A (2) Expense (Advertising Expense) increases by $900; Asset (Cash) decreases by $900. (3) Asset (Supplies) increases by $600; Liability (Accounts Payable) increases by $600. (4) Asset (Accounts Receivable) increases by $9,000; Revenue (Delivery Service
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Fees) increases by $9,000. (5) Asset (Cash) increases by $5,500; Asset (Accounts Receivable) decreases by $5,500. PE 1–3B (2) Asset (Cash) decreases by $1,500; Liability (Accounts Payable) decreases by $1,500. (3) Asset (Accounts Receivable) increases by $11,500; Revenue (Delivery Service Fees) increases by $11,500. (4) Asset (Cash) increases by $2,700; Asset (Accounts Receivable) decreases by $2,700. (5) Asset (Cash) decreases by $2,000; Dividends increase by $2,000. PE 1–4A IMPECCABLE TRAVEL SERVICE Income Statement For the Year Ended November 30, 2010 Fees earned ....................................................................... $754,000 Expenses: Wages expense ........................................................... $450,000 Office expense ............................................................. 313,300 Miscellaneous expense .............................................. 12,700 Total expenses ........................................................ 776,000 Net loss .............................................................................. $ (22,000 ) PE 1–4B EXPRESS TRAVEL SERVICE Income Statement For the Year Ended June 30, 2010 Fees earned ....................................................................... $475,000 Expenses: Wages expense ........................................................... $239,000 Office expense ............................................................. 111,000 Miscellaneous expense .............................................. 8,000 Total expenses ........................................................ 358,000 Net income ......................................................................... $ 117,000
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PE 1–5A IMPECCABLE TRAVEL SERVICE Retained Earnings Statement For the Year Ended November 30, 2010 Retained earnings, December 1, 2009 ............................ $305,000 Net loss for the year ......................................................... $ (22,000) Less dividends .................................................................. (20,000 ) Decrease in retained earnings ........................................ (42,000 ) Retained earnings, November 30, 2010 .......................... $ 263,000 PE 1–5B EXPRESS TRAVEL SERVICE Retained Earnings Statement For the Year Ended June 30, 2010
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