This document discusses accounting records and systems. It provides an overview of the chapter, noting updates from the previous edition. It outlines the instructor's approach, emphasizing practice with accounting tools like debits and credits to provide students with useful analytical skills. Two introductory cases are presented for student practice, involving both unincorporated businesses and corporations. The chapter concludes with sample problems to reinforce key concepts.
CHAPTER 7 LONG-LIVED NONMONETARY ASSETS AND THEIR AMORTIZATIONkld39
This document summarizes Chapter 7 of an accounting textbook on long-lived nonmonetary assets and their amortization. The chapter discusses depreciation as a process of writing off an asset's cost over time rather than being related to changes in value. It also summarizes several Financial Accounting Standards Board statements related to intangible assets. The chapter includes cases and problems for students to practice asset transactions and depreciation calculations.
History of Apple related to the founders. Particularly Steve Jobs and Steve Woniak in the early stage of the company. This presentation explains also the issues that went on during the expansion of the company.
This chapter discusses cost of sales and inventories. It can be assigned in two parts, with the second focusing on inventory costing methods. Students often struggle to understand deducting cost of goods sold, so drill problems are important. The chapter also addresses the choice between LIFO and FIFO inventory methods and how LIFO can indefinitely defer taxes. Sample problems demonstrate calculating cost of goods sold and preparing income statements using different inventory methods.
This document provides an overview of Optical Distortion Inc.'s plans to address cannibalism in the poultry industry by developing contact lenses for chickens. It discusses cannibalism issues in chickens and debeaking as a common solution. It then outlines ODI's lens technology, market analysis, pricing strategy, and break-even point analysis. ODI plans to enter key markets, target large farms, and initially price lenses at $0.28 per pair through a skimming strategy to maximize profits and fund R&D before competition emerges once their patent expires in 3 years.
Marriott Corporation was founded in 1927 and has grown into one of the leading lodging and food service companies in the US. The document discusses Marriott's history, brands, elements of its financial strategy including managing rather than owning assets and optimizing its capital structure. It also provides details on Marriott's three main business lines, and calculates its weighted average cost of capital (WACC) as well as the costs of equity and debt. The discussion concludes with questions and answers about how Marriott uses its cost of capital estimates to evaluate investment opportunities across its different divisions.
The carbonated soft drink (CSD's) industry was dominated by Coca Cola and Pepsi vying for market share. The CSD organizations gained market share in the U.S. and in global markets extending their brands’ recognition and capturing sales from new markets. The shift in consumer beverage preference and the expansion into global markets proved to uncover new opportunities for growth and profitability. In addition the changes in the organizational structure of business for these companies have allowed them to sustain growth beyond CSD’s.
- The Lone Pine Cafe is presenting balance sheets as of November 2, 2005 and March 30, 2006, as well as an income statement for the year ended March 30, 2006.
- As of March 30, 2006 the cafe has $35,435 in capital, $18,900 in unsecured loans, and $50,755 in fixed assets. It has $55,918 in total assets.
- For the year ended March 30, 2006 the cafe had $43,480 in sales but $33,765 in expenses, resulting in a $9,715 profit. However, after paying $23,150 to partners, it had a $13,435 loss for the year.
CHAPTER 7 LONG-LIVED NONMONETARY ASSETS AND THEIR AMORTIZATIONkld39
This document summarizes Chapter 7 of an accounting textbook on long-lived nonmonetary assets and their amortization. The chapter discusses depreciation as a process of writing off an asset's cost over time rather than being related to changes in value. It also summarizes several Financial Accounting Standards Board statements related to intangible assets. The chapter includes cases and problems for students to practice asset transactions and depreciation calculations.
History of Apple related to the founders. Particularly Steve Jobs and Steve Woniak in the early stage of the company. This presentation explains also the issues that went on during the expansion of the company.
This chapter discusses cost of sales and inventories. It can be assigned in two parts, with the second focusing on inventory costing methods. Students often struggle to understand deducting cost of goods sold, so drill problems are important. The chapter also addresses the choice between LIFO and FIFO inventory methods and how LIFO can indefinitely defer taxes. Sample problems demonstrate calculating cost of goods sold and preparing income statements using different inventory methods.
This document provides an overview of Optical Distortion Inc.'s plans to address cannibalism in the poultry industry by developing contact lenses for chickens. It discusses cannibalism issues in chickens and debeaking as a common solution. It then outlines ODI's lens technology, market analysis, pricing strategy, and break-even point analysis. ODI plans to enter key markets, target large farms, and initially price lenses at $0.28 per pair through a skimming strategy to maximize profits and fund R&D before competition emerges once their patent expires in 3 years.
Marriott Corporation was founded in 1927 and has grown into one of the leading lodging and food service companies in the US. The document discusses Marriott's history, brands, elements of its financial strategy including managing rather than owning assets and optimizing its capital structure. It also provides details on Marriott's three main business lines, and calculates its weighted average cost of capital (WACC) as well as the costs of equity and debt. The discussion concludes with questions and answers about how Marriott uses its cost of capital estimates to evaluate investment opportunities across its different divisions.
The carbonated soft drink (CSD's) industry was dominated by Coca Cola and Pepsi vying for market share. The CSD organizations gained market share in the U.S. and in global markets extending their brands’ recognition and capturing sales from new markets. The shift in consumer beverage preference and the expansion into global markets proved to uncover new opportunities for growth and profitability. In addition the changes in the organizational structure of business for these companies have allowed them to sustain growth beyond CSD’s.
- The Lone Pine Cafe is presenting balance sheets as of November 2, 2005 and March 30, 2006, as well as an income statement for the year ended March 30, 2006.
- As of March 30, 2006 the cafe has $35,435 in capital, $18,900 in unsecured loans, and $50,755 in fixed assets. It has $55,918 in total assets.
- For the year ended March 30, 2006 the cafe had $43,480 in sales but $33,765 in expenses, resulting in a $9,715 profit. However, after paying $23,150 to partners, it had a $13,435 loss for the year.
1. Peter Hynes created an improved commercial paint spray and formed a corporation called Dispensers of California, Inc. with some friends to gain a patent for the spray.
2. The document includes transaction worksheets, trial balances, income statements, statements of cash flow, and ending balance sheets to analyze the financial performance and position of the new business.
3. It asks if you would invest in the company based on considerations like the profit plan, financial statements, return on equity, return on sales, and current ratio.
Nelson Jones, owner of Jones Electrical Distribution, must decide how to improve his company's financial situation. He can pursue rapid or minimal sales growth. If pursuing rapid growth, he must decide whether to accept trade discounts and what type of financing to use. Alternatively, he can pursue minimal growth while also deciding on discounts and financing. Jones is struggling with cash flow due to ineffective inventory management and slow customer payments. A new bank has offered to extend Jones' line of credit by $100,000. An analysis of Jones' financials and business environment is needed to make recommendations.
This document analyzes the financial ratios of BNL Stores from 2002-2010 using income statements, balance sheets, and cash flow statements. It finds that BNL's profitability ratios like net profit margin and return on equity declined significantly from 2004-2010. This was likely due to high growth in operating expenses outpacing sales growth. Accounts receivable also increased substantially from 2004-2005, indicating issues with collecting on credit sales. The analysis suggests BNL's strategy of offering store credit and incentivizing sales on credit harmed its financial performance in the long run.
Midland Energy Resources, Inc. Cost of CapitalKivanc Ozuolmez
The document provides information to calculate the weighted average cost of capital (WACC) for various divisions within Midland corporation. It discusses how Mortensen's estimates of Midland's cost of capital are used for various purposes. It then calculates the overall corporate WACC of 8.548% and explains why Midland's choice of equity market risk premium (EMRP) of 5% is appropriate. It also recommends calculating separate WACCs for different divisions given their varying risk profiles. Separate WACCs are computed for the Exploration & Production and Marketing & Refining divisions, and a proposed method is provided for calculating the Petrochemical division's WACC.
McKinsey & Company: Managing Knowledge and LearningDisha Ghoshal
As part of Strategy execution, this presentation on was on how McKinsey & Company flourished throughout the years by Managing Knowledge and Learning diligently.
FIN4140 Corporate Finance: Marriott corporation case study solutionNURHANI MUIS
The document discusses the cost of capital calculation for Marriott Corporation's three divisions: lodging, restaurants, and contract services. It first calculates the weighted average cost of capital (WACC) for Marriott as a whole as 11.87%. It then calculates the WACC for each division separately by determining the cost of equity using CAPM and cost of debt, weighted by the capital structure of each division. The WACC is 9.47% for lodging, 13.41% for contract services, and 13.16% for restaurants. Calculating WACC at the divisional level allows each division to use a cost of capital appropriate to its risk.
1. The document provides background information on Eastboro Machine Tools Corporation, founded in 1923 and initially manufacturing metal presses and dies.
2. It discusses three proposed strategies for growth: shifting production mix, expanding internationally, and expanding through joint ventures and acquisitions.
3. It analyzes choices of action - stock buyback, advertising, and different dividend payout policies (0%, 15%, 20%, 40%, residual) - and their impact on excess cash over seven years based on sales and income projections. It concludes residual dividend policy allows reducing debt and making investments for growth.
- BTC's market share for product T30 declined from 56% in 1988-1989 to an estimated 33% in 1990 as its price increased, while competitor C&P's share rose to 67%.
- Keeping the price at $4/yard allows BTC to cover its fixed costs and make a profit if it sells over 72,000 yards. Increasing its sales volume would further boost profits.
- The analysis recommends BTC maintain the $4 price and aim to sell at least 80,000 yards, while encouraging C&P to also keep its price at $4. This would increase BTC's market share and profits.
The receiving plant faces issues with long truck wait times, high overtime costs, and inaccurate berry grading. To address these problems:
1) Plant operations should start at 7 AM instead of 11 AM on peak days to reduce truck wait time from 511 to 127 hours and limit overtime costs.
2) Installing a berry grader would save the cooperative $112,500 annually by properly grading berries, though it may reduce farmer incomes.
3) The storage bins hold berries between processes. Since more berries will be water-harvested, 8 additional bins need converting to wet bins to reach the needed total of 19 wet bins.
Cola wars continue coke and pepsi in 2006-1Hye Joo Lee
The document discusses the ongoing competition between Coca-Cola and Pepsi in the carbonated soft drink industry. It provides background on the industry structure, noting that Coke and Pepsi dominate as concentrate producers while bottling operations are carried out by other companies. The intense rivalry between Coke and Pepsi has driven up advertising spending and innovation, strengthening their brands while weakening smaller competitors. Despite declining demand for sugary drinks, Coke and Pepsi may be able to sustain profits by diversifying their product lines and marketing to address health consciousness.
ATLANTIC COMPUTER: A BUNDLE OF PRICING OPTIONS Akshay Jain
There are four main types of pricing strategies from which Atlantic Computers canchoose. First, Atlantic Computers could stay with the status quo and offer software tools for free. Second, it could choose competitive based pricing. Third it could choose from Cost-plus pricing. Finally, it could choose value-in use pricing.In addition to determining which pricing strategy to use, Atlantic
Three deaths were reported in late September 1982 in the Chicago suburbs from cyanide poisoning after ingesting Extra-Strength Tylenol capsules. The next day, one more death occurred and the cause was confirmed to be cyanide poisoning from the Tylenol capsules. James Burke, the CEO of Johnson & Johnson, took charge of the crisis management at the corporate level after it was determined that cyanide was the cause of death in the contaminated Tylenol capsules from a specific batch manufactured at a McNeil plant.
TiVo allows users to pause, rewind and record live TV and faces challenges in gaining widespread adoption. The document analyzes TiVo's business model and competitive threats. It recommends that TiVo lower prices to attract mainstream consumers, emphasize the pause and recording features in stores, and partner with TV providers to boost exposure and sales.
This document contains a case study on Merton Truck Company that analyzes different production scenarios to optimize profit. It examines changing the production mix of models 101 and 102, increasing engine assembly capacity, introducing a new model 103, outsourcing additional capacity, and altering the production ratio of models 101 and 102. For each scenario, it calculates production units, contribution, machine hour requirements and constraints, costs, and profitability. The objective is to determine the best ways to increase Merton Truck's total contribution and profit.
Wilkerson, a mid-sized manufacturing company that produces water purification systems, is seeing a decline in margins. The company has one production department that machines and assembles three products: valves, pumps, and flow controllers. Wilkerson uses a volume-based costing system that may be incorrectly allocating overhead costs. Alternatives are analyzed to address the profitability of specifically the flow controller product line and combat the declining margins, including adjusting the cost accounting method or changing the flow controller's pricing.
This document discusses a case involving Culinarian Cookware considering a price promotion. Donald Janus, VP of Culinarian, and Victoria Brown, Senior Sales Manager, debate the effects. While Janus is concerned it may hurt the brand image, Victoria believes it will boost awareness. The document provides market details on cookware from 2002-2007 and Culinarian's product lines, competitors, sales patterns, and research findings. It poses two problems: whether to run a price promotion in 2007 and if so, which products and terms. It recommends running a promotion, citing past sales increases, and focusing on their professional line promoted through celebrity chefs to maintain brand value while boosting sales.
Case study of culinarian cookware,Case Synopsis – what is the case about? (like The case focuses on … give a brief on the main issues)
Case Facts – what are the main facts, history and issues in the case?
b) Problem Definition and Sub-problems – define the problem with a question mark
c) Case Inferences – analyse the exhibits and draw conclusions
d) Recommendations / Conclusions
Culinarian is a cookware brand that aims to provide high quality products with advanced technology. In 2006, its strategic priorities are to widen its network, increase market share, and preserve its brand image with a revenue growth target of 15%. While a sales manager supports offering price promotions to boost awareness and engagement, the CEO believes it could harm the brand image based on negative results from 2004 promotions. The document considers pros and cons of price promotions versus alternative promotional strategies like cash back schemes and cooperative advertising to meet growth targets while maintaining a premium brand image.
The document discusses self-management at The Morning Star company. It was started in 1970 and believes in self-management rather than a traditional hierarchy. Employees have a CLOU (Colleague Letter of Understanding) that outlines their responsibilities and goals. However, issues arose with a lack of accountability, coordination, skills development and compensation decisions. The proposal suggests addressing these through premium pay for top performers, improving the compensation evaluation process, and adding both minimum fixed pay and variable premium pay. Self-management works best with peer accountability and initiative from all colleagues.
Accounting identifies, measures, records, and communicates economic transactions. It has two main branches: financial accounting provides information to external users, while management accounting provides information internally. The legal structure of a business determines aspects like the number of owners, their liability, capital raising, and financial reporting requirements. Limited companies must publicly disclose annual financial statements to inform present and potential investors, employees, lenders, suppliers, customers, governments, and the public.
Dabur India Limited is India's leading FMCG company with a turnover of Rs. 5,283 crore. It produces ayurvedic medicines and consumer products that are marketed in over 50 countries. Some of Dabur's top selling brands include Dabur Chyawanprash, Dabur Hajmola, Dabur Amla hair oil, and Dabur Red toothpaste. Dabur has manufacturing plants in India and several other countries, and continues to expand its operations both domestically and globally through new product launches, acquisitions, and facility investments.
1. Peter Hynes created an improved commercial paint spray and formed a corporation called Dispensers of California, Inc. with some friends to gain a patent for the spray.
2. The document includes transaction worksheets, trial balances, income statements, statements of cash flow, and ending balance sheets to analyze the financial performance and position of the new business.
3. It asks if you would invest in the company based on considerations like the profit plan, financial statements, return on equity, return on sales, and current ratio.
Nelson Jones, owner of Jones Electrical Distribution, must decide how to improve his company's financial situation. He can pursue rapid or minimal sales growth. If pursuing rapid growth, he must decide whether to accept trade discounts and what type of financing to use. Alternatively, he can pursue minimal growth while also deciding on discounts and financing. Jones is struggling with cash flow due to ineffective inventory management and slow customer payments. A new bank has offered to extend Jones' line of credit by $100,000. An analysis of Jones' financials and business environment is needed to make recommendations.
This document analyzes the financial ratios of BNL Stores from 2002-2010 using income statements, balance sheets, and cash flow statements. It finds that BNL's profitability ratios like net profit margin and return on equity declined significantly from 2004-2010. This was likely due to high growth in operating expenses outpacing sales growth. Accounts receivable also increased substantially from 2004-2005, indicating issues with collecting on credit sales. The analysis suggests BNL's strategy of offering store credit and incentivizing sales on credit harmed its financial performance in the long run.
Midland Energy Resources, Inc. Cost of CapitalKivanc Ozuolmez
The document provides information to calculate the weighted average cost of capital (WACC) for various divisions within Midland corporation. It discusses how Mortensen's estimates of Midland's cost of capital are used for various purposes. It then calculates the overall corporate WACC of 8.548% and explains why Midland's choice of equity market risk premium (EMRP) of 5% is appropriate. It also recommends calculating separate WACCs for different divisions given their varying risk profiles. Separate WACCs are computed for the Exploration & Production and Marketing & Refining divisions, and a proposed method is provided for calculating the Petrochemical division's WACC.
McKinsey & Company: Managing Knowledge and LearningDisha Ghoshal
As part of Strategy execution, this presentation on was on how McKinsey & Company flourished throughout the years by Managing Knowledge and Learning diligently.
FIN4140 Corporate Finance: Marriott corporation case study solutionNURHANI MUIS
The document discusses the cost of capital calculation for Marriott Corporation's three divisions: lodging, restaurants, and contract services. It first calculates the weighted average cost of capital (WACC) for Marriott as a whole as 11.87%. It then calculates the WACC for each division separately by determining the cost of equity using CAPM and cost of debt, weighted by the capital structure of each division. The WACC is 9.47% for lodging, 13.41% for contract services, and 13.16% for restaurants. Calculating WACC at the divisional level allows each division to use a cost of capital appropriate to its risk.
1. The document provides background information on Eastboro Machine Tools Corporation, founded in 1923 and initially manufacturing metal presses and dies.
2. It discusses three proposed strategies for growth: shifting production mix, expanding internationally, and expanding through joint ventures and acquisitions.
3. It analyzes choices of action - stock buyback, advertising, and different dividend payout policies (0%, 15%, 20%, 40%, residual) - and their impact on excess cash over seven years based on sales and income projections. It concludes residual dividend policy allows reducing debt and making investments for growth.
- BTC's market share for product T30 declined from 56% in 1988-1989 to an estimated 33% in 1990 as its price increased, while competitor C&P's share rose to 67%.
- Keeping the price at $4/yard allows BTC to cover its fixed costs and make a profit if it sells over 72,000 yards. Increasing its sales volume would further boost profits.
- The analysis recommends BTC maintain the $4 price and aim to sell at least 80,000 yards, while encouraging C&P to also keep its price at $4. This would increase BTC's market share and profits.
The receiving plant faces issues with long truck wait times, high overtime costs, and inaccurate berry grading. To address these problems:
1) Plant operations should start at 7 AM instead of 11 AM on peak days to reduce truck wait time from 511 to 127 hours and limit overtime costs.
2) Installing a berry grader would save the cooperative $112,500 annually by properly grading berries, though it may reduce farmer incomes.
3) The storage bins hold berries between processes. Since more berries will be water-harvested, 8 additional bins need converting to wet bins to reach the needed total of 19 wet bins.
Cola wars continue coke and pepsi in 2006-1Hye Joo Lee
The document discusses the ongoing competition between Coca-Cola and Pepsi in the carbonated soft drink industry. It provides background on the industry structure, noting that Coke and Pepsi dominate as concentrate producers while bottling operations are carried out by other companies. The intense rivalry between Coke and Pepsi has driven up advertising spending and innovation, strengthening their brands while weakening smaller competitors. Despite declining demand for sugary drinks, Coke and Pepsi may be able to sustain profits by diversifying their product lines and marketing to address health consciousness.
ATLANTIC COMPUTER: A BUNDLE OF PRICING OPTIONS Akshay Jain
There are four main types of pricing strategies from which Atlantic Computers canchoose. First, Atlantic Computers could stay with the status quo and offer software tools for free. Second, it could choose competitive based pricing. Third it could choose from Cost-plus pricing. Finally, it could choose value-in use pricing.In addition to determining which pricing strategy to use, Atlantic
Three deaths were reported in late September 1982 in the Chicago suburbs from cyanide poisoning after ingesting Extra-Strength Tylenol capsules. The next day, one more death occurred and the cause was confirmed to be cyanide poisoning from the Tylenol capsules. James Burke, the CEO of Johnson & Johnson, took charge of the crisis management at the corporate level after it was determined that cyanide was the cause of death in the contaminated Tylenol capsules from a specific batch manufactured at a McNeil plant.
TiVo allows users to pause, rewind and record live TV and faces challenges in gaining widespread adoption. The document analyzes TiVo's business model and competitive threats. It recommends that TiVo lower prices to attract mainstream consumers, emphasize the pause and recording features in stores, and partner with TV providers to boost exposure and sales.
This document contains a case study on Merton Truck Company that analyzes different production scenarios to optimize profit. It examines changing the production mix of models 101 and 102, increasing engine assembly capacity, introducing a new model 103, outsourcing additional capacity, and altering the production ratio of models 101 and 102. For each scenario, it calculates production units, contribution, machine hour requirements and constraints, costs, and profitability. The objective is to determine the best ways to increase Merton Truck's total contribution and profit.
Wilkerson, a mid-sized manufacturing company that produces water purification systems, is seeing a decline in margins. The company has one production department that machines and assembles three products: valves, pumps, and flow controllers. Wilkerson uses a volume-based costing system that may be incorrectly allocating overhead costs. Alternatives are analyzed to address the profitability of specifically the flow controller product line and combat the declining margins, including adjusting the cost accounting method or changing the flow controller's pricing.
This document discusses a case involving Culinarian Cookware considering a price promotion. Donald Janus, VP of Culinarian, and Victoria Brown, Senior Sales Manager, debate the effects. While Janus is concerned it may hurt the brand image, Victoria believes it will boost awareness. The document provides market details on cookware from 2002-2007 and Culinarian's product lines, competitors, sales patterns, and research findings. It poses two problems: whether to run a price promotion in 2007 and if so, which products and terms. It recommends running a promotion, citing past sales increases, and focusing on their professional line promoted through celebrity chefs to maintain brand value while boosting sales.
Case study of culinarian cookware,Case Synopsis – what is the case about? (like The case focuses on … give a brief on the main issues)
Case Facts – what are the main facts, history and issues in the case?
b) Problem Definition and Sub-problems – define the problem with a question mark
c) Case Inferences – analyse the exhibits and draw conclusions
d) Recommendations / Conclusions
Culinarian is a cookware brand that aims to provide high quality products with advanced technology. In 2006, its strategic priorities are to widen its network, increase market share, and preserve its brand image with a revenue growth target of 15%. While a sales manager supports offering price promotions to boost awareness and engagement, the CEO believes it could harm the brand image based on negative results from 2004 promotions. The document considers pros and cons of price promotions versus alternative promotional strategies like cash back schemes and cooperative advertising to meet growth targets while maintaining a premium brand image.
The document discusses self-management at The Morning Star company. It was started in 1970 and believes in self-management rather than a traditional hierarchy. Employees have a CLOU (Colleague Letter of Understanding) that outlines their responsibilities and goals. However, issues arose with a lack of accountability, coordination, skills development and compensation decisions. The proposal suggests addressing these through premium pay for top performers, improving the compensation evaluation process, and adding both minimum fixed pay and variable premium pay. Self-management works best with peer accountability and initiative from all colleagues.
Accounting identifies, measures, records, and communicates economic transactions. It has two main branches: financial accounting provides information to external users, while management accounting provides information internally. The legal structure of a business determines aspects like the number of owners, their liability, capital raising, and financial reporting requirements. Limited companies must publicly disclose annual financial statements to inform present and potential investors, employees, lenders, suppliers, customers, governments, and the public.
Dabur India Limited is India's leading FMCG company with a turnover of Rs. 5,283 crore. It produces ayurvedic medicines and consumer products that are marketed in over 50 countries. Some of Dabur's top selling brands include Dabur Chyawanprash, Dabur Hajmola, Dabur Amla hair oil, and Dabur Red toothpaste. Dabur has manufacturing plants in India and several other countries, and continues to expand its operations both domestically and globally through new product launches, acquisitions, and facility investments.
Equity Aids the Vigilant: The Supreme Court’s Montanile Decision And Its Less...Paul Hastings
After the U.S. Supreme Court’s opinion in Board of Trustees of the National Elevator Industry Health Benefit Plan holding that ERISA prohibits suits by benefits plans where the beneficiary spent the settlement money on nontraceable items, attorneys from Paul Hastings LLP suggest that plans enhance their monitoring efforts, review the adequacy of their subrogation clauses and act promptly when seeking reimbursement from plan participants.
Dimensions of business to consumer (b2 c) systems success in kuwaitsan18
This document summarizes an academic journal article that tests an enhanced model of business-to-consumer (B2C) e-commerce systems success in Kuwait. The study builds on prior research by Wang (2008) that applied the Delone and McLean information systems success model to e-commerce. The proposed model adds several improvements, including a multidimensional view of system quality, conceptualizations of both monetary and non-monetary value, and e-commerce-specific factors. The model was tested using 288 experienced B2C consumers in Kuwait and the results largely support the hypothesized relationships in the model. A key finding is that while service quality influences perceived value, it does not impact user satisfaction in the Arab context,
This document discusses humanity's place in the universe and our tendency to see ourselves as separate from it. It argues that this sense of separateness is an "optical delusion" and that we should work to overcome this illusion by expanding our circle of compassion to all living things and nature. The goal is for humanity to develop a new way of thinking that will allow our species to survive.
The document contains contact information for Normicka Forest, Program Associate at the Georgia Department of Behavioral Health & Developmental Disabilities Division of Addictive Diseases, Office of DUI Intervention Program. The information is repeated multiple times and includes her mailing address, phone number, fax number, email address and website.
I AM HR: FIVE STRATEGIC WAYS TO BREAK STEREOTYPES AND RECLAIM HRLaurie Ruettimann
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive functioning. Exercise boosts blood flow, releases endorphins, and promotes changes in the brain which help regulate emotions and stress levels.
Cultural diversity and unlocking the human potentialpitra.hutomo
The Executive Director of the Filipinas Copyright Licensing Society, Inc. (FILCOLS) Prior to FILCOLS, Alvin worked as Executive Assistant at the Office of the Chairman of the National Book Development Board (NBDB), a national government agency under the administrative supervision of the Department of Education. At the NBDB, he was project manager, writer, researcher, moderator, and editor-in-chief of the agency’s publication BOOKWATCH. He was in government service for five years.
A product of the public schools, Alvin graduated Salutatorian from Doña Rosario Elementary School in Quezon City. He graduated Valedictorian from Claro M. Recto High School in Manila. He finished his Bachelor of Arts, major in Philosophy from the University of St. La Salle in Bacolod City, Negros Occidental. He finished his Sacred Theology degree, Magna cum Laude from the University of Santo Tomas, España, Manila. He also received two certificates of completion with high distinction for the non-formal courses he took from the University of the Philippines Open University, Los Baños, Laguna. And while working at the NBDB, he took his Master in Public Management (candidate) from the Ateneo de Manila School of Government, Makati City.
Alvin loves to read especially books on history, enjoys computer strategy and simulation games, loves to drive his Nissan Exalta, loves to watch movies and TV science specials, loves to play the guitar and sing songs from sentimental to oldies to light rock to heavy metal.
Tokyo Disneyland is a 115-acre theme park located near Tokyo, Japan. It was the first Disney park built outside of the United States and opened in 1983. The park has 7 themed areas including Adventureland, Westernland, Fantasyland, and Tomorrowland. Disneyland Tokyo utilizes various positioning strategies in marketing, pricing, finance, and competition. It targets families and teens through digital gaming and social media. The park offers many rides, shows, restaurants, and shops across its themed areas. It also provides services like FASTPASS, online tickets, smoking areas, and photo services. Trend analysis identified 17 trends that Disneyland addresses through its products and services.
This document provides details on Intel 6th generation Core mobile and desktop processors including specifications such as core count, base frequency, graphics specifications, memory support, and pricing. It covers Y-series, U-series, H-series, and S-series mobile processors as well as desktop S-series processors. The document shows Intel is focusing on improved performance through increased core counts and enhanced Intel Turbo Boost Technology while maintaining competitive pricing and integration of security and manageability features.
Profit from the cloud TM Parallels Dynamic Infrastructure And OpenStack.OpenVZ
This document discusses how Parallels Dynamic Infrastructure and OpenStack can help companies profit from the cloud. It provides an overview of Parallels Cloud Storage, virtualization technologies like containers and hypervisors, automation and orchestration tools, and how these can improve efficiency. Benchmark results show Parallels Containers and Hypervisor outperform competitors like KVM and Xen. The document also outlines how Parallels integrates with OpenStack to provide additional capabilities around billing, packaging, storage, and containers.
NLCMG - Performance is good, Understanding performance is better nlwebperf
This document summarizes a presentation on understanding website and application performance. It discusses diagnosing performance issues, identifying bottlenecks, and incorporating performance testing into the development process. Key topics covered include availability and response time metrics, psychological costs of slow performance, analyzing transactions and resource usage, queueing theory, and common monitoring and analysis tools. The presentation calls for collaboration to develop a standard body of knowledge on web performance best practices.
This document is the inflight entertainment guide for Royal Brunei Airlines for the month of September 2013. It provides information on movies, television shows, music, and games available onboard flights. Some of the highlighted entertainment options include Baz Luhrmann's adaptation of The Great Gatsby starring Leonardo DiCaprio, the prequel to Monsters Inc. titled Monsters University, and the latest album release from Daft Punk. The guide also includes schedules of entertainment offerings for different aircraft types.
O documento descreve os serviços de uma agência de marketing chamada Promott, listando 7 razões para contratar sua parceria: 1) profissionais capacitados, 2) sempre um passo à frente graças à formação da equipe, 3) identificação de líderes para as empresas. Também fornece detalhes sobre quem são, sua experiência e clientes.
The document describes a barter exchange service called Ormita that facilitates advertising transactions without cash. Ormita acts as an intermediary, allowing companies to exchange their products/services for advertising placements. This allows companies to acquire advertising in various media like TV, radio, print while paying with their own offerings rather than cash.
How to unlock alcatel one touch fierce 7024w by unlock coderscooldesire
If your Alcatel One Touch Fierce 7024w is locked to use with specific carrier, and you are not able to use it another SIM card, most probably you want to unlock it for different SIM card providers. If you buy your Alcatel One Touch Fierce with networks like AT&T, T-Mobile etc. on a contract, then you phone is Sim Locked with that network. You can unlock your device to use with any compatible gsm network and save significant cost.
The document discusses the importance of teaching practical accounting skills to students in addition to theoretical accounting concepts. It notes that while theory provides a strong foundation, many new graduates struggle with practical business accounting tasks due to a lack of hands-on training. This can cause problems for accountants in the modern workplace. The document recommends that accounting education focus more on practical skills and real-world applications to help students transition successfully into accounting careers. It provides an example of how clearly explaining the logic and rules behind common journal entries, like cash deposits at a bank, could help students better understand accounting practices.
Financial accounting icab introduction part
Financial accounting icab introduction part
Financial accounting ,icab ,introduction part
Financial accounting icab introduction part
Financial accounting ,icab ,introduction part
Financial accounting icab introduction part
Financial accounting ,icab ,introduction part
Financial and Managerial Accounting 16th Edition Stevenson Solutions ManualRhiannonne
Accounting provides information to support economic decisions. There are two broad types - financial accounting for external users, and internal accounting for management. Financial statements communicate cash flow prospects to investors and creditors. The balance sheet, income statement, and statement of cash flows are used. Estimates are needed as information is historical, inexact, and future-oriented. Adherence to accounting principles ensures comparability among organizations.
Acct 304 ( intermediate accounting i ) entire coursebestwriter
This document provides the materials for an entire Intermediate Accounting I course (ACCT 304) over 7 weeks. It includes discussion prompts, lecture notes, and assignments on various accounting topics. Week 1 covers the development of accounting standards and the conceptual framework. Week 2 discusses the purpose and uses of the balance sheet. Later weeks cover the income statement, cash flow statement, inventories, and other intermediate accounting concepts. Students are expected to participate in discussion threads and complete graded assignments each week to demonstrate their understanding of the course content.
Course Syllabus
Prerequisites
ACC 206
Course Description
Covers the corporate balance sheet and its related problems. Balance sheet items examined in detail explaining the theory behind various methods of application to accounts: cash, temporary investments, receivables, inventories, plant and intangible assets, and long-term investments.
Course Design
This course has been designed for the individual student. That does not mean that students cannot collaborate and work on assignments as teams or groups. Indeed, collaborative efforts should raise the level of learning synergy as one student’s instructional efforts reinforce that individuals learning experience. However, the final measure of learning will be conducted on an individual basis and by the performance of that individual in addressing classroom activity, course assignments, and a final course reflective paper.
The learning experience will consist of the following efforts: reading of the text and articles that may be assigned, discussion of text material and article content, assigned homework problems for each chapter being studied, a weekly case or problem, quizzes, and a course Reflective Paper. The Reflective Paper should demonstrate understanding of the readings as well as the implications of new knowledge.
Reading the text will be the primary source of formal knowledge for each student. A student will be expected to read each chapter as sequenced through the course. In doing so that student will be measured on how well the subject matter is understood, how adept that student is at recognizing situations in which the subject matter is at hand, translating the recognition into a useful application of the knowledge, and use the knowledge application to solve a problem or find a solution. The student will also be expected to defend the chosen approach towards problem solving by referencing text and classroom materials and to defend the rejection of alternatives that may have warranted consideration.
Homework assignments will be the routine measuring of a student’s ability to apply specific learned knowledge to a formal and structure situation with the end result being an answer that is measurable in a quantitative manner. Each assignment will have the objective to testing the student on the composite knowledge presented in the respective chapter. It is expected that this routine will install a sense of process discipline in each student that will guide the problem solving process.
Accounting is a strict discipline of numbers that must conform to a predefined code established by The AICPA, FASB, SEC, and other government and private boards and agencies. Accounting is governed by Generally Accepted Accounting Principles (GAAP). It has been reasoned that the best method for measuring understanding is with problem solving. Hence students will be encouraged to do self-testing problems from each chapter to ensure their learning of the course material.
Study and review the concept review.
This document summarizes an accounting elective module for secondary school students in Singapore. The module aims to simulate running a business and using accounting software. Students will incorporate a mock company, record transactions, manage petty cash and bank reconciliations, correct errors, and prepare financial statements. The module uses an "Accounting Storyboard" game to enhance learning and is taught over 14 weeks with lectures, tutorials, and practical sessions using accounting software.
Acct 304 ( intermediate accounting i ) entire courseRenea Barrera
The document is a course syllabus for ACCT 304 Intermediate Accounting I. It includes discussion topics and assignments for each of the 7 weeks in the course. The weekly topics cover development of accounting standards, the conceptual framework, balance sheets, income statements, cash flow statements, inventories, and receivables. Students are required to respond to discussion questions on these topics and complete weekly quizzes to demonstrate their understanding of intermediate accounting concepts.
Acct 304 ( intermediate accounting i ) entire courseJenniferHenrich11
The document is a course syllabus for ACCT 304 Intermediate Accounting I. It includes discussion topics and assignments for each of the 7 weeks in the course. The weekly topics cover development of accounting standards, the conceptual framework, balance sheets, income statements, cash flow statements, inventories, and receivables. Students are required to respond to discussion questions on these topics and complete quizzes each week. The goal is to stimulate conversation among students and teachers to develop a deeper understanding of intermediate accounting concepts.
Acct 304 ( intermediate accounting i ) entire courseMelisaHoward
This document provides an overview of the entire ACCT 304 (Intermediate Accounting I) course including weekly topics, assignments, and discussions. The course covers fundamental accounting concepts and standards including the development of accounting standards, the conceptual framework, balance sheets, income statements, cash flow statements, and inventory. Weekly discussions address topics like the purpose of financial statements, revenue recognition, internal controls over cash, and inventory systems. Students are expected to thoroughly respond to discussion questions on multiple days each week to demonstrate understanding of key course concepts.
Acct 304 ( intermediate accounting i ) entire courseDeanaThomas11
The document is a course syllabus for ACCT 304 (Intermediate Accounting I). It includes discussion topics and assignments for each of the 7 weeks in the course. The weekly topics cover development of accounting standards, the conceptual framework, balance sheets, income statements, cash flow statements, inventories, and receivables. Students are required to participate in online discussions on the weekly topics and complete quizzes to demonstrate their understanding of the concepts.
Analysis of AIS of any Public Limited Corporation (UBL)waQas ilYas
The document provides information about United Bank Limited (UBL), including:
1) UBL is one of the largest banks in Pakistan with over 1,400 domestic branches and 19 overseas branches.
2) The document describes some of UBL's accounting information systems like Omni accounts which allow customers to conduct banking via SMS.
3) It provides details on how to open a UBL Omni account, conduct transactions via SMS/mobile top-ups, and make withdrawals at agents or branches.
This document is a syllabus for an Advanced Financial Accounting course. It provides information on the course objectives, topics, materials, assessment, and schedule. The course aims to discuss financial accounting for business combinations, investments in other entities, and consolidated financial reporting. Specific topics include various acquisition accounting methods, equity method of accounting for investments, consolidated financial statement preparation, and issues related to subsidiaries, intercompany transactions, and multinational accounting. Students will be assessed through assignments, quizzes, exams, and group work. The syllabus outlines the lecture topics, readings, and assessment breakdown and policies.
The document summarizes the changes made in the latest edition of a financial accounting textbook. Key changes include updated legislation, more definitions highlighted in the text, additional "pause and reflect" scenarios, real-life application examples, and improvements to teaching and learning features. Transactional analysis diagrams were also added as an innovative way to explain the linkage between conceptual understanding, the accounting equation, and double-entry bookkeeping.
This document provides learning objectives and lecture suggestions for a chapter on analyzing financial statements. The key learning objectives are to explain ratio analysis, calculate and interpret key ratios from five groups, discuss how ratios relate to the balance sheet and income statement, and use ratios to analyze a firm's performance over time and compare to other firms. The lecture suggestions focus on using ratios to determine a firm's strengths and weaknesses and pitching concepts to non-accounting students.
This document provides an overview of a course on Managerial and Cost Accounting. The course aims to introduce basic accounting concepts and how managerial accounting helps managers make better decisions. Key topics covered include the role of management accountants, cost terminology, income statements, cost-volume-profit analysis, job order costing, process costing, and decision making using relevant information. Assessment methods include midterm exams, exercises, and case studies. The course contents are broken down into 27 sessions covering these various cost accounting principles and techniques.
The document outlines a syllabus for a fundamental accounting course with 13 lessons. Lesson 1 introduces accounting concepts like the nature of the firm and the origins and evolution of accounting. Lesson 2 covers economic transactions, the accounting equation, and uses an example of a beauty photo store. Lesson 3 discusses analyzing and recording accounting transactions using double-entry accounting and T-accounts.
Course outline aacsb mba 839_global outsourcing_r kumarShashank Gupta
1. The document outlines a course on global outsourcing for an MBA program. The course aims to provide an understanding of outsourcing, including different types and levels, and cost-benefit analysis.
2. The learning objectives are to acquaint students with factors affecting outsourcing decisions, develop skills in decision-making and innovation, and critically analyze situations.
3. Assessment will include quizzes, case study discussions, projects, and exams to evaluate students' conceptual understanding and ability to apply concepts.
This document provides guidance to clerks on creating and using a professional journal. It discusses the purpose and benefits of a journal, including using it to track governing body performance over time. It recommends making regular, contemporaneous entries following meetings and events. The journal should have a consistent framework and be available for review. Entries can include rating agenda items and discussions, with descriptors provided for ratings. Responding to patterns in the journal is important, through actions like discussions that can improve governing. Early experiences trialling this approach have shown benefits for professional reflection, though maintaining the journal takes time. The journal approach may also be transferable to governors or chairs.
Profit is the amount of revenue gained from a business activity that exceeds expenses, costs, and taxes. It is the difference between the purchase price and costs of bringing a product to market. Several factors affect a company's profit levels, including degree of competition in the market, strength of demand for the product, state of the economy, costs of production, and a firm's efficiency. Market competition, contestability, costs, substitutes, and a firm's ability to price discriminate all impact the profits a company can earn.
Ben & Jerry's publishes unedited annual reports that include both financial and social performance metrics, assessed by an outside auditor. This level of transparency was unprecedented and brought both praise and criticism. While critics argued unedited reports exposed weaknesses, supporters saw it as increasing accountability and trust with stakeholders. The social reports assessed employee treatment, community involvement, and other non-financial factors. By addressing both profits and social responsibility, Ben & Jerry's believed they could build a sustainable and socially conscious company.
The IRS introduced a new program called "Offer in Compromise" to help taxpayers with tax debt. This program allows taxpayers to settle their tax debt by paying a portion of what they owe in exchange for having the remaining balance waived. It provides relief for those struggling with tax debt due to issues like divorce, failed businesses, or illness. The program benefits both taxpayers by helping them resolve their tax issues, and the government by bringing in revenue faster than attempting to collect the full amounts owed. While it had some disadvantages like not directly benefiting regular taxpayers, the program overall helped improve the IRS's public image and collect money that otherwise may have gone uncollected.
Michael Bloomberg started his career as a clerk and worked his way up to head of equity and sales. When his company went public, he used his bonus to start his own company. His innovative idea was to create a single terminal with up-to-date financial information from various sources. This made his company very successful and left competitors behind. As a leader, Bloomberg came up with new ideas that advanced the financial information industry, such as Bloomberg Business Radio and magazines. While an effective leader, it is unclear if he is truly charismatic as the case does not show him having devoted followers.
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Kessler helped restore credibility to the FDA after the public had lost faith due to scandals, long approval times, and inconsistency. He restructured the FDA using modern management theories like empowering lower managers, decentralizing decision making, and allowing different parts to work together towards goals. This helped solve problems more quickly and avoid delays. Under Kessler's leadership, the FDA's budget and staff increased, it became more user-friendly, and ensured drug safety through programs like MEDWatch that encouraged adverse event reporting. The changes improved the FDA's responsiveness as a system.
environmental awareness pays off at farmers insuranceNivin Vinoi
Farmers Insurance successfully implemented California's 1989 Clean Air Act, which required companies with over 100 employees to adopt ridesharing plans to reduce air pollution. The transportation coordinator at Farmers, Debbie Dala, aggressively promoted their ridesharing program through newsletters, contests and events. Through her efforts, Farmers was able to increase its average vehicle ridership from 1.17 to 1.30, even as other companies' rates decreased. Dala's active leadership helped influence Farmers' organizational environment positively and make the required ridesharing a successful change for the company.
Macy's was facing major crises due to poor cost controls, customer service, outdated systems, and inappropriate merchandise. Two new co-CEOs developed a long-term strategic plan to address these issues and revitalize the company. Their five-year plan focused on paying down debt and achieving modest annual sales growth and margin increases. They restructured operations and introduced a new system to improve merchandising, planning, and delivery. Additionally, they launched a successful 24-hour cable TV channel to promote products and gain an exclusive competitive advantage over rivals. Through disciplined long-term planning and strategic changes, the co-CEOs were able to stabilize Macy's finances and revamp its brand image.
Fox was a new television channel looking to increase its viewership and attract advertisers. Rupert Murdoch, the chairman of Fox's parent company News Corporation, made the unconventional decision to outbid CBS for the rights to broadcast National Football Conference (NFC) games. This was Fox's first time broadcasting NFL games. Though risky, the decision was a success - it helped Fox attract new viewers between ages 18-45 and increase advertising revenue. As a result, Fox became one of the top-rated television channels. Murdoch's gambit paid off by using a major sports property to promote viewership growth for Fox as a network.
Featherstone introduced an Employee Stock Ownership Plan (ESOP) to motivate employees and prevent the Will-Burt Company from shutting down due to liabilities. He also provided education to employees to improve product quality and reduce rework costs. Employees became more invested in the company's success as owners through the ESOP. Education programs decreased rework hours and expenses by 75%, improving quality and increasing profits. Overall, the ESOP and education empowered employees and turned the failing company around.
The document describes Karen Smith struggling to work effectively on a new product team due to personality conflicts. The team lacked clear leadership and was tasked with developing recommendations for a new retail product over several months. Karen faced difficulties getting along with teammate Ben, a male chauvinist. Ben and another teammate James often made decisions as a duo without considering others. The team spent most meetings discussing data rather than making decisions, slowing their progress. To improve the team's effectiveness, the document recommends assigning a disciplined, open-minded leader and having the team consider the Shea-Guzzo model of interdependence, sense of dependency, and outcome interdependence.
Tina Brown was hired as the new editor of The New Yorker magazine. The New Yorker was struggling with declining circulation as its content had become outdated. Brown made many changes to modernize and revitalize the magazine. She added color photography, started new columns, and changed the magazine's language to be more accessible. Brown also brought new technology and reimagined the magazine's visual design. These changes were successful in boosting circulation, advertising pages, and newsstand sales under Brown's leadership.
The United way Of Compensating ExecutivesNivin Vinoi
1) The president of the United Way of America (UWA), the largest charity organization in the US, resigned due to allegations of misusing funds through lavish spending.
2) As a non-profit organization dependent on public donations, UWA introduced new restrictions on fund usage and compensation to regain donor trust and address transparency issues.
3) These new policies included suspending the president's retirement package, increased financial oversight, limiting travel expenses, and setting a daily meal allowance, helping UWA recover its reputation and increase donations.
MGM Grand Hotel in Las Vegas has achieved success through innovative management techniques under CEO Larry Woolf. It operates on a hierarchical structure with senior managers responsible for overall operations and lower managers handling various levels. While an autocratic management style is common in Las Vegas casinos, MGM also employs elements of Theory Y such as cross-training managers to gain employee insights and an integrated benefits system. Additionally, MGM's quality assurance program focuses on participative management and empowering lower-level employees to solve problems and make decisions quickly. These techniques have provided MGM Grand with the structure needed to enjoy ongoing success.
This document is a term paper on corporate social responsibility (CSR). It discusses the evolution of CSR and provides analysis on several aspects of CSR including theoretical frameworks, standards, relationships with NGOs and customers, and environmental CSR. The paper examines how various actors like employees, stakeholders, governments, and NGOs can influence social change through their pressures and mechanisms related to CSR initiatives. It also outlines some common CSR standards and how customers are increasingly expecting companies to engage in CSR activities.
Axe uses a targeted marketing strategy focused on young men aged 16-35. It positions itself as a cool, confident brand through provocative advertising campaigns. Axe's promotional mix includes TV, print, and online advertising, as well as sales promotions, interactive games, mobile apps, events, and publicity stunts. The brand's unconventional innovations and adventurous marketing approach have helped it become the leading male deodorant brand in India.
Ribbons and Bows operated for three months from April to June 2010. It had total sales of $7720 and closing stock of $4100. The company made a net profit of $1480 over this period, showing it was profitable. Cash in the bank declined due to purchases of stock for $2900 and a sewing machine for $1800. The balance sheet on June 30, 2010 showed total assets of $12770 including cash of $3390, stock of $4100, and machinery and computer equipment worth $3490 after depreciation. Liabilities included a cousin's loan of $10000 and outstanding wages and interest. The business was profitable for a new three month old company but needs to pay
- The proprietor started PC Depot with $65,000 cash and a $100,000 bank loan. Expenses in September included $1,485 for rent and $15,500 to purchase furniture and fixtures with cash.
- Journal entries were made to record transactions and prepare ledger accounts for expenses, assets, liabilities and capital.
- A trial balance was prepared showing debit and credit balances of all ledger accounts at the end of September.
The summaries are:
1. The balance sheets as of June 1 and June 30 show an increase in equipment and corresponding decrease in retained earnings and inventory. Cash, receivables, and payables also increased.
2. Comparing the two balance sheets shows the company purchased equipment on loan, decreasing inventory but increasing sales. Accounts receivable and cash increased while a loan was paid off.
3. Retained earnings did not increase by the full net income amount because dividends were paid to the owner, and the remaining difference was transferred to cash.
Kim Fuller needs accounting information like incomes, expenses, assets and liabilities for his new business. This includes a truck, trailers, machines, supplies and a warehouse. He also needs non-accounting info like contracts signed and hiring employees.
To value assets, Fuller adds up individual assets totaling $277,000. Opening owner's equity is $165,000 which is Fuller's and siblings' capital.
To determine profit and loss, Fuller needs expense and income data. Expenses include trade and office costs while incomes include operating and non-operating revenues. He should do analysis quarterly as the business is young.
Fuller must carefully record changes to asset values, liabilities if loans are paid
The document provides an overview and approach to Chapter 5, which covers revenue and monetary assets. It discusses the key topics in the chapter including accounts receivable, bad debts, revenue recognition, and financial statement ratios related to current assets and liabilities. It outlines several cases that are included to illustrate different aspects of the chapter, such as accounting for receivables and bad debts (Stern Corporation), measuring revenue and valuing assets (Grennell Farm), and addressing discrete revenue recognition problems (Joan Holtz). The document concludes with sample problems related to the chapter topics.
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1. Chapter 04 - Accounting Records and Systems
CHAPTER 4
ACCOUNTING RECORDS AND SYSTEMS
Changes from Twelfth Edition
The chapter has been updated from the Twelfth Edition.
Approach
Instructors will differ in the coverage that they give to this chapter, depending on their personal
preference and on the background of their students. For executive groups, the material may either be
omitted altogether or suggested as optional reading. For students who have previously had a course in
accounting, a review of this chapter is probably desirable, even though there should be nothing new in it
for them. For beginning students, we find it highly desirable to give much practice in the mechanics of
accounting. As pointed out in the text, this practice is intended to provide facility in a tool that will prove
useful in later work in analyzing problems, rather than to make the students into expert bookkeepers.
Instructors have taught a whole first course in accounting without once mentioning debit and credit. We
believe that their principal motive for doing this is to prove to their colleagues that it can be done.
Actually, the debit and credit mechanism is a device that permits the students to record the results of their
analysis of transactions unambiguously. It also facilitates clear communication in the classroom.
Discussion is likely to be cumbersome and subject to much misunderstanding if debits and credits are not
required.
Many of the fine points of bookkeeping are omitted from the text, but our experience has been that
enough information is given so that students understand the idea of debit and credit and can use the
journal, ledger, and other tools in analyzing subsequent cases.
Cases
The first two cases are primarily for practice and drill. It is perhaps not even necessary to discuss both of
them in detail in class although some time should be allowed for students to raise questions. As in other
cases, no standard terminology should be enforced although it may be in order to call attention at this
point to the fact that when the name of an account is given, this precise name should be used in the
journal entries.
One of the cases is an unincorporated business and the other is a corporation, so that the student can
observe that there is a very little difference in the recordkeeping for these two types of businesses. Also,
in one case the accounting period is a year and in the other it is a month, to emphasize the similarity of
accounting for these different time intervals.
Copies Express is a straightforward complete cycle problem.
Waltham Oil and Lube Center involves journal entries and testing of student knowledge of common
accounts.
Note: Some instructors use Waltham Oil and Lube Center in any of the following chapters, or even as a
review after Chapter 14. When used in this way, the instructor requires students to prepare financial
statements for the company.
4-1
2. Chapter 04 - Accounting Records and Systems
Problems
Problem 4-1
Cash Accounts Payable
Beg. Bal. $900 $3,400 (3) (3) $3,400 $3,600 Beg. Bal.
(4) 5,350 950 (5) 2,350 (1)
Bal. $1,900 $2,550 Bal.
Accounts Receivable Notes Payable
Beg. Bal. $3,000 $5,350 (4) (5) $950 $950 Beg. Bal.
(2) 6,350
Bal. $4,000
Inventory
Beg. Bal. $5,700 $4,150 (2)
(1) 2,350
Bal. $3,900
Problem 4-2
1) dr. Prepaid Rent......................................................................................................................................................................$14,340
cr. Cash.............................................................................................................................................................................$14,340
Prepaid rent is an asset.
2) dr. Sales Discounts and Allowances.......................................................................................................................................$34,150
cr. Provision for Sales Discounts and Allowances...........................................................................................................$34,150
Sales discounts and allowances is a deduction from gross sales to arrive at net sales. The provision is
a liability.
3) dr. Interest Receivable............................................................................................................................................................$35
cr. Interest Income............................................................................................................................................................$35
Interest receivable is an asset. Interest income would be listed as other income in this period’s income
statement.
4) dr. Depreciation Expense........................................................................................................................................................$13,660
cr. Accumulated Depreciation..........................................................................................................................................$13,660
Depreciation expense is an income statement item. Accumulated depreciation is disclosed as a
deduction from the related depreciable asset.
5) dr. Cash...................................................................................................................................................................................$2,730
cr. Deferred revenue.........................................................................................................................................................$2,730
Deferred revenue is a liability.
4-2
3. Chapter 04 - Accounting Records and Systems
6) dr. Stamp Expense.....................................................................................................................................................$100
Stamp Inventory.........................................................................................................................................................$72
cr. Cash................................................................................................................................................................$172
Stamps expense is an income statement item. Stamp inventory is an asset.
7) Bad debt expense.......................................................................................................................................................$1,350
Allowance for doubtful accounts..................................................................................................................$1,350
Bad debt expense account is an expense account. Allowance for doubtful accounts is a contra asset
displayed as a deduction from the asset accounts receivable.
Problem 4-3
a.
1) dr. Inventory........................................................................................................................................................$1,300
cr. Accounts payable.......................................................................................................................................$1,300
2) dr. Wages Expense..............................................................................................................................................$730
cr. Cash...........................................................................................................................................................$730
3) dr. Cash...............................................................................................................................................................$1,940
cr. Sales...........................................................................................................................................................$1,940
4) dr. Accounts Receivable......................................................................................................................................$1,810
cr. Sales...........................................................................................................................................................$1,810
5) dr. Overhead and Other Expenses.......................................................................................................................$900
cr. Cash...........................................................................................................................................................$900
6) dr. Cash...............................................................................................................................................................$1,510
cr. Accounts Receivable..................................................................................................................................$1,510
7) dr. Accounts Payable...........................................................................................................................................$1,720
cr. Cash...........................................................................................................................................................$1,720
8) dr. Cash...............................................................................................................................................................$650
cr. Deferred Revenue......................................................................................................................................$650
9) dr. Cash...............................................................................................................................................................$200
cr. Note Payable..............................................................................................................................................$200
10) dr. Cost of Goods Sold........................................................................................................................................$1,280
cr. Inventory....................................................................................................................................................$1,280
+ Beginning inventory.......................................................................................................................................$1,730
Additions........................................................................................................................................................1,300
Total available................................................................................................................................................$3,030
Ending inventory............................................................................................................................................1,750
Cost of goods sold..........................................................................................................................................$1,280
4-3
4. Chapter 04 - Accounting Records and Systems
11) Dr. Depreciation Expense.................................................................................................................................................$300
Cr. Accumulated Depreciation............................................................................................................................$300
b.
Accounts Payable Accounts Receivable
(1) $1,720 $3,070 $2,160 1,510 (6)
1,300 (1) (4) 1,810
Accumulated Depreciation Allowance for Doubtful Accounts
$2,800 $70
300 (11)
Cash Fixed Assets (cost)
$1,440 $ 730 (2) $6,200
(3) 1,940 900 (5)
(1) 1,510 1,720 (7)
(8) 650
(9) 200
Inventories Notes Payable
$1,730 $1,280 (10) $600
(1) 1,300 200 (9)
Owners’ Equity Deferred Revenue
(2) Wages $730 $4,990 $650 (8)
(5) Overhead 900 1,940 Sales (3)
(10) COGS 1,280 1,810 Sales (4)
(11) Depreciation 300
See above
d.
LUFT CORPORATION
Balance Sheet
Assets Liabilities
Cash...........................................................................................................................................................................................$2,390 Accounts payable...................................................................................$2,650
Accounts receivable (net)...........................................................................................................................................................2,390 Deferred revenue....................................................................................650
Inventories.................................................................................................................................................................................1,750 Current liabilities...............................................................................3,300
Current assets........................................................................................................................................................................$6,530 Notes payable....................................................................................800
Total liabilities...................................................................................4,100
Fixed assets................................................................................................................................................................................$6,200 Owner’s equity
Accumulated depreciation..........................................................................................................................................................(3,100) Owner’s equity.......................................................................................5,530
Total assets............................................................................................................................................................................$9,630
Total liabilities
and owners’ equity.............................................................................$9,630
4-4
5. Chapter 04 - Accounting Records and Systems
e.
LUFT CORPORATION
Income Statement
Sales............................................................................................................................................$3,750
Cost of goods sold.......................................................................................................................1,280
Gross margin...............................................................................................................................2,470
Wages..........................................................................................................................................730
Overhead.....................................................................................................................................900
Depreciation................................................................................................................................300
Net income..................................................................................................................................$ 540
Problem 4-4
a.
Cash and Equivalents Accounts Receivable
$119,115 $162.500
$119,115 $162,500
Store Equipment Merchandise Inventory
$215,000 $700,680 $302,990 (1)
$215,000 $397,690
Supplies Inventory Prepaid Insurance
$15,475 $10,265 (3) $38,250 $4,660 (4)
$5,210 $33,590
Selling Expense Sales Salaries
$24,900 24,900 (a) $105,750
(6) 3,575 109,325 (b)
Cost of Goods Sold Depreciation Expense
(1) $302,990 $302,990 (h) (2) $12,750 $12,750 (i)
Supplies Expense Insurance Expense
(3) $10,265 $10,265 (j) (4) $4,660 $4,660 (k)
Accrued Interest Accrued Sales Salaries
$3,730 (5) $3,575 (6)
$3,730 $3,575
Interest Receivable Interest Income
(7) 390 (l) 390 390 (7)
390
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6. Chapter 04 - Accounting Records and Systems
Miscellaneous General Expenses Sales Discounts
$31,000 31,000 (c) (d) 6,220 $6,220
Interest Expense Social Security Taxes
$9,300 $9, 600 $9,600 (f)
(5) 3,730 $13,030 (e)
Accumulated Depreciation Accounts Payable
$37,300 $118,180
12,750 (2) $118,180
$50,050
Notes Payable Common Stock
$143,000 $300,000
$143,000 $300,000
Retained Earnings Sales
$122,375 (g) $716,935 $716,935
192,585 (m)
$314,960
Profit and Loss
(a) 24,900 716, 935 (g)
(b) 109,325 390 (l)
(c) 31,000
(d) 6,220
(e) 13,030
(f) 9,600
(h) 302,990
(i) 12,750
(j) 10,265
(k) 4,660
(m) 192,585
Adjusting entries are:
(1) dr. Cost Of Goods Sold...................................................................................................................................................$302,990
cr. Merchandise Inventory..........................................................................................................................................$302,990
(2) dr. Depreciation Expense................................................................................................................................................$12,750
cr. Accumulated Depreciation....................................................................................................................................$12,750
(3) dr. Supplies Expense.......................................................................................................................................................$10,265
cr. Supplies Inventory................................................................................................................................................$10,265
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7. Chapter 04 - Accounting Records and Systems
(4) dr. Insurance Expense........................................................................................................................................$4,660
cr. Prepaid Insurance.....................................................................................................................................$4,660
(5) dr. Interest Expense............................................................................................................................................$3,730
cr. Accrued Interest.......................................................................................................................................$3,730
(6) dr. Sales Salaries................................................................................................................................................$3,575
cr. Accrued Sales Salaries.............................................................................................................................$3,575
(7) dr. Interest Receivable.......................................................................................................................................$390
cr. Interest Income.........................................................................................................................................$390
Closing entries are:
(a) dr. Profit and Loss..............................................................................................................................................$24,900
cr. Selling Expense........................................................................................................................................$24,900
(b) dr. Profit and Loss..............................................................................................................................................$109,325
cr. Sales Salaries............................................................................................................................................$109,325
(c) dr. Profit and Loss..............................................................................................................................................$31,000
cr. Miscellaneous General Expenses.............................................................................................................$31,000
(d) dr. Profit and Loss..............................................................................................................................................$6,220
cr. Sales Discounts........................................................................................................................................$6,220
(e) dr. Profit and Loss..............................................................................................................................................$13,030
cr. Interest Expense.......................................................................................................................................$13,030
(f) dr. Profit and Loss..............................................................................................................................................$9,600
cr. Social Security Taxes...............................................................................................................................$9,600
(g) dr. Sales.............................................................................................................................................................$716,935
cr. Profit and Loss.........................................................................................................................................$716,935
(h) dr. Profit and Loss..............................................................................................................................................$302,990
cr. Cost of Goods Sold..................................................................................................................................$302,990
(i) dr. Profit and Loss..............................................................................................................................................$12,750
cr. Depreciation Expense...............................................................................................................................$12,750
(j) dr. Profit and Loss..............................................................................................................................................$10,265
cr. Supplies Expense.....................................................................................................................................$10,265
(k) dr. Profit and Loss..............................................................................................................................................$4,660
cr. Insurance Expense....................................................................................................................................$4,660
(l) dr. Interest Income.............................................................................................................................................$390
cr. Profit and Loss.........................................................................................................................................$390
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8. Chapter 04 - Accounting Records and Systems
(m) dr. Profit and Loss..........................................................................................................................................................$192,585
cr. Retained Earnings.................................................................................................................................................$192,585
DINDORF COMPANY
Income Statement for the year ----.
Sales......................................................................................................................................................................$716,935
Sales discounts......................................................................................................................................................(6,220)
Net sales................................................................................................................................................................710,715
Cost of goods sold.................................................................................................................................................302,990
Depreciation..........................................................................................................................................................12,750
Sales salaries.........................................................................................................................................................109,325
Selling expense......................................................................................................................................................24,900
Supplies expense...................................................................................................................................................10,265
Insurance expense.................................................................................................................................................4,660
Social Security taxes.............................................................................................................................................9,600
Miscellaneous general expenses............................................................................................................................31,000
Interest expense.....................................................................................................................................................13,030
Interest income......................................................................................................................................................390
Net income...............................................................................................................................................$192,585
DINDORF COMPANY
Balance Sheet as of January 31, ----.
Assets Liabilities
Cash and cash equivalent................................................................................................................................................................$119,115 Accounts payable..................................................................................$118,180
Accounts receivable........................................................................................................................................................................162,500 Accrued interest....................................................................................3,730
Merchandise inventory....................................................................................................................................................................397,690 Accrued sales salaries...........................................................................3,575
Supplies inventory...........................................................................................................................................................................5,210 Current liabilities..................................................................................125,485
Prepaid insurance............................................................................................................................................................................33,590
Interest receivable...........................................................................................................................................................................390 Notes payable.......................................................................................143,000
Current assets..................................................................................................................................................................................718,495 Total liabilities.........................................................................268,485
Owners’ Equity
Store equipment..............................................................................................................................................................................215,000 Common stock......................................................................................300,000
Accumulated depreciation...............................................................................................................................................................(50,050) Retained earnings.................................................................................314,960
Total assets.................................................................................................................................................................................$883,445
Total liabilities
and owners’ equity...........................................................................$883,445
Cases
Case 4-1: PC Depot
Note: This case is unchanged from the Twelfth Edition.
Approach
This is a way of easing gently into the debit-credit mechanism and the complete accounting cycle.
Students usually need such a simple problem to build up their confidence in journalizing and posting
transactions.
4-8
9. Chapter 04 - Accounting Records and Systems
Comments on Questions
Question 1
Students should describe each transaction along the lines: “Barbara Thompson started PC Depot by
investing $65,000 of her own money and $100,000 borrowed from the bank, so her initial cash balance
was $165,000.”
Question 2
(These accounts are shown under question 3.)
Question 3
General Journal (cont’d)
(9) Cash...................................................................................................................................................................38,000
Sales..............................................................................................................................................................38,000
(10) Accounts Receivable..........................................................................................................................................14,850
Sales..............................................................................................................................................................14,850
(11) Cash...................................................................................................................................................................3,614
Accounts Receivable.....................................................................................................................................3,614
(12) Accounts Payable...............................................................................................................................................96,195
Cash...............................................................................................................................................................96,195
(13) Merchandise Inventory......................................................................................................................................49,940
Accounts Payable..........................................................................................................................................49,940
(14) Cost of Sales......................................................................................................................................................38,140
Merchandise Inventory..................................................................................................................................38,140
(15) Wages Expense..................................................................................................................................................688
Cash...............................................................................................................................................................688
(16) Wages Expense..................................................................................................................................................440
Accrued Wages.............................................................................................................................................440
(17) Prepaid Rent......................................................................................................................................................1,485
Cash...............................................................................................................................................................1,485
(18) Prepaid Insurance...............................................................................................................................................2,310
Cash...............................................................................................................................................................2,310
(19) Utilities Expense................................................................................................................................................226
Accounts Payable..........................................................................................................................................226
(20) Furniture and Fixtures........................................................................................................................................1,760
Cash...............................................................................................................................................................660
Accounts Payable..........................................................................................................................................1,100
4-9
10. Chapter 04 - Accounting Records and Systems
PC DEPOT
Balance Sheet as of September 30
Assets
Cash................................................................................................................................................................................................$84,661
Accounts receivable........................................................................................................................................................................11,236
Merchandise inventory....................................................................................................................................................................149,300
Prepaid insurance............................................................................................................................................................................2,117
Prepaid rent.....................................................................................................................................................................................1,485
Furniture and fixtures......................................................................................................................................................................$17,260
Accumulated depreciation..........................................................................................................................................................( 144) 17,116
Total Assets................................................................................................................................................................................$265,915
Liabilities ant Owners’ Equity
Accounts payable............................................................................................................................................................................$92,571
Accrued wages................................................................................................................................................................................440
Bank loan payable...........................................................................................................................................................................100,000
Interest payable...............................................................................................................................................................................1,250
Proprietor’s capital..........................................................................................................................................................................65,000
Retained earnings............................................................................................................................................................................6,654
Total Liabilities and Owners’ Equity.........................................................................................................................................$265,915
PC DEPOT
Income Statement for September
Sales................................................................................................................................................................................................$52,850
Cost of sales....................................................................................................................................................................................38,140
Gross margin..............................................................................................................................................................................14,710
Expenses:
Wages....................................................................................................................................................................................$2,063
Advertising............................................................................................................................................................................1,320
Office supplies.......................................................................................................................................................................1,100
Utilities..................................................................................................................................................................................501
Rent.......................................................................................................................................................................................1,485
Insurance...............................................................................................................................................................................193
Interest...................................................................................................................................................................................1,250
Depreciation..........................................................................................................................................................................144 8,056
Net income......................................................................................................................................................................................$ 6,654
4-10
12. Chapter 04 - Accounting Records and Systems
Insurance Expense
Interest Expense (23) 193
(22) 1,250
Retained Earnings
Income Summary (25) 6,654
(25) 6,654 (24) 52,850
(other closing entries
not shown here)
Question 4
Other adjusting entries:
(21) Depreciation Expense [($15,500 + $1,760) / 10] / 12.............................................................................................144
Accumulated Depreciation.................................................................................................................................144
(22) Interest Expense ($100,000 x 15%) / 12)................................................................................................................1,250
Interest Payable..................................................................................................................................................1,250
(23) Insurance Expense ($ 2,310 / 12)............................................................................................................................193
Prepaid Insurance...............................................................................................................................................193
Postings to the ledger are shown under Question 3. Note that five additional T accounts, not required for
entries (1) - (20), must be created in order to post these adjusting entries.
Question 5
For reasons of space, we shall illustrate only one of the entries closing the temporary accounts, plus the
final closing entry:
(24) Sales........................................................................................................................................................................52,850
Income Summary...............................................................................................................................................52,850
(25) Income Summary....................................................................................................................................................6,654
Retained Earnings...............................................................................................................................................6,654
Note that two more T accounts have been created for the closing process.
Question 6
The statements appear above.
Case 4-2: Save-Mart
Note: This case is unchanged from the Twelfth Edition.
Approach
This is a straightforward problem in making adjusting and closing entries. Students may raise the
possibility of recording social security taxes on accrued sales salaries; this has not been done in the
accompanying solution.
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13. Chapter 04 - Accounting Records and Systems
Questions 1-4
The journal entries and accounts for Questions 1-3 are as indicated on the worksheet that follows.
(Because only one entry per account is involved, to save space we have used a worksheet here, even
though the students were asked to use T-accounts.) The financial statements for Question 4 are shown
below.
SAVE-MART COMPANY
Balance Sheet as of February 28
Assets
Current assets:....................................................................................................................................................................
Cash...............................................................................................................................................................................$ 88,110
Accounts receivable......................................................................................................................................................127,430
Merchandise inventory..................................................................................................................................................298,347
Supplies inventory.........................................................................................................................................................3,877
Prepaid insurance..........................................................................................................................................................5,305
Toted current assets..................................................................................................................................................523,069
Plant and Equipment:.........................................................................................................................................................
Store equipment.............................................................................................................................................................$ 70,970
Less: Accumulated depreciation....................................................................................................................................( 21,559) 49,411
Total assets.........................................................................................................................................................................$572,480
Equities
Liabilities
Accounts payable..........................................................................................................................................................$ 88,970
Notes and wages payable...............................................................................................................................................90,840
Interest payable.............................................................................................................................................................865
Total liabilities..........................................................................................................................................................180,675
Stockholders’ equity:.........................................................................................................................................................
Common stock $100,000
Retained earnings 291,805 391,805
Total equities......................................................................................................................................................................$572,480
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14. Chapter 04 - Accounting Records and Systems
SAVE-MART COMPANY
Income Statement for the Year Ended February 28
Gross sales......................................................................................................................................................................................$988,700
Less: Sales discount 3,340
Net sales..........................................................................................................................................................................................985,360
Less: Cost of goods sold..................................................................................................................................................................604,783
Gross margin...................................................................................................................................................................................380,577
Less: Expenses
Selling expense...........................................................................................................................................................................$10,880
Sales salaries..............................................................................................................................................................................49,480
Miscellaneous general expense..................................................................................................................................................18,930
Interest Expense.........................................................................................................................................................................7,965
Social security tax expense.........................................................................................................................................................3,400
Depreciation expense.................................................................................................................................................................10,139
Supplies used..............................................................................................................................................................................13,603
Insurance expenses.....................................................................................................................................................................7,125
Bank services charges................................................................................................................................................................750
Total expenses.......................................................................................................................................................................122,272
Net income......................................................................................................................................................................................$258,305
4-14
15. Chapter 04 - Accounting Records and Systems
SAVE-MART
Worksheet
Balances
February 28 Adjustments
Adjusted
Balances
dr. cr. dr. cr. dr. cr.
Cash...................................................................................................................................................................................88,860 (7) 750 88,110
Accounts receivable...........................................................................................................................................................127,430 127,430
Merchandise inventory.......................................................................................................................................................903,130 (1) 604,783 298,347
Store equipment.................................................................................................................................................................70,970 70,970
Supplies inventory..............................................................................................................................................................17,480 (3) 13,603 3,877
Prepaid insurance...............................................................................................................................................................12,430 (4) 7,125 5,305
Accumulated
depreciation........................................................................................................................................................................
11,420 (2) 10,139 21,559
Accounts payable 88,970 88,970
Notes and wages
payable...............................................................................................................................................................................
88,500 (6) 2,340 90,840
Interest payable..................................................................................................................................................................(5) 865 865
Common stock...................................................................................................................................................................100,000 100,000
Retained earnings...............................................................................................................................................................33,500 _______ 33,500
594,039 335,734
Sales...................................................................................................................................................................................988,700 988,700
Sales discounts...................................................................................................................................................................3,340 3,340
Selling expense..................................................................................................................................................................10,880 10,880
Sales salaries......................................................................................................................................................................47,140 (6) 2,340 49,480
Miscellaneous general
expense...........................................................................................................................................................................18,930 18,930
Interest expense..................................................................................................................................................................7,100 (5) 865 7,965
Social security tax..............................................................................................................................................................3,400 3,400
Bank service charges..........................................................................................................................................................(7) 750 750
4-15
16. Chapter 04 - Accounting Records and Systems
Cost of goods sold...........................................................................................................................................................................(1) 604,783 604,783
Depreciation....................................................................................................................................................................................(2) 10,139 10,139
Supplies expense.............................................................................................................................................................................(3) 13,603 13,603
Insurance expense..........................................................................................................................................................................._______
_
________ (4) 7,125 ______
_
7,125 ________
1,311,09
0
1,311,090 639,605 639,605 1,324,434 1,324,434
Case 4-3: Copies Express
Note: This case is updated from the Twelfth Edition.
Approach
This is a straightforward complete cycle accounting problem. The transactions and financial statements
follow.
Some students may develop a cost of sales amount, including wages, supplies, and perhaps some other
items. Actually, the case data are not complete enough to know which of Copies Express’ expenses are
analogous to cost of goods sold for a manufacturing firm, and which are definitely period expenses (e.g.,
a portion of utilities). These students’ efforts should not be discouraged at this point, as they are making
good efforts to incorporate important concepts despite the limitations in the data presented. Rather, the
students’ efforts can be used to raise the question of whether it would be useful for Copies Express to
have a gross margin figure, assuming one could be developed with some elaboration of the chart of
accounts.
4-16
17. Chapter 04 - Accounting Records and Systems
Journal Entries
(1) Cash........................................................................................................................................................................176,450
Sales...................................................................................................................................................................176,450
(2) Accounts Receivable..............................................................................................................................................64,750
Sales...................................................................................................................................................................64,750
Cash........................................................................................................................................................................64,750
Accounts Receivable..........................................................................................................................................64,750
(3) Wages and Salaries (expense).................................................................................................................................85,750
Cash....................................................................................................................................................................85,750
(4) Heat, Light, and Power (expense)...........................................................................................................................15,000
Cash....................................................................................................................................................................15,000
(5) Supplies Inventory .................................................................................................................................................52,600
Cash....................................................................................................................................................................52,600
(6) Selling and Administration (expense).....................................................................................................................28,375
Cash....................................................................................................................................................................28,375
(7) Interest Expense......................................................................................................................................................2,880
Cash....................................................................................................................................................................2,880
(8) Bank Loan..............................................................................................................................................................12,000
Cash....................................................................................................................................................................12,000
(9) Accounts Payable...................................................................................................................................................10,400
Cash....................................................................................................................................................................10,400
(10) Supplies Inventory..................................................................................................................................................9,875
Accounts Payable...............................................................................................................................................9,875
(11) Depreciation Expense.............................................................................................................................................15,000
Accumulated Depreciation.................................................................................................................................15,000
(12) Accounts Receivable..............................................................................................................................................11,000
Sales...................................................................................................................................................................11,000
(13) Cost of Supplies Used.............................................................................................................................................60,250
Supplies Inventory..............................................................................................................................................60,250
(14) Tax Expense...........................................................................................................................................................11,593
Taxes Payable.....................................................................................................................................................11,593
(15) At this point, the above entries can be posted, and temporary accounts closed to
Income Summary. The final entry closes Income Summary to Retained Earnings
Income Summary....................................................................................................................................................33,352
Retained Earnings...............................................................................................................................................33,352
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18. Chapter 04 - Accounting Records and Systems
COPIES EXPRESS
Income Statement
For the Year Ended December 31, 2010
Sales................................................................................................................................................................................................$252,200
Operating expenses:........................................................................................................................................................................
Cost of supplies used..................................................................................................................................................................$60,250
Wages and salaries.....................................................................................................................................................................85,750
Heat, light, and power................................................................................................................................................................15,000
Selling and administration..........................................................................................................................................................28,375
Depreciation...............................................................................................................................................................................15,000
Total......................................................................................................................................................................................204,375
Operating income............................................................................................................................................................................47,825
Interest expense...............................................................................................................................................................................2,880
Income before taxes........................................................................................................................................................................44,945
Federal income taxes.......................................................................................................................................................................11,593
Net income.................................................................................................................................................................................$ 33,352
COPIES EXPRESS
Balance Sheet as of December 31, 2010
Assets
Current assets..................................................................................................................................................................................
Cash (2,000 + 241,200 - 207,005)..............................................................................................................................................$ 36,195
Accounts receivable...................................................................................................................................................................11,000
Supplies inventory (24,400 + 52,600 + 9,875 - 60,250)............................................................................................................26,625
Total......................................................................................................................................................................................$ 73,820
Property, plant and equipment.........................................................................................................................................................
Building and equipment.............................................................................................................................................................$300,000
Less: Accumulated depreciation.................................................................................................................................................15,000 285,000
Land...........................................................................................................................................................................................12,000
Total Assets...........................................................................................................................................................................297,000
$370,820
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19. Chapter 04 - Accounting Records and Systems
Liabilities and Owners’ Equity
Current liabilities................................................................................................................................................................
Accounts payable (10,400 – 10,400 + 9,875)................................................................................................................9,875
Taxes payable................................................................................................................................................................11,593
Total.........................................................................................................................................................................$ 21,468
Long-term debt:..................................................................................................................................................................
Bank loan......................................................................................................................................................................12,000
Owners’ equity:..................................................................................................................................................................
Capital stock..................................................................................................................................................................304,000
Retained earnings..........................................................................................................................................................33,352
Total......................................................................................................................................................................337,352
Total liabilities and owners’ equity....................................................................................................................................$370,820
Case 4-4 Waltham Oil and Lube Center, Inc.
Note: This case is unchanged from the Twelfth Edition.
Approach
The case is designed to give students a bookkeeping experience within a class discussion that is more
interesting that the typical bookkeeping class.
The case asks students to prepare the journal entries for a new business’ initial three months of
operations; derive directly from the journal entries certain end of the period account balances; and
comment on several accounting policy decisions facing the management.
The journal entry requirement is straightforward, but some students may find it somewhat difficult
because the entries must be prepared using a case format rather than a problem format. The class
discussion of account balances is designed to test the students’ understanding of account definitions and
the relationship of journal entries to the account balances. Finally, the case includes several additional
actual and potential transactions that will generate class discussion as to the correct way to account for the
transaction. This latter discussion and the account balance discussion can be combined.
Some instructors use the case to discuss the complete accounting cycle. If the case is used for this
purpose, the instructor must assign the questions for this assignment. Since students in the early stages of
the course (up through Chapter 4) may have trouble with this challenging assignment, instructors using
the case for a discussion of the full accounting cycle usually assign the case later in the course (Chapter 5
onwards.)
Question 1
The journal entries are:
1) $40,000 Capital contribution
Cash 40,000
Capital 40,000
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21. Chapter 04 - Accounting Records and Systems
Cash 4,500
17) $340 Receivable – parking
Accounts receivable 340
Parking Revenues 340
18) $730 Receivable – local merchant
Accounts receivable 730
Service Revenues 730
19) $2100 Unpaid payroll
Payroll expense 2100
Accrued payroll 2100
20) $350 Unpaid utilities
Utilities expense 350
Accrued utilities 350
21) $9,260 Cost of Sales (oil and grease)1
Cost of Sales 9,260
Inventory 9260
22) $150 Furniture depreciation2
Depreciation expense 150
Accumulated depreciation 150
23) $3,750 Equipment depreciation3
Depreciation expense 3,750
Accumulated depreciation 3,750
24) $400 August parking prepayments
Cash 400
Deferred parking revenue 400
25) $300 Insurance expense4
Insurance expense 300
Prepaid Insurance 300
Question 2
A) Capital
Knight has made two capital contributions ($40,000 and $10,000.) The total is $50,000. Some
students may want to include retained earnings in their capital amount. They should be encouraged not to
do this as accounting has a separate account for retained earnings for a good reason – to show how much
of the company’s profits have been invested in the business. Similarly, the capital account is kept
separate from retained earnings to show how much the owners have contributed to the business.
1
Beginning Inventory $ 6,320
Purchases 8,230
Total Available $14,550
Ending Inventory 5,290
Cost of Sales $9,260
2
($6,000/ 10 years) x .25 = $150
3
($75,000/ 5 years) x .25 = $3,750
4
$1200 x .25 = $300
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22. Chapter 04 - Accounting Records and Systems
B) Accumulated depreciation
The accumulated depreciation account is the sum of two amounts ($150 and $3,750.) The
balance is $3,900. Students should be encouraged to explain why depreciable assets are reported at cost
with the accumulated depreciation account shown as a contra asset account. Statement users want to
know the cost of the assets being used and the extent to which they have been depreciated. Statement
users can use their data to estimate the average age of a depreciable asset (accumulated depreciation /
annual straight-line depreciation expense.)
C) Prepaid Asset
The only prepaid asset is prepaid insurance. The balance is $900 ($1200 - $300.) One-quarter of
the insurance coverage benefit has expired ($1200 x .25.) Students should be asked why was the
insurance payment was not expensed on May 1. The answer is it met the definition of an asset (future
economic benefits) and its expiration accounting is influenced by the matching concept.
D) Cash balance
The cash T account is (Journal entry indicated)
Cash
1) 40,000 2) 40,000
4) 10,000 3) 6,000
9) 108,600 5) 1,200
24) 400 7) 1,500
10) 8,230
11) 34,560
12) 1,700
13) 6,600
14) 26,400
15) 2,490
16) 4,500
Balance 25,820
The cash balance is $25,820. Some students might argue the $400 prepaid parking checks do not belong
in the July 31 cash balance. In their view the payment was not received until after that date. The case is
deliberately vague on this point. The instructor can use this vagueness to raise the question as to the
significance of “cut off” dates.
E) Accounts Receivable
Waltham Center is owed $340 by overnight parkers and $730 by local merchants. The accounts
receivable balance is $1070. Here or later in the class, the bad debt issue can be discussed. In either case
the instructor should take advantage of the issue to illustrate how bad debt accounting works and have the
class discuss why accounts receivable are reported net of bad debt allowance (assets should be reported at
their net realized value.)
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23. Chapter 04 - Accounting Records and Systems
F) Liabilities
There are three liabilities at the end of the three month operating period. Two are the current
liabilities accrued payroll $2,100 and accrued utilities $350. The third is the longer term obligation for
the equipment ($47,310.) The liability account balance is $49,760. During the liability discussion the
instructor should ask what is the current liability balance? The correct answer is $12,410 ($12,410 =
$2,100 + 350 + 9,960 current maturity of equipment payable [$830 + 12 = $9,960]). The two accrued
liabilities mentioned above plus the current maturity on the long-term obligation. The instructor should
use the discussion to review the distinction between current and non current balance sheet accounts.
Some advanced students may challenge the liability total. They may want to impute an interest
charge on the “non interest bearing note.” If students do not raise this issue, the instructor is well advised
not to raise it. The class is not ready at this time for a present value-type discussion.
Question 2
a) Withdrawals
The amount of the withdrawals is not the interesting question. The interesting question is how
should Knight view his withdrawals in his assessment of the progress of his business to date. Is the
$4,500 withdrawal a dividend? Wages? If Knight is trying to assess how well his business has done, he
might account for the withdrawals as “wages.” On the other hand, if he is trying to answer how much he
has earned on his investment, he might regard the withdrawals as “dividends.” In either case the
instructor might consider including the opportunity cost of wages foregone by not working elsewhere.
b) Cost of Sales
See note to cost of sales journal entry.
c) Parking revenues
The amount is $3,640 ($3,300 cash received plus $340 owed.) Some students may want to
deduct a bad debt provision from gross revenues. Accounting does not work that way. It reports
provisions for bad debts as an expense item. Other students may want to include the $400 prepaid August
parking. This would be an error. The prepayment has not been earned (it has been realized.) It is a
deferred revenue item (a liability.)
d) Lease Expenses
The total amount is $27,900 (May $1500 prepaid flat rental plus $3,000 June – July flat rental
paid plus $23,400 per car $10 payments.) Some students will forget the prepaid May rental. This
discussion gives the instructor an opportunity to discuss how a prepaid expense becomes an expense.
e) Total Revenues
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24. Chapter 04 - Accounting Records and Systems
Total revenues is the sum of parking revenues ($3,640) cash service revenues ($105,300) and
credit service sales ($730.) The amount is $109,670. Some students may forget the credit service sales.
The service and rental revenues should be reported separately. In this way the profitability of
each activity can be assessed.
Question 4
Some instructors use the revenue and bad debts discussion here and above as a lead into or part of
their Chapter 5 assignments.
Since the checks were received before the end of the accounting period, the $400 prepaid August
parking checks are part of the end of period cash balance. The offsetting credit is to deferred revenues
(realized but not earned.) See discussion above.
A provision for bad debt might be considered. Some of the parkers may not belong to the
“permanent” local population and might “skip town” without paying. Also, small businesses have a high
rate of bankruptcy. On the other hand, given the low level of receivables, any bad debt allowance might
not be material enough to warrant accounting recognition of a bad debt allowance.
The family use of the Waltham Center should generate considerable discussion. Is the family use
revenue? A cost? A withdrawal? Measured at retail? Measured at cost? Worth worrying about?
Accounting, if the amount is material, treats the family use as a withdrawal measured at cost. This use is
not an expense associated with revenues (matching.) It is not a revenue (not realized.) The amount is not
measured at retail (accounting does not recognize opportunity costs.) Measurement at cost reflects the
replacement cost value of the asset transferred to the owners. In this case the cost is probably worth
worrying about since the family use is a form of “leakage” that may become more significant and distort
the operating results if not controlled. (Technically, the family use is an income item for tax purposes,
which might motivate management to use a cost based measurement.)
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