1. CHAPTER 2The Recording ProcessASSIGNMENT CLASSIFICATION TABLEBrief A BStudy ObjectivesQuestionsExercises Do It!ExercisesProblemsProblems1.Explain what anaccount 1 1is and how it helps intherecording process.2.Define debits andcredits2, 3, 4, 5, 1, 2, 5 1 2, 4, 6, 1A, 2A, 1B, 2B,and explain their use in 6, 7, 8, 9, 7, 14 3A, 5A 3B, 5Brecording business 14, 21transactions.3.Identify the basic stepsin 10, 19 4 6, 7the recording process.4.Explain what a journalis11, 12, 13, 3, 6 2 3, 5, 6, 7 1A, 2A, 1B, 2B,and how it helps in the 14, 16 10, 11,123A, 5A 3B, 5Brecording process.5.Explain what a ledger is 17 8and how it helps in therecording process.6.Explain what posting is 15 7, 8 3 9, 122A, 3A,5A2B, 3B,5Band how it helps in therecording process.7.Prepare a trial balance 18, 20 9, 10 4 9, 10, 11, 2A, 3A, 2B, 3B,and explain itspurposes.13, 14,15 4A, 5A 4B, 5B

2. Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-1 3. ASSIGNMENT CHARACTERISTICS TABLEProblemDifficultyTimeAllottedNumber Description Level (min.)1A Journalize a series of transactions. Simple 20302A Journalize transactions, post, and prepare a trial balance. Simple 30403AJournalize and post transactions, and prepare a trialbalance.Moderate 40504A Prepare a correct trial balance.Moderate 30405A Journalize transactions, post, and prepare a trial balance.Moderate 40501B Journalize a series of transactions. Simple 20302B Journalize transactions, post, and prepare a trial balance. Simple 30403B Journalize transactions, post, and prepare a trial balance.Moderate 40504B Prepare a correct trial balance.Moderate 30405B Journalize transactions, post, and prepare a trial balance.Moderate 40502-2 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (For Instructor UseOnly) 4. WEYGANDT IFRS 1ECHAPTER 2THE RECORDING PROCESSNumber SO BT DifficultyTime(min.)BE1 2 C Simple 68BE2 2 C Simple 46BE3 4 AP Simple 46BE4 3 C Moderate 46BE5 2 C Simple 68BE6 4 AP Simple 46BE7 6 AP Simple 46BE8 6 AP Simple 46BE9 7 AP Simple 46BE10 7 AN Moderate 68DI1 2 C Simple 35DI2 4 AP Simple 35DI3 6 AP Simple 24DI4 7 AP Simple 68EX1 1 K Simple 24EX2 2 C Simple 1015EX3 4 AP Simple 810EX4 2 C Simple 68EX5 4 AP Simple 68EX6 24 AP Simple 68EX7 24 AP Simple 810EX8 5 K Simple 24EX9 6, 7 AP Simple 1012EX10 4, 7 AP Moderate 1012EX11 4, 7 AP Moderate 1215EX12 4, 6 AP Moderate 1215EX13 7 AN Moderate 68EX14 2, 7 AP Simple 810EX15 7 C Simple 46Copyright 2011 John Wiley & Sons, Inc. Weygandt,IFRS, 1/e, Solutions Manual (For Instructor Use Only)2-3 5. THE RECORDING PROCESS (Continued)Number SO BT Difficulty Time (min.)P1A 2, 4 AP Simple 2030P2A 2, 4, 6, 7 AP Simple 3040P3A 2, 4, 6, 7 AP Moderate 4050P4A 7 AN Moderate 3040P5A 2, 4, 6, 7 AP Moderate 4050P1B 2, 4 AP Simple 2030P2B 2, 4, 6, 7 AP Simple 3040P3B 2, 4, 6, 7 AP Moderate 4050P4B 7 AN Moderate 3040P5B 2, 4, 6, 7 AP Moderate 4050BYP1 2 C Simple 810BYP2 2, 6 AN Simple 810BYP3 AP Simple 1520BYP4 6, 7 AP, S Moderate 2030BYP5 3, 6 S Simple 1015BYP6 7 AN, E Moderate 10152-4 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (For InstructorUse Only) 6. Co2-5CorrelationChartbetweenBloomsTaxonomy,StudyObjectivesandEnd-of-ChapterExercisesandProblemsStudy 1.Explain is and how recording 2.Define andexplain recordingbusiness 3.Identify the recording 4 Explain 7. . andBLOOMhow it helps in therecordingprocess.5.STAXONExplain what a ledger isandhow it helps in therecordingprocess.6.OMYExplain what posting isandhow it helps in therecordingprocess.7.TABLPrepare a trial balanceandEexplain its purposes.Broadening Your Perspective 8. ANSWERS TO QUESTIONS1. A T account has the following parts: (a) the title, (b) the left or debit side, and (c) the right or credit side.2. Disagree. The terms debit and credit mean left and right respectively.3. Jeff is incorrect. The double-entry system merely records the dual effect of a transaction on theaccounting equation. A transaction is not recorded twice; it is recorded once, with a dual effect.4. Maria is incorrect. A debit balance only means that debit amounts exceed credit amounts in anaccount. Conversely, a credit balance only means that credit amounts are greater than debitamounts in an account. Thus, a debit or credit balance is neither favorable nor unfavorable.5. (a) Asset accounts are increased by debits and decreased by credits.(2) Liability accounts are decreased by debits and increased by credits.(3) Revenues, share capital, and retained earnings are increased by credits and decreased bydebits. Expenses and dividends are increased by debits and decreased by credits.6. (a) Accounts Receivabledebit balance.(2) Cashdebit balance.(3) Dividendsdebit balance.(4) Accounts Payablecredit balance.(5) Service Revenuecredit balance.(6) Salaries Expensedebit balance.(7) Share CapitalOrdinarycredit balance.7. (a) Accounts Receivableassetdebit balance.(2) Accounts Payableliabilitycredit balance(3) Equipmentassetdebit balance.(4) Dividendsequitydebit balance.(5) Suppliesassetdebit balance.8. (a) Debit Supplies and credit Accounts Payable.(2) Debit Cash and credit Notes Payable.(3) Debit Salaries Expense and credit Cash.9. (1) Cashboth debit and credit entries.(2) Accounts Receivableboth debit and credit entries.(3) Dividendsdebit entries only.(4) Accounts Payableboth debit and credit entries.(5) Salaries Expensedebit entries only.(6) Service Revenuecredit entries only.10. The basic steps in the recording process are:1. Analyze each transaction for its effect on the accounts.2. Enter the transaction information in a journal.3. Transfer the journal information to the appropriate accounts in the ledger.2-6 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (For Instructor UseOnly) 9. Questions Chapter 2 (Continued)11. The advantages of using the journal in the recording process are:(1) It discloses in one place the complete effects of a transaction.(2) It provides a chronological record of all transactions.(3) It helps to prevent or locate errors because the debit and credit amounts for each entry canbe easily compared.12. (a) The debit should be entered first.(2) The credit should be indented.13. When three or more accounts are required in one journal entry, the entry is referred to as acompound entry. An example of a compound entry is the purchase of equipment, part of which ispaid for with cash and the remainder is on account.14. (a) No, debits and credits should not be recorded directly in the ledger.(2) The advantages of using the journal are:1. It discloses in one place the complete effects of a transaction.2. It provides a chronological record of all transactions.3. It helps to prevent or locate errors because the debit and credit amounts for each entrycan be easily compared.15. The advantage of the last step in the posting process is to indicate that the item has been posted.16. (a) Cash 9,000Share CapitalOrdinary 9,000(Issued shares for cash)(b) Prepaid Insurance 800Cash. 800(Paid one-year insurance policy)(c) Supplies 2,000Accounts Payable 2,000(Purchased supplies on account)(d) Cash 7,500Service Revenue 7,500(Received cash for services rendered)17. (a) The entire group of accounts maintained by a company, including all the asset, liability, andequity accounts, is referred to collectively as the ledger.(2) A chart of accounts is a list of accounts and the account numbers that identify their location inthe ledger. The chart of accounts is important, particularly for a company that has a largenumber of accounts, because it helps organize the accounts and define the level of detail thata company desires in its accounting system.Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-7 10. Questions Chapter 2 (Continued)18. A trial balance is a list of accounts and their balances at a given time. The primary purpose of atrial balance is to prove (check) that the debits equal the credits after posting. A trial balance alsofacilitates the discovery of errors in journalizing and posting. In addition, it is useful in preparingfinancial statements.19. No, Jim is not correct. The proper sequence is as follows:(2) Business transaction occurs.(3) Information entered in the journal.(a) Debits and credits posted to the ledger.(e) Trial balance is prepared.(4) Financial statements are prepared.20. (a) The trial balance would balance.(2) The trial balance would not balance.21. The normal balances are Cash debit, Accounts Payable credit, and Interest Expense debit.2-8 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (For Instructor UseOnly) 11. SOLUTIONS TO BRIEF EXERCISESBRIEF EXERCISE 2-1(a) (b) (c)Debit CreditNormalEffect EffectBalance1.Accounts PayableDecreaseIncreaseCredit2.Advertising ExpenseIncreaseDecreaseDebit3.Service RevenueDecreaseIncreaseCredit4.Accounts ReceivableIncreaseDecreaseDebit5.Share CapitalOrdinaryDecreaseIncreaseCredit6.DividendsIncreaseDecreaseDebitBRIEF EXERCISE 2-2Account Debited Account CreditedJune 1 CashShare CapitalOrdinary2 Equipment Accounts Payable3 Rent Expense CashAccounts12Receivable Service RevenueBRIEF EXERCISE 2-3June 1 Cash 5,000Share CapitalOrdinary 5,0002 Equipment 900Accounts Payable 9003 Rent Expense 800Cash 800 12. 12 Accounts Receivable 300Service Revenue 300Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-9 13. BRIEF EXERCISE 2-4The basic steps in the recording process are:1. Analyze each transaction. In this step, business documents areexamined to determine the effects of the transaction on theaccounts.2. Enter each transaction in a journal. This step is calledjournalizing and it results in making a chronological record of thetransactions.3. Transfer journal information to ledger accounts. This step iscalled posting. Posting makes it possible to accumulate theeffects of jour-nalized transactions on individual accounts.BRIEF EXERCISE 2-5(1) Effect on AccountingEquationAug. 1 The asset Cash is increased;the equity account ShareCapital is increased.4 The asset PrepaidInsurance is increased;the asset Cash isdecreased.16 The asset Cash isincreased; the revenueService Revenue isincreased.27 The expense SalariesExpense is increased; theasset Cash is decreased.(2) Debit-CreditAnalysisDebitsincreaseassets:debit CashR$8,000.Credits increaseequity: credit ShareCapitalOrdinaryR$8,000.Debits increaseassets:debit PrepaidInsurance R$1,800.Credits decreaseassets:credit CashR$1,800.Debitsincreaseassets:debitCashR$800.Creditsincreaserevenues:creditServiceRevenueR$800.Debitsincreaseexpenses:debit SalariesExpenseR$1,000.Creditsdecreaseassets:credit CashR$1,000.2-10Copyright 2011 John Wiley &Sons, Inc. Weygandt, IFRS, 1/e,Solutions Manual (For Instructor UseOnly) 14. BRIEF EXERCISE 2-6Aug. 1 Cash 8,000Share CapitalOrdinary 8,0004 Prepaid Insurance 1,800Cash 1,80016 Cash 800Service Revenue 80027 Salaries Expense 1,000Cash 1,000BRIEF EXERCISE 2-7CashServiceRevenue5/12 2,400 5/55,0005/15 3,000 5/153,000Ending Bal.5,400Ending Bal.8,000AccountsReceivable5/5 5,0005/122,400Ending Bal.2,600BRIEF EXERCISE 2-8CashDate Explanation Ref.DebitCredit BalanceMay12 J12,400 2,40015 J13,000 5,400 15. Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS, 1/e, Solutions Manual (For Instructor Use Only) 2-11 16. BRIEF EXERCISE 2-8 (Continued)Accounts ReceivableDate Explanation Ref.Debit CreditBalanceMay 5 J15,000 5,00012J1 2,400 2,600Service RevenueDate Explanation Ref. Debit Credit BalanceMay 5 J1 5,000 5,00015J1 3,000 8,000BRIEF EXERCISE 2-9CLELAND COMPANYTrial BalanceJune 30, 2011DebitCreditCash.......................................................................................... $8,800AccountsReceivable ..........................................................3,000Equipment ..............................................................................17,000AccountsPayable ................................................................$9,000Share CapitalOrdinary....................................................20,000Dividends................................................................................1,200ServiceRevenue...................................................................8,000SalariesExpense..........................................................6,000 17. ........RentExpense ........................................................................1,000$37,000$37,0002-12 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (For Instructor UseOnly) 18. BRIEF EXERCISE 2-10KWUN COMPANYTrial BalanceDecember 31, 2011DebitCreditCash .........................................................................................14,800PrepaidInsurance ............................................................... 3,500AccountsPayable................................................................ 3,000UnearnedRevenue..............................................................2,200Share CapitalOrdinary ...................................................13,000Dividends................................................................................ 4,500ServiceRevenue ..................................................................25,600SalariesExpense .................................................................18,600RentExpense........................................................................2,40043,80043,800SOLUTIONS FOR DO IT! REVIEW EXERCISESDO IT! 2-1Josh would likely need the following accounts in which to record thetransactions necessary to ready his photography studio for openingday:Cash (debit balance) Notes Payable (credit balance)Photography Supplies Accounts Payable(debit balance) (credit balance) 19. Photography Equipment Share CapitalOrdinary (credit balance)(debit balance)Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-13 20. DO IT! 2-2Each transaction that is recorded is entered in the general journal.The three activities would be recorded as follows:1. Cash 8,000Share CapitalOrdinary 8,0002. Photography Supplies 1,100Cash 400Accounts Payable 7003. No entry because no transaction has occurred.DO IT! 2-3Cash4/11,6004/166004/33,4004/203004/304,100DO IT! 2-4BOARDIN COMPANYTrialBalanceDecember 31, 2011Debit CreditCash....................................................................................R$6,000AccountsReceivable ....................................................8,000Supplies ............................................................................5,000Equipment ........................................................................80,000NotesPayable .................................................................R$20,000AccountsPayable ..........................................................11,000SalariesPayable ................................................. 3,00 21. ............ 0Share Capital25,0Ordinary..............................................00Dividends..........................................................................8,000ServiceRevenue.............................................................88,000SuppliesExpense ......................................................... .2,000SalariesExpense........................................................... .38,000R$147,000 R$147,0002-14 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (For Instructor UseOnly) 22. SOLUTIONS TO EXERCISESEXERCISE 2-11. False. An account is an accounting record of a specific asset,liability, or equity item.2. False. An account shows increases and decreases in the item itrelates to.3. False. Each asset, liability, and equity item has a separateaccount.4. False. An account has a left, or debit side, and a right, or creditside.5. True.Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-15 23. 2-16Copyright2011ohnWileyJ&Sons,nc.Weygandt,IIFRS,1/e,SolutionsManua 24. Forl(nstIuctorUsreOnly) 25. EXERCISE2-2EXERCISE 2-3General Journal J1DateAccount Titles andExplanationRef. Debit CreditJan.2Cash............................................................. 10,000Share CapitalOrdinary.............. 10,0003Equipment ................................................. 4,000Cash.................................................... 4,0009Supplies ..................................................... 500 26. AccountsPayable .......................... 50011AccountsReceivable ............................. 1,800ServiceRevenue............................. 1,80016AdvertisingExpense.............................. 200Cash.................................................... 20020Cash............................................................. 700AccountsReceivable .................... 70023AccountsPayable ................................... 300Cash.................................................... 30028Dividends................................................... 1,000Cash.................................................... 1,000EXERCISE 2-4Oct. 1 Debits increase assets: debit Cash 150,000.Credits increase equity: credit Share CapitalOrdinary150,000.2 No transaction.3 Debits increase assets: debit Office Furniture 19,000.Credits increase liabilities: credit Accounts Payable19,000.Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-17 27. EXERCISE 2-4 (Continued)Oct. 6 Debits increase assets: debit Accounts Receivable32,000. Credits increase revenues: credit ServiceRevenue 32,000.27 Debits decrease liabilities: debit Accounts Payable7,000. Credits decrease assets: credit Cash 7,000.30 Debits increase expenses: debit Salaries Expense25,000. Credits decrease assets: credit Cash25,000.EXERCISE 2-5General JournalDateAccount Titles andExplanationRef. Debits CreditOct.1Cash ............................................................150,000Share CapitalOrdinary............ 150,0002 No entry.3OfficeFurniture ....................................... 19,000AccountsPayable ........................ 19,0006AccountsReceivable............................. 32,000ServiceRevenue........................... 32,00027AccountsPayable................................... 7,000Cash.................................................. 7,00030SalariesExpense .................................... 25,000Cash.................................................. 25,0002-18 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (For 28. Instructor Use Only) 29. EXERCISE 2-6(1) 1. Increase the asset Cash, increase the liability NotesPayable.2. Increase the asset Computer, decrease the asset Cash.3. Increase the asset Supplies, increase the liability AccountsPayable.(b)1.Cash ............................................................................. 50,000NotesPayable ................................................... 50,0002.Computer.................................................................... 25,000Cash ..................................................................... 25,0003.Supplies ...................................................................... 7,000AccountsPayable............................................ 7,000EXERCISE 2-7(1) Assets = Liabilities + Equity1. + + (Issue shares)2. (Expense)3. + + (Revenue)4. (Dividends)(b)1. Cash ............................................................................. 4,000Share CapitalOrdinary ............................... 4,0002.RentExpense............................................................ 1,100Cash ..................................................................... 1,1003.AccountsReceivable.............................................. 5,200ConsultingRevenue....................................... 5,2004. Dividends.................................................................... 700Cash ..................................................................... 700EXERCISE 2-8 30. 1. False. The general ledger contains all the asset, liability, andequity accounts.2. True.3. False. The accounts in the general ledger are arranged infinancial statement order: first the statement of financialposition accounts followed by the income statement accounts.4. True.5. False. The general ledger is not a book of original entry;transactions are first recorded in the general journal, then inthe general ledger.Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-19 31. EXERCISE 2-9(a)CashAug.1 5,000Aug.121,000102,40031900Bal. 7,300Accounts ReceivableAug. 25 1,600 Aug. 31900Bal. 700Office EquipmentAug. 12 5,000Notes PayableAug. 124,000Share CapitalOrdinaryAug. 1 5,000Service RevenueAug. 10 2,40025 1,600Bal. 4,000 32. (b)TERESA GONZALEZ, INVESTMENTBROKERTrial BalanceAugust 31,2011Cash .....................................................................................AccountsReceivable......................................................OfficeEquipment .............................................................NotesPayable ...................................................................Share CapitalOrdinary................................................ServiceRevenue .............................................................2-20 Copyright 2011 John Wiley& Sons, Inc.Weygandt, IFRS,1/e, SolutionsManual (ForInstructor Use Only) 33. EXERCISE 2-10(a)General JournalDateAccount Titles andExplanationRef. Debit CreditApr.1Cash.............................................................. 15,000Share CapitalOrdinary................... 15,000(Issued shares for cash)12Cash.............................................................. 900ServiceRevenue.................................. 900(Received cash forservices provided)15SalariesExpense...................................... 600Cash......................................................... 600(Paid salaries to date)25AccountsPayable .................................... 1,500Cash......................................................... 1,500(Paid creditors on account)29Cash.............................................................. 400AccountsReceivable ......................... 400(Received cash in paymentof account)30Cash.............................................................. 1,000UnearnedRevenue ............................. 1,000(Received cash for futureservices) 34. Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS, 1/e, Solutions Manual (For Instructor Use Only) 2-21EXERCISE 2-10 (Continued)SIMON LANDSCAPING(b)COMPANYTrial BalanceApril 30, 2011DebitCreditCash . .. .. ......... ............ .. .. .......... .. ........ ....... .. .. ............ ........... .. .$15,200AccountsReceivable........................................................ 2,800Supplies ................................................................................ 1,800AccountsPayable.............................................................. $ 300UnearnedRevenue............................................................1,000Share CapitalOrdinary .................................................15,000ServiceRevenue ................................................................4,100SalariesExpense ............................................................... 600$20,400$20,400EXERCISE 2-11(a) Oct.1Cash........................................................................ 5,000Share CapitalOrdinary ..........................5,000(Issued shares for cash)10Cash........................................................................ 650ServiceRevenue......................................... 650(Received cash for servicesprovided) 35. 10Cash........................................................................ 4,000NotesPayable..............................................4,000(Obtained loan from bank)20Cash........................................................................ 500AccountsReceivable ................................ 500(Received cash in payment ofaccount)20AccountsReceivable ........................................ 940ServiceRevenue......................................... 940(Billed clients for servicesprovided)2-22 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 36. EXERCISE 2-11(Continued)(b) HEEREY CO.Trial BalanceOctober 31,2011DebitCreditCash................................................................................. $9,200AccountsReceivable .................................................1,240Supplies.......................................................................... 400Furniture.........................................................................2,000NotesPayable............................................................... $4,000AccountsPayable ....................................................... 500Share CapitalOrdinary...........................................7,000Dividends ....................................................................... 300ServiceRevenue..........................................................2,390Store WagesExpense................................................ 500RentExpense .............................................................. . 250$13,890$13,890EXERCISE 2-12(a)General Journal J1DateAccount Titles andExplanationRef. Debit CreditSept.1Cash...........................................................101 10,000Share CapitalOrdinary ............311 10,000 37. 5Equipment................................................157 12,000Cash..................................................101 5,000AccountsPayable ........................201 7,00025AccountsPayable .................................201 3,000Cash..................................................101 3,00030Dividends .................................................332 500Cash..................................................101 500Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-23 38. EXERCISE 2-12(Continued)(b)CashNo.101Date Explanation Ref. Debit CreditBalanceSept. 1 J1 10,000 10,0005 J1 5,000 5,00025 J1 3,000 2,00030 J1 500 1,500EquipmentNo.157Date Explanation Ref. Debit CreditBalanceSept. 5 J1 12,000 12,000Accounts PayableNo.201Date Explanation Ref. Debit CreditBalanceSept. 5 J1 7,000 7,00025 J1 3,000 4,000Share CapitalOrdinaryNo.311Date Explanation Ref. Debit CreditBalanceSept. 1 J1 10,000 10,000DividendsNo.332Date Explanation Ref. Debit CreditBalanceSept. 30 J1 500 500 39. 2-24 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 40. EXERCISE 2-13(a) (b) (c)ErrorInBalance DifferenceLargerColumn1. No $400 Debit2. Yes 3. Yes 4. No 300 Credit5. Yes 6. No 18 CreditEXERCISE 2-14SANFORD DELIVERY SERVICETrial BalanceJuly 31, 2011Cash (82,907 Debit total withoutCashDebitCredit66,340)...............................................................................16,567AccountsReceivable .......................................................... 7,642PrepaidInsurance................................................................ 1,968DeliveryEquipment .............................................................49,360NotesPayable ....................................................................... 18,450AccountsPayable ................................................................ 8,396SalariesPayable ................................................................... 815Share CapitalOrdinary.................................................... 40,000RetainedEarnings .........................................................4,636 41. ......Dividends................................................................................ 700ServiceRevenue................................................................... 10,610SalariesExpense.................................................................. 4,428RepairExpense..................................................................... 961Gas and OilExpense........................................................... 758InsuranceExpense .............................................................. 52382,907 82,907EXERCISE 2-15Transactions 4, 5, and 7 are operating activities.Transaction 3 is an investing activity.Transactions 1, 2, and 6 are financing activities.Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-25 42. SOLUTIONS TO PROBLEMSPROBLEM 2-1AJ1Date Account Titles and ExplanationRef. Debit CreditApr.1Cash ................................................................ 40,000Share CapitalOrdinary ................. 40,000(Issued shares for cash)4Land................................................................. 30,000Cash....................................................... 30,000(Purchased land for cash)8AdvertisingExpense.................................. 1,800AccountsPayable ............................. 1,800(Incurred advertisingexpense on account)11SalariesExpense ........................................ 1,500Cash....................................................... 1,500(Paid salaries)12 No entryNot a transaction.13PrepaidInsurance....................................... 1,500Cash....................................................... 1,500(Paid for one-yearinsurance policy)17Dividends....................................................... 1,000Cash....................................................... 1,000(Declared and paid cashdividends) 43. 20Cash ................................................................ 5,700AdmissionRevenue ......................... 5,700(Received cash for servicesprovided)2-26 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 44. PROBLEM 2-1A (Continued)DateAccount Titles andExplanationRef. Debit CreditApr.25Cash................................................................ 2,500Unearned AdmissionRevenue......... 2,500(Received cash for futureservices)30Cash................................................................ 8,900AdmissionRevenue .......................... 8,900(Received cash for servicesprovided)30AccountsPayable ...................................... 900Cash ....................................................... 900(Paid creditor on account)Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-27 45. PROBLEM 2-2A(a)J1Date Account Titles and Explanation Ref. Debit CreditMayCash ..............................................1.................. 101 25,000Share CapitalOrdinary ................. 31125,000(Issued shares for cash)2 No entrynot a transaction.3Supplies ......................................................... 126 2,500AccountsPayable ............................. 201 2,500(Purchased supplies onaccount)7RentExpense ............................................... 729 900Cash....................................................... 101 900(Paid office rent)11AccountsReceivable................................. 112 2,100ServiceRevenue................................ 400 2,100(Billed client for servicesprovided)12Cash ................................................................ 101 3,500UnearnedRevenue............................ 209 3,500(Received cash for futureservices)17Cash ................................................................ 101 1,200ServiceRevenue................................ 400 1,200(Received cash for servicesprovided) 46. 31SalariesExpense ........................................ 726 2,000Cash....................................................... 101 2,000(Paid salaries)2-28 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 47. PROBLEM 2-2A (Continued)DateAccount Titles andExplanationRef. DebitCreditMay31Accounts Payable (2,500 X40%)............201 1,000Cash ......................................................1011,000(Paid creditor onaccount)(b)CashNo.101Date Explanation Ref.DebitCreditBalanceMay1 J125,000 25,0007 J1 900 24,10012 J1 3,500 27,60017 J1 1,200 28,8002,0031 J10 26,80031 J11,000 25,800Accounts ReceivableNo.112Date Explanation Ref.DebitCreditBalanceMay11 J1 2,100 2,100SuppliesNo.126Date Explanation Ref.DebitCreditBalanceMay 3 J1 2,500 2,500 48. Accounts PayableNo.201Date Explanation Ref.DebitCreditBalanceMay 3 J12,50031 J1 1,000 1,500Unearned RevenueNo.209Date Explanation Ref.DebitCreditBalanceMay12 J13,500 3,500Copyright 2011 John Wiley & Sons, Inc. Weygandt,IFRS, 1/e, Solutions Manual (For Instructor Use Only)2-29 49. PROBLEM 2-2A(Continued)Share CapitalOrdinaryNo.311Date Explanation Ref. Debit CreditBalanceMay 1 J1 25,000 25,000Service RevenueNo.400Date Explanation Ref. Debit CreditBalanceMay11 J1 2,100 2,10017 J1 1,200 3,300Salaries ExpenseNo.726Date Explanation Ref. Debit CreditBalanceMay 31 J12,000 2,000Rent ExpenseNo.729Date Explanation Ref. Debit CreditBalanceMay 7 J1 900 900(c) JANE KENT ACCOUNTANTTrialBalanceMay 31,2011DebitCredit 50. Cash ...........................................................................25,800AccountsReceivable............................................ 2,100Supplies .................................................................... 2,500AccountsPayable.................................................. 1,500UnearnedRevenue................................................3,500Share CapitalOrdinary .....................................25,000ServiceRevenue ....................................................3,300SalariesExpense ................................................... 2,000RentExpense......................................................... .900 33,300 33,3002-30 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 51. PROBLEM 2-3A(a)&(c)CashBalance(4)(7)AccountsReceivableBalance15,000(4)14,0 00(7) 9,00010,000PartsInventoryBalance13,0004,000(6)13,000PrepaidRentBalance3,0003,000ShopEquipmentBalance21,00021,000AccountsPayableBala nce19 ,00 0(2)4,00015,0008,000ShareCapitalOrdinaryBalan ce30 ,00 030,000RetainedEarningsBalan ce11 ,00 011,000Dividends3,0003,000RepairServicesReven 52. ue(7)15,0 0015,000MiscellaneousExpenseAdvertisingExpense(1) 1,0002,0002,0001,000RepairPartsExpense4,0004,000WageExpense3,0003,000Copyright2011JohnWiley&Weygandt,IFRS, 1/e,SolutionsManualSons,(ForInstructorUse Only)Inc.2-31 53. PROBLEM 2-3A (Continued)(b)Trans.Account Titles andExplanation Debit Credit1.AdvertisingExpense..................................... 1,000Cash......................................................... 1,0002.PartsInventory................................................ 4,000AccountsPayable ............................... 4,0003.MiscellaneousExpense ............................... 2,000Cash......................................................... 2,0004.Cash.................................................................... 14,000AccountsReceivable ......................... 14,0005.AccountsPayable .......................................... 15,000Cash......................................................... 15,0006.Repair PartsExpense ................................... 4,000PartsInventory..................................... 4,0007.Cash.................................................................... 6,000AccountsReceivable .................................... 9,000Repair ServicesRevenue.................. 15,0008.WageExpense ................................................ 3,000Cash......................................................... 3,0009.Dividends.......................................................... 3,000Cash......................................................... 3,000 54. 2-32 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 55. PROBLEM 2-3A(Continued)(d)BYTE REPAIR SERVICE,INC.Trial BalanceJanuary 31,2011DebitCreditCash ................................................................................ $4,000AccountsReceivable.................................................10,000PartsInventory ............................................................13,000PrepaidRent.................................................................3,000ShopEquipment .........................................................21,000AccountsPayable....................................................... $8,000Share CapitalOrdinary...........................................30,000RetainedEarnings ......................................................11,000Dividends.......................................................................3,000Repair ServicesRevenue.........................................15,000AdvertisingExpense .................................................1,000MiscellaneousExpense............................................2,000Repair PartsExpense................................................4,000WageExpense .............................................................3,000$64,000$64,000 56. Copyright 2011 John Wiley & Sons, Inc. Weygandt,IFRS, 1/e, Solutions Manual (For Instructor Use Only)2-33 57. PROBLEM 2-4ASTERLING COMPANYTrial BalanceMay 31, 2011DebitCreditCash (5,850 + 520 405) ....................................... 5,965Accounts Receivable (2,570 210)......................2,360Prepaid Insurance (700 +100)............................... 800Supplies (0 +520) ...................................................... 520Equipment (8,000 7,4520)..........................................80Accounts Payable (4,500 100 +520 210)................................................................. 4,710Property TaxesPayable ............................................... 560Share CapitalOrdinary (11,700 +1,000)..........12,700Dividends (0 +1,000) ................................................1,000ServiceRevenue.............................................................6,960Salaries Expense (4,200 +200) .............................4,400Advertising Expense (1,100 +405) ......................1,505Property Tax Expense (800 +100) ....................... 90024,930 24,930 58. 2-34 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 59. PROBLEM 2-5A(a) &(c)CashNo.101Date Explanation Ref. Debit CreditBalanceApr. 1 Balance6,0002 J1 8005,2009 J1 2,8008,00010 J1 3,0005,00012 J1 5004,50025 J1 5,2009,70029 J1 2,0007,70030 J1 857,78530 J1 9006,885Accounts ReceivableNo.112Date Explanation Ref. Debit CreditBalanceApr. 30 J1 85 85Prepaid RentalsNo.136Date Explanation Ref. Debit CreditBalanceApr. 30 J1 900 900LandNo.140 60. Date Explanation Ref. Debit CreditBalanceApr. 1 Balance 10,000BuildingsNo.145Date Explanation Ref. Debit CreditBalanceApr. 1 Balance 8,000Copyright 2011 John Wiley & Sons, Inc. Weygandt,IFRS, 1/e, Solutions Manual (For Instructor Use Only)2-35 61. PROBLEM 2-5A(Continued)EquipmentNo.157Date Explanation Ref. Debit CreditBalanceApr. 1 Balance 6,000Accounts PayableNo.201Date Explanation Ref. Debit CreditBalanceApr. 1 Balance 2,00010 J1 1,000 1,00020 J1 1,000 2,000Mortgage PayableNo.275Date Explanation Ref. Debit CreditBalanceApr. 1 Balance 8,00010 J1 2,000 6,000Share CapitalOrdinaryNo.311Date Explanation Ref. Debit CreditBalanceApr. 1 Balance 20,000Admission RevenueNo.405Date Explanation Ref. Debit CreditBalanceAp 9 J1 2,800 2,800 62. r.25 J1 5,200 8,000Concession RevenueNo.406Date Explanation Ref. Debit CreditBalanceApr. 30 J1 170 1702-36 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 63. PROBLEM 2-5A (Continued)Advertising ExpenseNo.610Date ExplanationRef. DebitCreditBalanceApr.12 J1 500 500Film Rental ExpenseNo.632Date ExplanationRef. DebitCreditBalanceApr. 2 J1 800 80020J1 1,000 1,800Salaries ExpenseNo.726Date ExplanationRef. DebitCreditBalanceApr.29 J1 2,000 2,000(b) DaAccount Titles andteExplanation Ref. Debit CreditJ1Apr. 2Film RentalExpense ............................... 632 800Cash ................................................... 101 800(Paid filmrental)3 No entrynot a transaction.9Cash.............................................................. 101 2,800Admission 405 2,800 64. Revenue......................(Received cash for servicesprovided)10MortgagePayable .................................... 275 2,000AccountsPayable .................................... 201 1,000Cash ................................................... 101 3,000(Made payments onmortgage andaccountspayable)Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-37 65. PROBLEM 2-5A (Continued)Date Account Titles and Explanation Ref. Debit CreditApr.11 No entrynot a transaction.12AdvertisingExpense................................. 610 500Cash ..................................................... 101 500(Paid advertisingexpenses)20Film RentalExpense ................................. 632 1,000AccountsPayable ........................... 201 1,000(Rented film on account)25Cash................................................................ 101 5,200AdmissionRevenue........................ 405 5,200(Received cash forservicesprovided)29SalariesExpense........................................ 726 2,000Cash ..................................................... 101 2,000(Paid salaries expense)30Cash................................................................ 101 85AccountsReceivable ................................ 112 85ConcessionRevenue ..................... 406 170(17% X $1,000)(Received cash andbalance on account forconcession revenue)30 PrepaidRentals .......................................... 136 900 66. Cash ..................................................... 101 900(Paid cash for future filmrentals)2-38 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 67. PROBLEM 2-5A(Continued)(d)LAKETHEATERTrial BalanceApril 30,2011DebitCredit................................................................................Cash $6,885AccountsReceivable................................................. 85PrepaidRentals ........................................................... 900Land.................................................................................10,000Buildings........................................................................8,000Equipment .....................................................................6,000AccountsPayable....................................................... $2,000MortgagePayable.......................................................6,000Share CapitalOrdinary...........................................20,000AdmissionRevenue...................................................8,000ConcessionRevenue................................................. 170AdvertisingExpense ................................................. 500Film Rental1,8Expense..................................................00SalariesExpense ....................................................... .2,000$36,170 $36,170 68. Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-39 69. PROBLEM 2-1BJ1DateAccount Titles andExplanation Ref. Debit CreditMar.1Cash .................................................................. 20,000Share CapitalOrdinary................... 20,000(Issued shares for cash)3Land .................................................................. 12,000Buildings ......................................................... 2,000Equipment....................................................... 1,000Cash ........................................................ 15,000(Purchased Heerens GolfLand)5AdvertisingExpense ................................... 700Cash ........................................................ 700(Paid for advertising)6PrepaidInsurance ........................................ 600Cash ........................................................ 600(Paid for one-year insurancepolicy)10Equipment....................................................... 1,050AccountsPayable............................... 1,050(Purchased equipment onaccount)18Cash .................................................................. 340GolfRevenue........................................ 340(Received cash for services 70. provided)19Cash .................................................................. 1,000UnearnedRevenue ............................. 1,000(Received cash for couponbooks sold)2-40 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 71. PROBLEM 2-1B (Continued)DateAccount Titles andExplanationRef. Debit CreditMar.25Dividends.................................................... 800Cash .................................................... 800(Declared and paid cashdividend)30SalariesExpense...................................... 250Cash .................................................... 250(Paid salaries)30AccountsPayable.................................... 1,050Cash .................................................... 1,050(Paid creditor on account)31Cash ............................................................. 200GolfRevenue.................................... 200(Received cash forservicesprovided)Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-41 72. PROBLEM 2-2B(a)J1DateAccount Titles andExplanationRef. Debit CreditApr.1Cash ..................................................................101 40,000Share CapitalOrdinary...................311 40,000(Issued shares for cash)1No entrynot atransaction.2RentExpense.................................................729 1,000Cash ........................................................101 1,000(Paid monthly office rent)3Supplies ...........................................................126 4,000AccountsPayable...............................201 4,000(Purchased supplies onaccount from SmileCompany)10AccountsReceivable...................................112 5,100ServiceRevenue .................................400 5,100(Billed clients for servicesprovided)11Cash ..................................................................101 1,000UnearnedRevenue .............................209 1,000(Received cash for futureservice)20Cash ..................................................................101 2,100ServiceRevenue .................................400 2,100(Received cash for servicesprovided)30SalariesExpense .........................................726 2,400 73. .Cash ........................................................101 2,400(Paid monthly salary)2-42 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 74. PROBLEM 2-2B (Continued)DateAccount Titles andExplanationRef. DebitsCreditApr.30AccountsPayable .... .. .. ........ .. .. ....... .. ....... 201 1,600Cash...............................101 1,600 75. .....................(Paid Smile Companyonaccount) (b)Cash No. 101DateExplanation Ref. DebitCredit BalanceApr. 1 J140,00040,0002 J11,00039,00011 J1 1,00040,00020 J1 2,10042,100 76. 30 J12,40039,70030 J11,60038,100AccountsReceivable No. 112DateExplanation Ref. DebitCredit BalanceApr.10 J1 5,100 5,100Supplies No. 126DateExplanation Ref. DebitCredit BalanceApr. 3 J1 4,000 4,000AccountsPayable No. 201DateExplanation Ref. DebitCredit BalanceApr. 3 J14,000 4,00030 J1 1,600 2,400UnearnedRevenue No. 209DateExplanation Ref. DebitCredit BalanceApr.11 J11,000 1,000Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-43 77. PROBLEM 2-2B (Continued)Share CapitalOrdinaryNo.311Date Explanation Ref. DebitCreditBalanceApr. 1 J140,000 40,000Service RevenueNo.400Date Explanation Ref. DebitCreditBalanceApr. 10 J15,100 5,10020J12,100 7,200Salaries ExpenseNo.726Date Explanation Ref. DebitCreditBalanceApr. 30 J1 2,400 2,400Rent ExpenseNo.729Date Explanation Ref. DebitCreditBalanceApr. 2 J1 1,000 1,000(c)MARIA JUAREZ,DENTISTTrial BalanceApril 30, 2011 78. DebitCredit.................................................................................Cash$38,100AccountsReceivable .................................................5,100Supplies..........................................................................4,000AccountsPayable ....................................................... $ 2,400UnearnedRevenue ..................................................... 1,000Share CapitalOrdinary........................................... 40,000ServiceRevenue.......................................................... 7,200Salaries2,40Expense.........................................................0RentExpense .............................................................. .1,000$50,600 $50,6002-44 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 79. PROBLEM 2-3B(a)Trans.Account Titles andExplanation Debit Credit1.Cash ...........................................................50,000Share CapitalOrdinary........... 50,0002. No entryNot a transaction.3. Prepaid Rent 24,000Cash 24,0004. Furniture & Equipment 30,000Cash 10,000Accounts Payable 20,0005. Prepaid Insurance 1,800Cash 1,8006. Office Supplies 500Cash 5007. Office Supplies 1,500Accounts Payable 1,5008. Cash 8,000Accounts Receivable . 12,000Service Revenue 20,0009. Accounts Payable 400Cash 40010.Cash 3,000Accounts Receivable 3,00011.Utility Expense 200Accounts Payable 200Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-45 80. PROBLEM 2-3B (Continued)Trans.Account Titles andExplanation DebitCredit12.SalariesExpense .................................. 5,600Cash ...................... ................... ........5,600(b)Cash Furniture & Equipment(1)50,000(3)24,000(4) 30,00030,000(4)10,000(5)1,800(8) 8,000(6) 500AccountsPayable(9) 400(4)20,000(10) 3,000(7)1,500(9) 400(12)5,600 (11) 20018,70021,300Accounts Receivable(8) 12,000(10)3,0009,000Office Supplies(6) 500(7) 1,5002,000PrepaidInsurance(5) 1,8001,800PrepaidRent(3) 24,00024,000 81. Share CapitalOrdinary(1) 50,0 0050,000Service Revenue(8) 20,0 0020,000SalariesExpense(12) 5,6005,600UtilityExpense(11) 2002002-46 Copyright 2011 John Wiley &Sons, Inc. Weygandt, IFRS, 1/e,Solutions Manual (For Instructor Use Only) 82. PROBLEM 2-3B (Continued)(c)SLOWHANDSERVICESTrial BalanceMay 31, 2011DebitCredit............................................................................Cash18,700AccountsReceivable............................................. 9,000OfficeSupplies ........................................................ 2,000PrepaidInsurance .................................................. 1,800PrepaidRent.............................................................24,000Furniture &Equipment..........................................30,000AccountsPayable................................................... 21,300Share CapitalOrdinary....................................... 50,000ServiceRevenue ..................................................... 20,000SalariesExpense .................................................... 5,600 83. UtilityExpense......................................................... 20091,300 91,300Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-47 84. PROBLEM 2-4BSYED MOIZ CO.Trial BalanceJune 30, 2011DebitCredit...........................................................Cash($3,340+$360) $3,700Accounts Receivable ($2,731 $360)............................2,371Supplies ($1,200 $620) .................................................... 580Equipment ($2,600 +$620)................................................3,220Accounts Payable ($3,666 $306 $360).................... $3,000UnearnedRevenue ..............................................................1,100Share CapitalOrdinary....................................................8,000Dividends ($800 +$600).....................................................1,400Service Revenue ($2,480 +$801) ....................................3,281Salaries Expense ($3,200 + $700 $600) .....................3,300OfficeExpense...................................................................... 810$15,381 $15,381 85. 2-48 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 86. PROBLEM 2-5B(a) &(c)CashNo.101Date Explanation Ref. Debit CreditBalanceMar. 1 Balance 9,0002 J1 1,500 7,5009 J1 4,000 11,50010 J1 4,100 7,40012 J1 450 6,95020 J1 5,000 11,95020 J1 2,000 9,95031 J1 2,500 7,45031 J1 450 7,90031 J1 9,000 16,900Accounts ReceivableNo.112Date Explanation Ref. Debit CreditBalanceMar.31 J1 450 450LandNo.140Date Explanation Ref. Debit CreditBalanceMar. 1 Balance 24,000BuildingsNo.145Date Explanation Ref. Debit CreditBalanceMar. 1 Balance 10,000 87. EquipmentNo.157Date Explanation Ref. Debit CreditBalanceMar. 1 Balance 10,000Copyright 2011 John Wiley & Sons, Inc. Weygandt,IFRS, 1/e, Solutions Manual (For Instructor Use Only)2-49 88. PROBLEM 2-5B(Continued)Accounts PayableNo.201Date Explanation Ref. Debit CreditBalanceMar. 1 Balance 7,0002 J1 2,000 9,00010 J1 4,100 4,900Share CapitalOrdinaryNo.311Date Explanation Ref. Debit CreditBalanceMar. 1 Balance 46,000Admission RevenueNo.405Date Explanation Ref. Debit CreditBalanceMar. 9 J1 4,000 4,00020 J1 5,000 9,00031 J1 9,000 18,000Concession RevenueNo.406Date Explanation Ref. Debit CreditBalanceMar.31 J1 900 900Advertising ExpenseNo.610Date Explanation Ref. Debit CreditBalance 89. Mar.12 J1 450 450Film Rental ExpenseNo.632Date Explanation Ref. Debit CreditBalanceMar. 2 J13,500 3,50020 J12,000 5,5002-50 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 90. PROBLEM 2-5B (Continued)Salaries ExpenseNo.726Date ExplanationRef. DebitCreditBalanceMar.31 J1 2,500 2,500(b) J1Date Account Titles and ExplanationRef. Debit CreditMar.2Film RentalExpense..................................632 3,500AccountsPayable ............................201 2,000Cash......................................................101 1,500(Rented films for cashandon account)3 No entry.9Cash ................................................................101 4,000AdmissionRevenue ........................405 4,000(Received cash forservicesprovided)10Accounts Payable ($2,000 +$2,100).........201 4,100Cash......................................................101 4,100(Paid creditors onaccount)11 No entry.12AdvertisingExpense..................................610 450Cash......................................................101 450(Paid advertisingexpense) 91. 20Cash ................................................................101 5,000AdmissionRevenue ........................405 5,000(Received cash forservicesprovided)20Film RentalExpense..................................632 2,000Cash......................................................101 2,000(Paid film rental)Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-51 92. PROBLEM 2-5B (Continued)Date Account Titles and ExplanationRef. Debit CreditMar.31SalariesExpense......................................... 726 2,500Cash ...................................................... 101 2,500(Paid salaries expense)31Cash................................................................. 101 450AccountsReceivable ................................. 112 450ConcessionRevenue....................... 406 900(15% X $6,000)(Received cash and balanceon account for concessionrevenue)31Cash................................................................. 101 9,000AdmissionRevenue......................... 405 9,000(Received cash for servicesprovided)(d)JOSIETHEATERTrial BalanceMarch 31,2011Debit Credit.............................................................................Cash$16,900AccountsReceivable............................................. .450Land............................................................................. .24,000Buildings.................................................................... .10,000Equipment ................................................................. .10,000AccountsPayable............................................ $ 4,90 93. ........ 0Share CapitalOrdinary........................................46,000AdmissionRevenue................................................18,000ConcessionRevenue.............................................. 900AdvertisingExpense.............................................. .450Film RentalExpense .............................................. .5,500SalariesExpense .................................................... .2,500$69,800 $69,8002-52 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 94. BYP 2-1 FINANCIAL REPORTING PROBLEM(a) (1) (1) (2)AccountIncrease DecreaseNormalSide SideBalanceTrade Payables Credit DebitCreditTrade Receivables Debit CreditDebitProperty, Plant, andEquipment Debit CreditDebitTaxes Payable Credit DebitCreditInterest Expense Debit CreditDebitInventory Debit CreditDebit(2) 1. Cash is increased.2. Cash is decreased.3. Cash is decreased or Trade Payables are increased.(3) 1. Cash is decreased.2. Cash is decreased or Notes or Mortgage Payable isincreased.Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-53 95. BYP 2-2 COMPARATIVE ANALYSIS PROBLEM(a) Cadbury Nestl1. Inventory:debit 1. Trade Receivables:debit2.Property, Plant,anddebit 2.Cash and CashEquivalents:debitEquipment:3. Trade Payables:credit 3.Cost of Goods Sold (expense):debit4. Interest Expense:debit 4. Sales (revenue):credit(2) The following other accounts are ordinarily involved:1. Increase in Trade Receivable: Sales is increased (credited).2. Decrease in Wages Payable: Cash is decreased (credited).3. Increase in Property, Plant, and Equipment: Notes Payableis increased (credited) or Cash is decreased (credited).4. Increase in Interest Expense: Cash is decreased (credited).2-54 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 96. BYP 2-3 EXPLORING THE WEBThe answer is dependent upon the company selected by thestudent.Copyright 2011 John Wiley & Sons, Inc. Weygandt,IFRS, 1/e, Solutions Manual (For Instructor UseOnly) 2-55 97. BYP 2-4 DECISION MAKING ACROSS THE ORGANIZATION(a) May 1 Correct.5 Cash 250Lesson Revenue 2507 Cash 300Unearned Boarding Revenue . 30014 Office Equipment 800Cash . 80015 Dividends400Cash . 40020 Cash 184Riding Revenue . 18430 Correct.31 Hay and Feed Supplies 1,700Accounts Payable 1,700(2) The errors in the entries of May 14 and 20 would prevent thetrial balance from balancing.(c) Net income asreported...................................................$4,500Add: 5/15, Salaries expense (Dividendspaid)....... $4005/31, Hay and feed expense (still on hand).....1,700 2,1006,600Less: 5/7, Boarding revenueunearned..................... 300Correct netincome ...........................................................$6,300(d) Cash asreported ...............................................................$12,475Add: 5/20, Transpositionerror ................................... $ 365/31, Purchase onaccount................................1,700 1,736$14, 98. 2112-56 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only) 99. BYP 2-5 COMMUNICATION ACTIVITYDate: May 25, 2010To: Accounting InstructorFrom: StudentIn the first transaction, bills totaling $6,000 were sent to customersfor services rendered. Therefore, the asset Accounts Receivable isincreased $6,000 and the revenue Service Revenue is increased$6,000. Debits increase assets and credits increase revenues, sothe journal entry is:AccountsReceivable........................................................................ 6,000ServiceRevenue ....................................................................... 6,000(Bill customers for services provided)The $6,000 amount is then posted to the debit side of the generalledger account Accounts Receivable and to the credit side of thegeneral ledger account Service Revenue.In the second transaction, $2,000 was paid in salaries to employees.Therefore, the expense Salaries Expense is increased $2,000 andthe asset Cash is decreased $2,000. Debits increase expenses andcredits decrease assets, so the journal entry is:SalariesExpense ............................................................................... 2,000Cash .............................................................................................. 2,000(Salaries paid)The $2,000 amount is then posted to the debit side of the generalledger account Salaries Expense and to the credit side of thegeneral ledger account Cash. 100. Copyright 2011 John Wiley & Sons, Inc. Weygandt, IFRS,1/e, Solutions Manual (For Instructor Use Only) 2-57 101. BYP 2-6 ETHICS CASE(1) The stakeholders in this situation are:Mary Jansen, assistant chief accountant.Users of the companys financialstatements. The Casey Company.(2) By adding $1,000 to the Equipment account, that account totalis inten-tionally misstated. By not locating the error causing theimbalance, some other account may also be misstated by$1,000. If the amount of $1,000 is determined to be immaterial,and the intent is not to commit fraud (cover up an embezzlementor other misappropriation of assets), Marys action might not beconsidered unethical in the preparation of interim financialstatements. However, if Mary is violating a company accountingpolicy by her action, then she is acting unethically.(3) Marys alternatives are:1. Miss the deadline but find the error causing the imbalance.2. Tell her supervisor of the imbalance and suffer theconsequences.3. Do as she did and locate the error later, making theadjustment in the next quarter. 102. 2-58 Copyright 2011 John Wiley & Sons, Inc.Weygandt, IFRS, 1/e, Solutions Manual (ForInstructor Use Only)