CHAPTER 2

The Recording Process

ASSIGNMENT CLASSIFICATION TABLE

Brief A
Learning Objectives Questions Exercises Do It! Exercises Problems

1. Indicate how accounts, 1, 2, 3, 4, 5, 1, 2, 5 1 1, 2, 4, 6, 7, 1A, 2A, 3A,

debits, and credits are used 6, 7, 8, 9, 19, 14 5A
to record business 21
transactions.

2. Indicate how a journal is 10, 11, 12, 3, 4, 6 2 3, 5, 6, 7, 10, 1A, 2A, 3A,
used in the recording 13, 14, 16 11, 12 5A
process.

3. Explain how a ledger and 15, 17 7, 8 3 8, 9, 12 2A, 3A, 5A

posting help in the recording
process.

4. Prepare a trial balance. 18, 20 9, 10 4 9, 10, 11, 13, 2A, 3A, 4A,
14 5A

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-1
ASSIGNMENT CHARACTERISTICS TABLE

Problem Difficulty Time Allotted

Number Description Level (min.)

1A Journalize a series of transactions. Simple 20–30

2A Journalize transactions, post, and prepare a trial balance. Simple 30–40

3A Journalize transactions, post, and prepare a trial balance. Moderate 40–50

4A Prepare a correct trial balance. Moderate 30–40

5A Journalize transactions, post, and prepare a trial balance. Moderate 40–50

2-2 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
 WEYGANDT ACCOUNTING PRINCIPLES 12E
CHAPTER 2
THE RECORDING PROCESS

Number LO BT Difficulty Time (min.)

BE1 1 C Simple 6–8
BE2 1 C Simple 4–6
BE3 2 AP Simple 4–6
BE4 2 C Moderate 4–6
BE5 1 C Simple 6–8
BE6 2 AP Simple 4–6
BE7 3 AP Simple 4–6
BE8 3 AP Simple 4–6
BE9 4 AP Simple 4–6
BE10 4 AN Moderate 6–8
DI1 1 C Simple 3–5
DI2 2 AP Simple 3–5
DI3 3 AP Simple 2–4
DI4 4 AP Simple 6–8
EX1 1 K Simple 2–4
EX2 1 C Simple 10–15
EX3 2 AP Simple 8–10
EX4 1 C Simple 6–8
EX5 2 AP Simple 6–8
EX6 1, 2 AP Simple 6–8
EX7 1, 2 AP Simple 8–10
EX8 3 K Simple 2–4
EX9 3, 4 AP Simple 10–12
EX10 2, 4 AP Moderate 10–12
EX11 2, 4 AP Moderate 12–15
EX12 2, 3 AP Moderate 12–15
EX13 4 AN Moderate 6–8
EX14 1, 4 AP Simple 8–10

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-3
THE RECORDING PROCESS (Continued)

Number LO BT Difficulty Time (min.)

P1A 1, 2 AP Simple 20–30
P2A 1, 2, 3, 4 AP Simple 30–40
P3A 1, 2, 3, 4 AP Moderate 40–50
P4A 4 AN Moderate 30–40
P5A 1, 2, 3, 4 AP Moderate 40–50
BYP1 1 C Simple 8–10
BYP2 1, 2 AN Simple 8–10
BYP3 — AP Simple 15–20
BYP4 — AP, S Simple 15–20
BYP5 3, 4 AP, S Moderate 20–30
BYP6 4 AN, E Moderate 10–15
BYP7 — E Moderate 10–15
BYP8 — E Moderate 15–20
BYP9 — E Moderate 15–20
BYP10 — E Moderate 20–30

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Copyright © 2015 John Wiley & Sons, Inc.

BLOOM’S TAXONOMY TABLE

Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems

Learning Objective Knowledge Comprehension Application Analysis Synthesis Evaluation

1. Describe how accounts, Q2-1 Q2-2 Q2-8 DI2-1 E2-6 P2-1A P2-5A
debits, and credits are used to Q2-21 Q2-3 Q2-9 E2-2 E2-7 P2-2A
record business transactions. E2-1 Q2-4 Q2-19 E2-4 E2-14 P2-3A
Q2-5 BE2-1
Q2-6 BE2-2
Q2-7 BE2-5
2. Indicate how a journal is used Q2-10 Q2-11 Q2-16 E2-5 E2-12
in the recording process. Q2-12 Q2-13 BE2-3 E2-6 P2-1A
Weygandt, Accounting Principles, 12/e, Solutions Manual

Q2-14 BE2-6 E2-7 P2-2A

BE2-4 DI2-2 E2-10 P2-3A
E2-3 E2-11 P2-5A
3. Explain how a ledger and E2-8 Q2-15 BE2-7 E2-9 P2-3A
posting help in the recording Q2-17 BE2-8 E2-12 P2-5A
process. DI2-3 P2-2A
4. Prepare a trial balance. Q2-18 BE2-9 E2-10 P2-2A BE2-10
Q2-20 DI2-4 E2-11 P2-3A E2-13
E2-9 E2-14 P2-5A P2-4A
Broadening Your Perspective Financial Reporting Real-World Focus Comparative Analysis Communication All About You
Ethics Case Decision Making Ethics Case
Across the Considering
Organization P, P, and P
Real-World
Focus
(For Instructor Use Only)
2-5
 ANSWERS TO QUESTIONS

1. A T account has the following parts: (a) the title, (b) the left or debit side, and (c) the right or credit
side.

2. Disagree. The terms debit and credit mean left and right respectively.

3. Heath is incorrect. The double-entry system merely records the dual effect of a transaction on the
accounting equation. A transaction is not recorded twice; it is recorded once, with a dual effect.

4. Erica is incorrect. A debit balance only means that debit amounts exceed credit amounts in an
account. Conversely, a credit balance only means that credit amounts are greater than debit
amounts in an account. Thus, a debit or credit balance is neither favorable nor unfavorable.

5. (a) Asset accounts are increased by debits and decreased by credits.

(b) Liability accounts are decreased by debits and increased by credits.
(c) Revenues and owner’s capital are increased by credits and decreased by debits. Expenses
and owner’s drawing are increased by debits and decreased by credits.

6. (a) Accounts Receivable—debit balance.

(b) Cash—debit balance.
(c) Owner’s Drawings—debit balance.
(d) Accounts Payable—credit balance.
(e) Service Revenue—credit balance.
(f) Salaries and Wages Expense—debit balance.
(g) Owner’s Capital—credit balance.

7. (a) Accounts Receivable—asset—debit balance.

(b) Accounts Payable—liability—credit balance
(c) Equipment—asset—debit balance.
(d) Owner’s Drawings—owner’s equity—debit balance.
(e) Supplies—asset—debit balance.

8. (a) Debit Supplies and credit Accounts Payable.

(b) Debit Cash and credit Notes Payable.
(c) Debit Salaries and Wages Expense and credit Cash.

9. (1) Cash—both debit and credit entries.

(2) Accounts Receivable—both debit and credit entries.
(3) Owner’s Drawings—debit entries only.
(4) Accounts Payable—both debit and credit entries.
(5) Salaries and Wages Expense—debit entries only.
(6) Service Revenue—credit entries only.

10. The basic steps in the recording process are:

(1) Analyze each transaction for its effect on the accounts.
(2) Enter the transaction information in a journal.
(3) Transfer the journal information to the appropriate accounts in the ledger.

2-6 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
Questions Chapter 2 (Continued)

11. The advantages of using the journal in the recording process are:
(1) It discloses in one place the complete effects of a transaction.
(2) It provides a chronological record of all transactions.
(3) It helps to prevent or locate errors because the debit and credit amounts for each entry can
be easily compared.

12. (a) The debit should be entered first.

(b) The credit should be indented.

13. When three or more accounts are required in one journal entry, the entry is referred to as a
compound entry. An example of a compound entry is the purchase of equipment, part of which is
paid for with cash and the remainder is on account.

14. (a) No, debits and credits should not be recorded directly in the ledger.
(b) The advantages of using the journal are:
1. It discloses in one place the complete effects of a transaction.
2. It provides a chronological record of all transactions.
3. It helps to prevent or locate errors because the debit and credit amounts for each entry
can be easily compared.

15. The advantage of the last step in the posting process is to indicate that the item has been posted.

16. (a) Cash.............................................................................................. 9,000

Owner’s Capital.................................................................... 9,000
(Invested cash in the business)

(b) Prepaid Insurance.......................................................................... 800

Cash...................................................................................... 800
(Paid one-year insurance policy)

(c) Supplies......................................................................................... 2,000

Accounts Payable................................................................. 2,000
(Purchased supplies on account)

(d) Cash.............................................................................................. 7,500

Service Revenue.................................................................. 7,500
(Received cash for services performed)

17. (a) The entire group of accounts maintained by a company, including all the asset, liability, and
owner’s equity accounts, is referred to collectively as the ledger.
(b) A chart of accounts is a list of accounts and the account numbers that identify their location
in the ledger. The chart of accounts is important, particularly for a company that has a large
number of accounts, because it helps organize the accounts and define the level of detail that
a company desires in its accounting system.

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-7
Questions Chapter 2 (Continued)

18. A trial balance is a list of accounts and their balances at a given time. The primary purpose of a
trial balance is to prove (check) that the debits equal the credits after posting. A trial balance also
facilitates the discovery of errors in journalizing and posting. In addition, it is useful in preparing
financial statements.

19. No, Victor is not correct. The proper sequence is as follows:

(b) Business transaction occurs.
(c) Information entered in the journal.
(a) Debits and credits posted to the ledger.
(e) Trial balance is prepared.
(d) Financial statements are prepared.

20. (a) The trial balance would balance.

(b) The trial balance would not balance.

21. The normal balances are Cash debit, Accounts Payable credit, and Interest Expense debit.

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 SOLUTIONS TO BRIEF EXERCISES

BRIEF EXERCISE 2-1

(a) (b) (c)

Debit Credit Normal
Effect Effect Balance
1. Accounts Payable Decrease Increase Credit
2. Advertising Expense Increase Decrease Debit
3. Service Revenue Decrease Increase Credit
4. Accounts Receivable Increase Decrease Debit
5. Owner’s Capital Decrease Increase Credit
6. Owner’s Drawings Increase Decrease Debit

BRIEF EXERCISE 2-2

Account Debited Account Credited

June 1 Cash Owner’s Capital
2 Equipment Accounts Payable
3 Rent Expense Cash
12 Accounts Receivable Service Revenue

BRIEF EXERCISE 2-3

June 1 Cash....................................................................... 5,000

Owner’s Capital............................................. 5,000

2 Equipment............................................................. 2,400
Accounts Payable......................................... 2,400

3 Rent Expense........................................................ 800

Cash............................................................... 800

12 Accounts Receivable........................................... 300

Service Revenue........................................... 300

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-9
BRIEF EXERCISE 2-4

The basic steps in the recording process are:

1. Analyze each transaction. In this step, business documents are examined

to determine the effects of the transaction on the accounts.

2. Enter each transaction in a journal. This step is called journalizing and

it results in making a chronological record of the transactions.

3. Transfer journal information to ledger accounts. This step is called

posting. Posting makes it possible to accumulate the effects of
journalized transactions on individual accounts.

BRIEF EXERCISE 2-5

(a) Effect on Accounting Equation (b) Debit-Credit Analysis

Aug. 1 The asset Cash is increased; the Debits increase assets:

owner’s equity account debit Cash $8,000.
Owner’s Capital is increased. Credits increase owner’s equity:
credit Owner’s Capital $8,000.

4 The asset Prepaid Insurance is Debits increase assets:

increased; the asset Cash is debit Prepaid Insurance $1,800.
decreased. Credits decrease assets:
credit Cash $1,800.

16 The asset Cash is increased; the Debits increase assets:

revenue Service Revenue is debit Cash $3,600.
increased. Credits increase revenues:
credit Service Revenue $3,600.

27 The expense Salaries and Wages Debits increase expenses:

Expense is increased; the asset debit Salaries and Wages Expense
Cash is decreased. $1,000.
Credits decrease assets:
credit Cash $1,000.

2-10 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
BRIEF EXERCISE 2-6

Aug. 1 Cash....................................................................... 8,000

Owner’s Capital............................................. 8,000

4 Prepaid Insurance................................................. 1,800

Cash................................................................ 1,800

16 Cash....................................................................... 3,600
Service Revenue............................................ 3,600

27 Salaries and Wages Expense............................... 1,000

Cash................................................................ 1,000

BRIEF EXERCISE 2-7

Cash Service Revenue

5/12 2,400 5/5 4,400
5/15 3,000 5/15 3,000
Ending Bal. 5,400 Ending Bal. 7,400

Accounts Receivable
5/5 4,400 5/12 2,400

Ending Bal. 2,000

BRIEF EXERCISE 2-8

Cash
Date Explanation Ref. Debit Credit Balance
May 12 J1 2,400 2,400
15 J1 3,000 5,400

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BRIEF EXERCISE 2-8 (Continued)

Accounts Receivable
Date Explanation Ref. Debit Credit Balance
May 5 J1 4,400 4,400
12 J1 2,400 2,000

Service Revenue
Date Explanation Ref. Debit Credit Balance
May 5 J1 4,400 4,400
15 J1 3,000 7,400

BRIEF EXERCISE 2-9

AMARO COMPANY
Trial Balance
June 30, 2017

Debit Credit
Cash............................................................................. $ 5,800
Accounts Receivable.................................................. 3,000
Equipment.................................................................... 17,000
Accounts Payable....................................................... $ 8,100
Owner’s Capital........................................................... 15,000
Owner’s Drawings....................................................... 1,200
Service Revenue......................................................... 10,000
Salaries and Wages Expense..................................... 5,100
Rent Expense.............................................................. 1,000
$33,100 $33,100

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BRIEF EXERCISE 2-10

CAPPSHAW COMPANY
Trial Balance
December 31, 2017

Debit Credit
Cash............................................................................. $10,800
Prepaid Insurance....................................................... 3,500
Accounts Payable....................................................... $ 3,000
Unearned Service Revenue........................................ 2,200
Owner’s Capital........................................................... 9,000
Owner’s Drawings....................................................... 4,500
Service Revenue......................................................... 25,600
Salaries and Wages Expense..................................... 18,600
Rent Expense.............................................................. 2,400
$39,800 $39,800

SOLUTIONS FOR DO IT! REVIEW EXERCISES

DO IT! 2-1

Tom would likely need the following accounts in which to record the
transactions necessary to ready his photography studio for opening day:

Cash (debit balance) Equipment (debit balance)

Supplies (debit balance) Accounts Payable (credit balance)
Notes Payable (credit balance) Owner’s Capital (credit balance)

DO IT! 2-2

Each transaction that is recorded is entered in the general journal. The

three activities would be recorded as follows:

1. Cash............................................................... 6,300
Owner’s Capital.................................... 6,300
2. Supplies......................................................... 1,100
Cash...................................................... 400
Accounts Payable................................ 700
3. No entry because no transaction has occurred.

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DO IT! 2-3

Cash
4/1 1,600 4/16 700
4/3 3,400 4/20 250
4/30 4,050

DO IT! 2-4

CARLAND COMPANY
Trial Balance
December 31, 2017

Debit Credit
Cash............................................................................. $ 6,000
Accounts Receivable.................................................. 8,000
Supplies....................................................................... 6,000
Equipment.................................................................... 80,000
Notes Payable.............................................................. $ 20,000
Accounts Payable....................................................... 11,000
Salaries and Wages Payable...................................... 3,000
Owner’s Capital........................................................... 28,000
Owner’s Drawings....................................................... 8,000
Service Revenue......................................................... 88,000
Rent Expense.............................................................. 4,000
Salaries and Wages Expense..................................... 38,000
$150,000 $150,000

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 SOLUTIONS TO EXERCISES

EXERCISE 2-1

1. False. An account is an accounting record of a specific asset, liability,

or owner’s equity item.

2. False. An account shows increases and decreases in the item it relates to.

3. False. Each asset, liability, and owner’s equity item has a separate
account.

4. False. An account has a left, or debit side, and a right, or credit side.

5. True.

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-15
2-16

EXERCISE 2-2
Copyright © 2015 John Wiley & Sons, Inc.

Account Debited Account Credited

(a) (b) (c) (d) (a) (b) (c) (d)
Basic Specific Normal Basic Specific Normal
Transaction Type Account Effect Balance Type Account Effect Balance

Jan. 2 Asset Cash Increase Debit Owner’s Owner’s Increase Credit

Equity Capital

3 Asset Equipment Increase Debit Asset Cash Decrease Debit

Weygandt, Accounting Principles, 12/e, Solutions Manual

9 Asset Supplies Increase Debit Liability Accounts Increase Credit

Payable

11 Asset Accounts Increase Debit Owner’s Service Increase Credit

Receivable Equity Revenue

16 Owner’s Advertising Increase Debit Asset Cash Decrease Debit

Equity Expense

20 Asset Cash Increase Debit Asset Accounts Decrease Debit

Receivable

23 Liability Accounts Decrease Credit Asset Cash Decrease Debit

Payable

28 Owner’s Owner’s Increase Debit Asset Cash Decrease Debit

Equity Drawings
(For Instructor Use Only)
EXERCISE 2-3

General Journal J1
Date Account Titles and Explanation Ref. Debit Credit
Jan. 2 Cash.................................................... 10,000
Owner’s Capital.......................... 10,000

3 Equipment.......................................... 3,000
Cash............................................ 3,000

9 Supplies............................................. 500
Accounts Payable...................... 500

11 Accounts Receivable........................ 2,400

Service Revenue........................ 2,400

16 Advertising Expense......................... 350

Cash............................................ 350

20 Cash.................................................... 700
Accounts Receivable................. 700

23 Accounts Payable.............................. 300

Cash............................................ 300

28 Owner’s Drawings............................. 1,000

Cash............................................ 1,000

EXERCISE 2-4

Oct. 1 Debits increase assets: debit Cash $15,000.

Credits increase owner’s equity: credit Owner’s Capital $15,000.

2 No transaction.

3 Debits increase assets: debit Equipment $1,900.

Credits increase liabilities: credit Accounts Payable $1,900.

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-17
EXERCISE 2-4 (Continued)

Oct. 6 Debits increase assets: debit Accounts Receivable $3,800.

Credits increase revenues: credit Service Revenue $3,800.

27 Debits decrease liabilities: debit Accounts Payable $1,100.

Credits decrease assets: credit Cash $1,100.

30 Debits increase expenses: debit Salaries and Wages Expense

$2,500.
Credits decrease assets: credit Cash $2,500.

EXERCISE 2-5

General Journal
Date Account Titles and Explanation Ref. Debits Credit
Oct. 1 Cash.................................................... 15,000
Owner’s Capital........................ 15,000

2 No entry.

3 Equipment.......................................... 1,900
Accounts Payable..................... 1,900

6 Accounts Receivable........................ 3,800

Service Revenue....................... 3,800

27 Accounts Payable.............................. 1,100

Cash........................................... 1,100

30 Salaries and Wages Expense........... 2,500

Cash........................................... 2,500

2-18 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
EXERCISE 2-6

(a) 1. Increase the asset Cash, increase the liability Notes Payable.
2. Increase the asset Equipment, decrease the asset Cash.
3. Increase the asset Supplies, increase the liability Accounts Payable.

(b) 1. Cash................................................................... 5,000

Notes Payable............................................ 5,000
2. Equipment......................................................... 3,100
Cash............................................................ 3,100
3. Supplies............................................................. 850
Accounts Payable...................................... 850

EXERCISE 2-7

(a) Assets = Liabilities + Owner’s Equity

1. + + (Investment)
2. – – (Expense)
3. + + (Revenue)
4. – – (Drawings)

(b) 1. Cash................................................................... 4,000

Owner’s Capital.......................................... 4,000
2. Rent Expense.................................................... 840
Cash............................................................ 840
3. Accounts Receivable........................................ 5,200
Service Revenue........................................ 5,200
4. Owner’s Drawings............................................ 750
Cash............................................................ 750

EXERCISE 2-8

1. False. The general ledger contains all the asset, liability, and owner’s
equity accounts.
2. True.
3. False. The accounts in the general ledger are arranged in financial
statement order: first the assets, then the liabilities, owner’s capital,
owner’s drawings, revenues, and expenses.
4. True.
5. False. The general ledger is not a book of original entry; transactions
are first recorded in the general journal, then in the general ledger.

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-19
EXERCISE 2-9

(a)

Cash
Aug. 1 5,000 Aug. 12 2,300
10 2,600
31 900
Bal. 6,200

Accounts Receivable
Aug. 25 1,700 Aug. 31 900
Bal. 800

Equipment
Aug. 12 5,000
Notes Payable
Aug. 12 2,700

Owner’s Capital
Aug. 1 5,000

Service Revenue
Aug. 10 2,600
25 1,700
Bal. 4,300

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(b) JUNE FELDMAN, INVESTMENT BROKER
Trial Balance
August 31, 2017

Debit Credit
Cash.......................................................................... $ 6,200
Accounts Receivable.............................................. 800
Equipment................................................................ 5,000
Notes Payable.......................................................... $ 2,700
Owner’s Capital....................................................... 5,000
Service Revenue...................................................... 4,300
$12,000 $12,000

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-21
EXERCISE 2-10

(a)
General Journal
Date Account Titles and Explanation Ref. Debit Credit
Apr. 1 Cash................................................... 12,000
12,000
Owner’s Capital.............................
(Owner’s investment of
cash in business)

12 Cash................................................... 900
900
Service Revenue...........................
(Received cash for
services performed)

15 Salaries and Wages Expense........... 1,300

Cash............................................... 1,300
(Paid salaries to date)

25 Accounts Payable............................. 1,500

Cash............................................... 1,500
(Paid creditors on account)

29 Cash................................................... 400
400
Accounts Receivable....................
(Received cash in payment
of account)

30 Cash................................................... 1,000
1,000
Unearned Service Revenue..........
(Received cash for future
services)
EXERCISE 2-10 (Continued)

(b) DAGGETT LANDSCAPING COMPANY

Trial Balance
April 30, 2017

Debit Credit
Cash........................................................................... $11,500
Accounts Receivable................................................ 2,800
Supplies..................................................................... 1,800
Accounts Payable..................................................... $ 300
Unearned Service Revenue...................................... 1,000
Owner’s Capital......................................................... 12,000
Service Revenue....................................................... 4,100
Salaries and Wages Expense................................... 1,300
$17,400 $17,400

EXERCISE 2-11

(a) Oct. 1 Cash.............................................................. 3,000

Owner’s Capital..................................... 3,000
(Owner’s investment of cash in
business)

10 Cash.............................................................. 750
Service Revenue................................... 750
(Received cash for services
performed)

10 Cash.............................................................. 4,000
Notes Payable........................................ 4,000
(Obtained loan from bank)

20 Cash.............................................................. 500
Accounts Receivable............................ 500
(Received cash in payment of
account)

20 Accounts Receivable................................... 940

Service Revenue................................... 940

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-23
(Billed clients for services
performed)
EXERCISE 2-11 (Continued)

(b) SHUMWAY CO.

Trial Balance
October 31, 2017

Debit Credit
Cash...................................................................... $ 7,200
Accounts Receivable.......................................... 1,240
Supplies................................................................ 400
Equipment............................................................ 2,000
Notes Payable...................................................... $ 4,000
Accounts Payable................................................ 500
Owner’s Capital................................................... 5,000
Owner’s Drawings............................................... 300
Service Revenue.................................................. 2,490
Salaries and Wages Expense............................. 500
Rent Expense....................................................... 350
$11,990 $11,990

EXERCISE 2-12

(a)
General Journal J1
Date Account Titles and Explanation Ref. Debit Credit
Sept. 1 Cash................................................. 101 10,000
Owner’s Capital....................... 301 10,000

5 Equipment....................................... 157 12,000

Cash......................................... 101 4,000
Accounts Payable................... 201 8,000

25 Accounts Payable........................... 201 3,000

Cash......................................... 101 3,000

30 Owner’s Drawings........................... 306 700

Cash......................................... 101 700

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-25
EXERCISE 2-12 (Continued)

(b)

Cash No. 101

Date Explanation Ref. Debit Credit Balance
Sept. 1 J1 10,000 10,000
5 J1 4,000 6,000
25 J1 3,000 3,000
30 J1 700 2,300

Equipment No. 157

Date Explanation Ref. Debit Credit Balance
Sept. 5 J1 12,000 12,000

Accounts Payable No. 201

Date Explanation Ref. Debit Credit Balance
Sept. 5 J1 8,000 8,000
25 J1 3,000 5,000

Owner’s Capital No. 301

Date Explanation Ref. Debit Credit Balance
Sept. 1 J1 10,000 10,000

Owner’s Drawings No. 306

Date Explanation Ref. Debit Credit Balance
Sept. 30 J1 700 700
EXERCISE 2-13

(a) (b) (c)

Error In Balance Difference Larger Column
1. No $525 Debit
2. Yes — —
3. Yes — —
4. No 415 Credit
5. Yes — —
6. No 27 Debit

EXERCISE 2-14

OVERNITE DELIVERY SERVICE

Trial Balance
July 31, 2017

Debit Credit
Cash ($78,821 – Debit total without Cash
$66,340).................................................................... $12,481
Accounts Receivable.................................................. 7,642
Prepaid Insurance....................................................... 1,968
Equipment.................................................................... 49,360
Notes Payable.............................................................. $17,000
Accounts Payable....................................................... 8,396
Salaries and Wages Payable...................................... 815
Owner’s Capital........................................................... 42,000
Owner’s Drawings....................................................... 700
Service Revenue......................................................... 10,610
Salaries and Wages Expense..................................... 4,428
Maintenance and Repairs Expense........................... 961
Gasoline Expense....................................................... 758
Utilities Expense......................................................... 523
$78,821 $78,821

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-27
 SOLUTIONS TO PROBLEMS

PROBLEM 2-1A

J1
Date Account Titles and Explanation Ref. Debit Credit
Mar. 1 Cash......................................................... 20,000
Owner’s Capital.............................. 20,000
(Owner’s investment of cash
in business)

3 Land......................................................... 12,000
Buildings................................................. 2,000
Equipment............................................... 1,000
Cash................................................. 15,000
(Purchased Rainbow’s Golf Land)

5 Advertising Expense.............................. 900

Cash................................................. 900
(Paid for advertising)

6 Prepaid Insurance................................... 600

Cash................................................. 600
(Paid for one-year insurance
policy)

10 Equipment............................................... 1,050
Accounts Payable........................... 1,050
(Purchased equipment on
account)

18 Cash......................................................... 1,100
Service Revenue............................. 1,100
(Received cash for services
performed)

19 Cash......................................................... 1,500
Unearned Service Revenue........... 1,500
(Received cash for coupon
books sold)
PROBLEM 2-1A (Continued)

Date Account Titles and Explanation Ref. Debit Credit

Mar. 25 Owner’s Drawings............................. 800
Cash............................................ 800
(Withdrew cash for personal
use)

30 Salaries and Wages Expense........... 250

Cash............................................ 250
(Paid salaries)

30 Accounts Payable............................. 1,050

Cash............................................ 1,050
(Paid creditor on account)

31 Cash................................................... 2,700
Service Revenue........................ 2,700
(Received cash for services
performed)

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-29
 PROBLEM 2-2A

(a)
J1
Date Account Titles and Explanation Ref. Debit Credit
Apr. 1 Cash....................................................... 101 20,000
Owner’s Capital............................. 301 20,000
(Owner’s investment of cash
in business)

1 No entry—not a transaction.

2 Rent Expense........................................ 729 1,100

Cash............................................... 101 1,100
(Paid monthly office rent)

3 Supplies................................................. 126 4,000

Accounts Payable......................... 201 4,000
(Purchased supplies on
account from Dazzle Company)

10 Accounts Receivable............................ 112 5,100

Service Revenue........................... 400 5,100
(Billed clients for services
performed)

11 Cash....................................................... 101 1,000

Unearned Service Revenue......... 209 1,000
(Received cash for future
service)

20 Cash....................................................... 101 2,100

Service Revenue........................... 400 2,100
(Received cash for services
performed)

30 Salaries and Wages Expense............... 726 2,800

Cash............................................... 101 2,800
 (Paid monthly salary)

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-31
PROBLEM 2-2A (Continued)

Date Account Titles and Explanation Ref. Debits Credit

Apr. 30 Accounts Payable.............................. 201 2,400
Cash............................................ 101 2,400
(Paid Dazzle Company on
account)

(b)

Cash No. 101

Date Explanation Ref. Debit Credit Balance
Apr. 1 J1 20,000 20,000
2 J1 1,100 18,900
11 J1 1,000 19,900
20 J1 2,100 22,000
30 J1 2,800 19,200
30 J1 2,400 16,800

Accounts Receivable No. 112

Date Explanation Ref. Debit Credit Balance
Apr. 10 J1 5,100 5,100

Supplies No. 126

Date Explanation Ref. Debit Credit Balance
Apr. 3 J1 4,000 4,000

Accounts Payable No. 201

Date Explanation Ref. Debit Credit Balance
Apr. 3 J1 4,000 4,000
30 J1 2,400 1,600

Unearned Service Revenue No. 209

Date Explanation Ref. Debit Credit Balance
Apr. 11 J1 1,000 1,000
PROBLEM 2-2A (Continued)

Owner’s Capital No. 301

Date Explanation Ref. Debit Credit Balance
Apr. 1 J1 20,000 20,000

Service Revenue No. 400

Date Explanation Ref. Debit Credit Balance
Apr. 10 J1 5,100 5,100
20 J1 2,100 7,200

Salaries and Wages Expense No. 726

Date Explanation Ref. Debit Credit Balance
Apr. 30 J1 2,800 2,800

Rent Expense No. 729

Date Explanation Ref. Debit Credit Balance
Apr. 2 J1 1,100 1,100

(c) EMILY VALLEY, DENTIST

Trial Balance
April 30, 2017

Debit Credit
Cash...................................................................... $16,800
Accounts Receivable.......................................... 5,100
Supplies................................................................ 4,000
Accounts Payable................................................ $ 1,600
Unearned Service Revenue................................ 1,000
Owner’s Capital................................................... 20,000
Service Revenue.................................................. 7,200
Salaries and Wages Expense............................. 2,800
Rent Expense....................................................... 1,100
$29,800 $29,800

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-33
 PROBLEM 2-3A

(a)

Trans. Account Titles and Explanation Debit Credit

1. Cash................................................... 40,000
............................................................
Owner’s Capital....................... 40,000

2. No entry—Not a transaction.

3. Prepaid Rent..................................... 24,000

Cash.......................................... 24,000

4. Equipment......................................... 30,000
Cash.......................................... 10,000
Accounts Payable................... 20,000

5. Prepaid Insurance............................ 1,800

Cash.......................................... 1,800

6. Supplies............................................. 420
Cash.......................................... 420

7. Supplies............................................. 1,500
Accounts Payable................... 1,500

8. Cash................................................... 8,000
............................................................
Accounts Receivable....................... 12,000
Service Revenue...................... 20,000

9. Accounts Payable............................. 400

Cash.......................................... 400

10. Cash................................................... 3,000

............................................................
Accounts Receivable.............. 3,000
 11. Utilities Expense............................... 380
Accounts Payable................... 380

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-35
PROBLEM 2-3A (Continued)

Trans. Account Titles and Explanation Debit Credit

12. Salaries and Wages Expense....... 6,100
Cash........................................ 6,100

(b)
Cash (4) 30,000
(1) 40,000 30,000
(3) 24,000
(4) 10,000
(5) 1,800 Accounts Payable
(6) 420 (4) 20,000
(8) 8,000 (7) 1,500
(9) 400 (9) 400
(10) 3,000 (11) 380
(12) 6,100 21,480
8,280

Owner’s Capital
Accounts Receivable (1) 40,000
(8) 12,000 40,000
(10) 3,000
9,000
Service Revenue
(8) 20,000
Supplies 20,000
(6) 420
(7) 1,500
1,920 Salaries and Wages Expense
(12) 6,100
6,100
Prepaid Insurance
(5) 1,800
1,800 Utilities Expense
(11) 380
380
Prepaid Rent
(3) 24,000
24,000
Equipment
Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-37
PROBLEM 2-3A (Continued)

(c) MAQUOKETA SERVICES

Trial Balance
May 31, 2017

Debit Credit
Cash.................................................................. $ 8,280
Accounts Receivable...................................... 9,000
Supplies........................................................... 1,920
Prepaid Insurance........................................... 1,800
Prepaid Rent.................................................... 24,000
Equipment........................................................ 30,000
Accounts Payable........................................... $21,480
Owner’s Capital............................................... 40,000
Service Revenue.............................................. 20,000
Salaries and Wages Expense......................... 6,100
Utilities Expense.............................................. 380
$81,480 $81,480
 PROBLEM 2-4A

AVTAR SANDHU CO.

Trial Balance
June 30, 2017

Debit Credit
Cash ($3,340 + $270)................................................... $ 3,610
Accounts Receivable ($2,812 – $270)........................ 2,542
Supplies ($1,200 – $710)............................................. 490
Equipment ($2,600 + $710)......................................... 3,310
Accounts Payable ($3,666 – $306 – $360)................. $ 3,000
Unearned Service Revenue........................................ 1,100
Owner’s Capital........................................................... 8,000
Owner’s Drawings ($800 + $600)............................... 1,400
Service Revenue ($2,480 + $882)............................... 3,362
Salaries and Wages Expense
($3,200 + $700 – $600).............................................. 3,300
Utilities Expense......................................................... 810
$15,462 $15,462

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-39
 PROBLEM 2-5A

(a) & (c)

Cash No. 101

Date Explanation Ref. Debit Credit Balance
Mar. 1 Balance  3,000
2 J1 1,500 1,500
9 J1 4,300 5,800
10 J1 4,100 1,700
12 J1 900 800
20 J1 5,000 5,800
20 J1 2,000 3,800
31 J1 3,100 700
31 J1 450 1,150
31 J1 9,000 10,150

Accounts Receivable No. 112

Date Explanation Ref. Debit Credit Balance
Mar. 31 J1 450 450

Land No. 140

Date Explanation Ref. Debit Credit Balance
Mar. 1 Balance  24,000

Buildings No. 145

Date Explanation Ref. Debit Credit Balance
Mar. 1 Balance  10,000

Equipment No. 157

Date Explanation Ref. Debit Credit Balance
Mar. 1 Balance  10,000
PROBLEM 2-5A (Continued)

Accounts Payable No. 201

Date Explanation Ref. Debit Credit Balance
Mar. 1 Balance  7,000
2 J1 2,000 9,000
10 J1 4,100 4,900

Owner’s Capital No. 301

Date Explanation Ref. Debit Credit Balance
Mar. 1 Balance  40,000

Service Revenue No. 400

Date Explanation Ref. Debit Credit Balance
Mar. 9 J1 4,300 4,300
20 J1 5,000 9,300
31 J1 9,000 18,300

Rent Revenue No. 429

Date Explanation Ref. Debit Credit Balance
Mar.31 J1 900 900

Advertising Expense No. 610

Date Explanation Ref. Debit Credit Balance
Mar.12 J1 900 900

Salaries and Wages Expense No. 726

Date Explanation Ref. Debit Credit Balance
Mar. 31 J1 3,100 3,100

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-41
PROBLEM 2-5A (Continued)

Rent Expense No. 729

Date Explanation Ref. Debit Credit Balance
Mar. 2 J1 3,500 3,500
20 J1 2,000 5,500

(b)
J1
Date Account Titles and Explanation Ref. Debit Credit
Mar. 2 Rent Expense........................................ 729 3,500
Accounts Payable........................ 201 2,000
Cash.............................................. 101 1,500
(Rented films for cash and
on account)
3 No entry.
9 Cash....................................................... 101 4,300
................................................................
Service Revenue.......................... 400 4,300
(Received cash for services
performed)
10 Accounts Payable ($2,000 + $2,100)...... 201 4,100
Cash.............................................. 101 4,100
(Paid creditors on account)
11 No entry.
12 Advertising Expense............................. 610 900
Cash.............................................. 101 900
(Paid advertising expense)
20 Cash....................................................... 101 5,000
................................................................
Service Revenue.......................... 400 5,000
(Received cash for services
performed)
20 Rent Expense........................................ 729 2,000
Cash.............................................. 101 2,000
 (Paid film rental)

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-43
PROBLEM 2-5A (Continued)

Date Account Titles and Explanation Ref. Debit Credit

Mar. 31 Salaries and Wages Expense............... 726 3,100
Cash.............................................. 101 3,100
(Paid salaries expense)

31 Cash........................................................ 101 450

................................................................
Accounts Receivable............................ 112 450
Rent Revenue............................... 429 900
(15% X $6,000)
(Received cash and balance
on account for rent
revenue)

31 Cash........................................................ 101 9,000

................................................................
Service Revenue.......................... 400 9,000
(Received cash for services
performed)

(d) STARR THEATER

Trial Balance
March 31, 2017

Debit Credit
Cash.................................................................. $10,150
Accounts Receivable....................................... 450
Land................................................................... 24,000
Buildings........................................................... 10,000
Equipment......................................................... 10,000
Accounts Payable............................................ $ 4,900
Owner’s Capital................................................ 40,000
Service Revenue.............................................. 18,300
Rent Revenue................................................... 900
Advertising Expense........................................ 900
Salaries and Wages Expense.......................... 3,100
Rent Expense................................................... 5,500
 $64,100 $64,100

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-45
CC2 COOKIE CREATIONS

(a) GENERAL JOURNAL J1

Account Titles and Explanation Debit Credit

Nov. 8 No entry required for cashing U.S.

Savings Bonds—this is a personal
transaction.

8 Cash........................................................... 500
Owner’s Capital.................................... 500

11 Advertising Expense................................ 65
Cash...................................................... 65

13 Supplies..................................................... 125
Cash...................................................... 125

14 Equipment................................................. 300
Owner’s Capital.................................... 300

16 Cash........................................................... 2,000
Notes Payable...................................... 2,000

17 Equipment................................................. 900
Cash...................................................... 900

20 Cash........................................................... 125
Service Revenue.................................. 125

25 Cash........................................................... 30
Unearned Service Revenue................. 30

30 Prepaid Insurance.................................... 1,320

Cash...................................................... 1,320
CC2 (Continued)

(b)

Cash
Date Explanation Ref. Debits Credits Balance

Nov. 8 J1 500 500

11 J1 65 435
13 J1 125 310
16 J1 2,000 2,310
17 J1 900 1,410
20 J1 125 1,535
25 J1 30 1,565
30 J1 1,320 245

Supplies
Date Explanation Ref. Debits Credits Balance

Nov. 13 J1 125 125

Prepaid Insurance
Date Explanation Ref. Debits Credits Balance

Nov. 30 J1 1,320 1,320

Equipment
Date Explanation Ref. Debits Credits Balance

Nov. 14 J1 300 300

17 J1 900 1,200

Unearned Service Revenue

Date Explanation Ref. Debits Credits Balance

Nov. 25 J1 30 30

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-47
CC2 (Continued)

(b) (Continued)

Notes Payable
Date Explanation Ref. Debits Credits Balance

Nov. 16 J1 2,000 2,000

Owner’s Capital
Date Explanation Ref. Debits Credits Balance

Nov. 8 J1 500 500

14 J1 300 800

Service Revenue
Date Explanation Ref. Debits Credits Balance

Nov. 20 J1 125 125

Advertising Expense
Date Explanation Ref. Debits Credits Balance

Nov. 11 J1 65 65

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-49
CC2 (Continued)

(c)
COOKIE CREATIONS
Trial Balance
November 30, 2016

Debit Credit
Cash............................................................................. $ 245
Supplies...................................................................... 125
Prepaid Insurance...................................................... 1,320
Equipment................................................................... 1,200
Unearned Service Revenue....................................... $ 30
Notes Payable............................................................. 2,000
Owner’s Capital.......................................................... 800
Service Revenue......................................................... 125
Advertising Expense.................................................. 65
$2,955 $2,955

Note to instructors: Because the notes payable is not due for 24 months, it
follows Unearned Service Revenue in the accounts and the trial balance.
 BYP 2-1 FINANCIAL REPORTING PROBLEM

(a) (1) (1) (2)

Increase Decrease Normal
Account Side Side Balance
Accounts Payable Credit Debit Credit
Accounts Receivable Debit Credit Debit
Property, Plant, and Equipment Debit Credit Debit
Cash and Cash Equivalents Debit Credit Debit
Research and Development Debit Credit Debit
Expense
Inventories Debit Credit Debit

(b) 1. Cash is increased.

2. Cash is decreased.
3. Cash is decreased or Accounts Payable is increased.

(c) 1. Cash is decreased.

2. Cash is decreased or Notes or Mortgage Payable is increased.

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-51
 BYP 2-2 COMPARATIVE ANALYSIS PROBLEM

PepsiCo Coca-Cola
(a) 1. Inventory: debit 1. Accounts Receivable: debit
2. Property, Plant & 2. Cash and Cash Equivalents: debit
Equipment: debit
3. Accounts Payable: credit 3. Cost of Goods debit
Sold(expense):
Interest Expense: debit 4. Sales (revenue) credit

(b)

1. Increase in Accounts Receivable: Service Revenue or Sales

Revenue is increased (credited).

2. Decrease in Salaries and Wages Payable: Cash is decreased

(credited).

3. Increase in Property, Plant and Equipment: Cash is decreased

(credited) and Accounts Payable or Notes payable is increased
(credited).

4. Increase in Interest Expense: Cash is decreased (credited).

 BYP 2-3 COMPARATIVE ANALYSIS PROBLEM

Amazon Wal-Mart
(a) 1. Interest Expense: debit 1. Net Product Revenues: credit
2. Cash and Cash debit 2. Inventories: debit
Equivalents:
3. Accounts Payable: credit 3. Cost of Sales: debit

(b) The following other accounts are ordinarily involved:

1. Increase in Accounts Receivable: Service Revenue or Sales

Revenue is increased (credited).

2. Increase in Interest Expense: Cash is decreased (credited).

3. Decrease in Salaries and Wages Payable: Cash is decreased

(credited).

4. Increase in Service Revenue: Cash or Accounts Receivable is

increased (debited).

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-53
 BYP 2-4 REAL-WORLD FOCUS

The answer is dependent upon the company selected by the student.

 BYP 2-5 REAL-WORLD FOCUS

(a) The reason the Green Bay Packers’ issue an annual report is because
they are a publicly owned, nonprofit company. They issue the report to
the more than 100,000 shareholders who hold shares. None of the
other teams are publicly owned, so they have no obligation to make
their financial information available except to their small group of
owners.
(b) At the time that the article was written the owners of the NFL teams
and the players’ labor union were negotiating a new contract. Knowing
how profitable the NFL teams are would be useful information for the
players to know so that they would have a better sense of how much
the teams could afford to pay. The Packers are obviously a “small
market” team, they are not necessarily representative of teams in
general. However, the Packers’ annual report does give the players
some sense of the profitability of other teams.
(c) Since some of the cost of the stadium that the Packers play in is
covered by taxpayers, the county and state government has an interest
in the team’s finances.
(d) The Packers’ revenues increased during recent years. However,
because the cost of players’ salaries increased at a faster rate than
revenues, the Packers’ operating profit actually declined.

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-55
 BYP 2-6 COMMUNICATION ACTIVITY

Date: May 25, 2017

To: Accounting Instructor

From: Student

In the first transaction, bills totaling $6,000 were sent to customers for
services performed. Therefore, the asset Accounts Receivable is increased
$6,000 and the revenue Service Revenue is increased $6,000. Debits increase
assets and credits increase revenues, so the journal entry is:

Accounts Receivable.............................................................. 6,000

Service Revenue.............................................................. 6,000
(Billed customers for services performed)

The $6,000 amount is then posted to the debit side of the general ledger
account Accounts Receivable and to the credit side of the general ledger
account Service Revenue.

In the second transaction, $2,000 was paid in salaries to employees. Therefore,

the expense Salaries and Wages Expense is increased $2,000 and the asset
Cash is decreased $2,000. Debits increase expenses and credits decrease
assets, so the journal entry is:

Salaries and Wages Expense................................................ 2,000

Cash................................................................................. 2,000
(Salaries and wages paid)

The $2,000 amount is then posted to the debit side of the general ledger
account Salaries and Wages Expense and to the credit side of the general
ledger account Cash.
 BYP 2-7 ETHICS CASE

(a) The stakeholders in this situation are:

 Ellynn Kole, assistant chief accountant.

 Users of the company’s financial statements.
 The Doman Company.

(b) By adding $1,000 to the Equipment account, that account total is inten-
tionally misstated. By not locating the error causing the imbalance,
some other account may also be misstated by $1,000. If the amount of
$1,000 is determined to be immaterial, and the intent is not to commit
fraud (cover up an embezzlement or other misappropriation of assets),
Ellynn’s action might not be considered unethical in the preparation of
interim financial statements. However, if Ellynn is violating a company
accounting policy by her action, then she is acting unethically.

(c) Ellynn’s alternatives are:

1. Miss the deadline but find the error causing the imbalance.

2. Tell her supervisor of the imbalance and suffer the consequences.

3. Do as she did and locate the error later, making the adjustment in
the next quarter.

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-57
BYP 2-8 ETHICS CASE

The decision whether to fire Mr. Edmondson was the responsibility of

Radio Shack’s board of directors, which is elected by the company’s
shareholders to oversee management. The board initially announced its
support for the CEO. After further investigation, the board encouraged
Mr. Edmondson to resign, which he did. In contrast, when Bausch &
Lomb’s CEO offered to resign in a similar situation, the company’s
board refused to accept his resignation. Board members stated that they
felt he was still the best person for the position.

Radio Shack says that although it did a reference check at the time of
Mr. Edmondson’s hiring, it did not check his educational credentials.
Under the Sarbanes-Oxley Act, companies must now perform thorough
background checks as part of a check of internal controls. The bottom
line: Your résumé must be a fair and accurate depiction of your past.
 BYP 2-9 ALL ABOUT YOU

(a) Students’ responses to this question will vary. It is important that the
steps that they identify be as specific as possible, and clearly directed
toward achieving their goal. You may wish to ask a follow-up question
asking them to explain how each step will assist them in achieving
their goal.

(b) There are many sites on the Internet that provide information about
preparing a résumé. For example, you can find extensive resources at:
http://www.rileyguide.com/resprep.html. Many schools also have re-
sources in their placement centers or writing labs. The Writing Center
at Rensselaer Polytechnic Institute provides useful, concise
information on its website at http://www.ccp.rpi.edu/resources/careers-
and-graduate-school/resumes. A wide variety of sample résumés can
be found. For example, Monster.com provides samples for a wide
variety of professions and situations at http://www.career-
advice.monster.com/resumes-cover-letters/careers.aspx.

(c) It is important to provide accurate and complete documentation of all

relevant training, education, and employment experiences so as to
provide assurance to the potential employer, and also to enable that
employer to do follow-up work. If you say you have certain skills, such
as computer skills, try to substantiate the claim with recognized proof
of proficiency. Make sure that all addresses and phone numbers are
accurate and up-to-date. Also, ensure that the people you use as
references have a copy of your résumé and cover letter, and that they
are informed that you are interviewing so they know to expect a call.

(d) See the sample résumés provided in the websites above for various
format options. You might also mention to students that there are
electronic résumé templates available on the Internet.

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-59
 BYP 2-10 CONSIDERING PEOPLE, PLANET AND PROFIT

(a) The existence of three different forms of certification would most

likely create confusion for coffee purchasers. It would be difficult to
know what aspects of the coffee growing process each certification
covered. Similarly, if there were multiple groups that certified financial
statements, each with different criteria, it would be difficult for
financial statement users to know what each certification promised.

(b) The Starbucks certification appears to be the most common in that

area. It has the advantage of having a direct link to the Starbucks
coffee market. Although it does not guarantee that Starbucks will buy
its coffee, it is a requirement that must be met before Starbucks will
buy somebody’s coffee. Note that the article states that the Starbucks
certification “incorporates elements of social responsibility and
environmental leadership, but quality of coffee is the first criteria.”
The Smithsonian Bird Friendly is considered to have the strictest
requirements and, as a result, appears to be the least common.

(c) The certifications have multiple objectives including organic farming

as a means to protect bird species, biodiversity and wildlife habitat.
Some included requirements are to improve workers’ living
conditions, such as providing running water in worker housing, child
labor regulations and education requirements. As mentioned above,
the Starbucks certification has the potential financial benefit of
making Starbucks a potential customer, which can stabilize farmers’
earnings. Certifications can also be financially beneficial because
companies can benefit from the positive public relations effects of
either producing or buying coffee produced using sustainable
practices.
 IFRS 2-1 INTERNATIONAL FINANCIAL REPORTING PROBLEM

Account Financial Statement Position in Financial Statement

Other operating Consolidated Income After gross profit and before
income and Statement operating profit
expense
Cash and cash Consolidated Balance Current assets
equivalents Sheet
Trade accounts Consolidated Current liabilities
payable Balance Sheet
Cost of net Consolidated Income After operating profit and before
financial debt Statement profit from continuing
operations before taxes.

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 2-61