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会计英语课后习题参考答案

会计英语课后习题参考

答案

LEKIBM standardization office【IBM5AB- LEKIBMK08- LEKIBM2C】

Suggested Solution

Chapter 1

(b) net income = 9,260-7,470=1,790

Chapter 2

a.To increase Notes Payable -CR

b.To decrease Accounts Receivable-CR

c.To increase Owner, Capital -CR

d.To decrease Unearned Fees -DR

e.To decrease Prepaid Insurance -CR

f.To decrease Cash - CR

g.To increase Utilities Expense -DR

h.To increase Fees Earned -CR

i.To increase Store Equipment -DR

j.To increase Owner, Withdrawal -DR

Cash 1,800

Accounts payable .................................................... 1,800 b.

Revenue ....................................................... 4,500

Accounts receivable ................................ 4,500 c.

Owner’s withdrawals ..................................... 1,500

Salaries Expense ..................................... 1,500 d.

Accounts Receivable (750)

Revenue (750)

Prepare adjusting journal entries at December 31, the end of the year.

Advertising expense 600

Prepaid advertising 600 Insurance expense (2160/12*2) 360

Prepaid insurance 360 Unearned revenue 2,100

Service revenue 2,100 Consultant expense 900

Prepaid consultant 900 Unearned revenue 3,000

Service revenue 3,000 4.

1. $388,400

2. $22,520

3. $366,600

4. $21,800

1. net loss for the year ended June 30, 2002: $60,000

2. DR Jon Nissen, Capital 60,000

CR income summary 60,000

3. post-closing balance in Jon Nissen, Capital at June 30, 2002: $54,000

Chapter 3

1. Dundee Realty bank reconciliation

October 31, 2009

Reconciled balance $6,220 Reconciled balance $6,220 2. April 7 Dr: Notes receivable—A company 5400

Cr: Accounts receivable—A company 5400

12 Dr: Cash

Interest expense

Cr: Notes receivable 5400 June 6 Dr: Accounts receivable—A company 5533

Cr: Cash

5533

18 Dr: Cash

Cr: Accounts receivable—A company 5533

Interest revenue

3. (a) As a whole: the ending inventory=685

(b) applied separately to each product: the ending inventory=625

4. The cost of goods available for sale=ending inventory + the cost of goods=80,000+200,000*500%=80,000+1,000,000=1,080,000

5.(1) 24,000+60,000-90,000*=12000

(2) (60,000+24,000)/( 85,000+31,000)*( 85,000+31,000-90,000)=18828

Chapter 4

1. (a) second-year depreciation = (114,000 – 5,700) / 5 = 21,660;

(b) second-year depreciation = 8,600 * (114,000 – 5,700) / 36,100 = 25,800;

second-year depreciation = (114,000 – 45,600) * 40% = 27,360;

(d) second-year depreciation = (114,000 – 5,700) * 4/15 = 28,880.

2. (a) weighted-average accumulated expenditures (2008) = 75,000 * 12/12 + 84,000 * 9/12 + 180,000 * 8/12 + 300,000 * 7/12 + 100,000 * 6/12 = 483,000

(b) interest capitalized during 2008 = 60,000 * 12% + ( 483,000 – 60,000) * 10% =49,500

3. (1) depreciation expense = 30,000

(2) book value = 600,000 – 30,000 * 2=540,000

(3) depreciation expense = ( 600,000 – 30,000 * 8)/16 =22,500

(4) book value = 600,000 – 30,000 * 8 – 22,500 = 337,500

4. Situation 1:

Jan 1st, 2008 Investment in M 260,000

Cash 260,000

June 30 Cash 6000

Dividend revenue 6000

Situation 2:

January 1, 2008 Investment in S 81,000

Cash 81,000

June 15 Cash 10,800

Investment in S 10,800

December 31 Investment in S 25,500

Investment Revenue 25,500

5. a. December 31, 2008 Investment in K 1,200,000

Cash 1,200,000

June 30, 2009 Dividend Receivable 42,500 Dividend Revenue 42,500

December 31, 2009 Cash 42,500

Dividend Receivable 42,500

b. December 31, 2008 Investment in K 1,200,000 Cash 1,200,000

December 31, 2009 Cash 42,500

Investment in K 42,500

Investment in K 146,000

Investment revenue 146,000

c. In a, the investment amount is 1,200,000

net income reposed is 42,500

In b, the investment amount is 1,303,500

Net income reposed is 146,000

Chapter 5

a. June 1: Dr: Inventory 198,000

Cr: Accounts Payable 198,000

June 11: Dr: Accounts Payable 198,000

Cr: Notes Payable 198,000

June 12: Dr: Cash 300,000

Cr: Notes Payable 300,000

b. Dr: Interest Expenses (for notes on June 11) 12,100 Cr: Interest Payable 12,100

Dr: Interest Expenses (for notes on June 12) 8,175 Cr: Interest Payable 8,175

c. Balance sheet presentation:

Notes Payable 498,000

Accrued Interest on Notes Payable 20,275

d. For Green:

Dr: Notes Payable 198,000

Interest Payable 12,100

Interest Expense 7,700

Cr: Cash 217,800

For Western:

Dr: Notes Payable 300,000

Interest Payable 8,175

Interest Expense 18,825

Cr: Cash 327,000

(1) 208 Deferred income tax is a liability 2,400

Income tax payable 21,600

209 Deferred income tax is an asset 600

Income tax payable 26,100

(2) 208: Dr: Tax expense 24,000

Cr: Income tax payable 21,600

Deferred income tax 2,400 209: Dr: Tax expense 25,500

Deferred income tax 600

Cr: Income tax payable 26,100

(3) 208: Income statement: tax expense 24,000 Balance sheet: income tax payable 21,600 209: Income statement: tax expense 25,500 Balance sheet: income tax payable 26,100

a. 1,560,000 (*12 %* (1-35%))

b. % (*12 %* (1-35%)/)

Notes Payable 14,400

Interest Payable 1,296

Accounts Payable 60,000

+Unearned Rent Revenue 7,200

Current Liabilities 82,896

Chapter 6

1. Mar. 1

Cash 1,200,000

Common Stock 1,000,000

Paid-in Capital in Excess of Par Value 200,000

Mar. 15

Organization Expense 50,000

Common Stock 50,000

Mar. 23

Patent 120,000

Common Stock 100,000

Paid-in Capital in Excess of Par Value 20,000

The value of the patent is not easily determinable, so use the issue price of $12 per share on March 1 which is the issuing price of common stock.

Treasury Stock 180,000

Cash 180,000

The cost of treasury purchased is 180,000/30,000=60 per share.

Nov. 1

Cash 70,000

Treasury Stock 60,000

Paid-in Capital from Treasury Stock 10,000

Sell the treasury at the cost of $60 per share, and selling price is $70 per share. The treasury stock is sold above the cost.

Dec. 20

Cash 75,000

Paid-in Capital from Treasury Stock 15,000

Treasury Stock 90,000

The cost of treasury is $60 per share while the selling price is $50 which is lower than the cost.

3. a. July 1

Retained Earnings 24,000

Dividends Payable—Preferred Stock 24,000

Cash 24,000

Retained Earnings 80,000

Dividends Payable—Common Stock 80,000

Income Summary 350,000

Retained Earnings 350,000

a. Preferred stock gives its owner certain advantages over common stockholders. These benefits include the right to receive dividends before the common stockholders and the right to receive assets before the common stockholders if the corporation liquidates. Corporation pay a fixed amount of dividends on preferred stock.

The 7% cumulative term indicates that the investors earn 7% fixed dividends.

b. 7%*120%*20,000=504,000

c. If corporation issued debt, it has obligation to repay principal

d. The date of declaration decrease the stockholders’ equity; the date of record and the date of payment have no effect on stockholders.

a. Jan. 15

Retained Earnings 35,000

Accumulated Depreciation 35,000

To correct error in prior year’s depreciation.

b. Mar. 20

Loss from Earthquake 70,000

Building 70,000

c. Mar. 31

Retained Earnings 12,500

Dividends Payable 12,500

Cash 12,500

e. June 30

Retained Earnings 37,500

Common Stock 25,000

Additional Paid-in Capital 12,500

To record issuance of 10% stock dividend: 10%*25,000=2,500 shares;

2500*$15=$37,500

f. Dec. 31

Depreciation Expense 14,000

Accumulated Depreciation 14,000

Original depreciation: $40,000/40=$10,000 per year. Book value on , 2009 is $350,000(=$400,000-5*$10,000). Deprecation for 2009 is

$14,000(=$350,000/25).

g. The company does not need to make entry in the accounting records. But the amount of Common Stock ($10 par value) decreases 275,000, while the amount of Common Stock ($5 par value) increases 275,000.

Chapter 7

Requirement 1

If revenue is recognized at the date of delivery, the following journal entries would be

used to record the transactions for the two years:

Year 1

Inventory ....................................................................................... 480,000 Cash/Accounts payable .......................................................... 480,000 To record purchase of inventory

Inventory ....................................................................................... 124,000 Cash/Accounts payable .......................................................... 124,000 To record refurbishment of inventory

Accounts receivable ...................................................................... 310,000 Sales revenue ......................................................................... 310,000 To record sale of goods on account

Cost of goods sold ........................................................................ 220,000 Inventory ................................................................................. 220,000 To record the cost of the goods sold as an expense

Sales returns (I/S) ......................................................................... 15,500* Allowance for sales returns (B/S) ........................................... 15,500 To record provision for return of goods sold under 30-day return period

* 5% of $310,000

Warranty expense ......................................................................... 31,000* Provision for warranties (B/S) ................................................. 31,000 To record provision, at time of sale, for warranty expenditures

* 10% of $310,000

Allowance for sales returns .......................................................... 12,400 Accounts receivable ............................................................... 12,400 To record return of goods within 30-day return period.

It is assumed the returned goods have no value and are disposed of.

Provision for warranties (B/S) ....................................................... 18,600 Cash/Accounts payable .......................................................... 18,600 To record expenditures in year 1 for warranty work

Cash .............................................................................................. 297,600*

Accounts receivable ............................................................... 297,600 To record collection of Accounts Receivable

* $310,000 – $12,400

Year 2

Provision for warranties (B/S) ....................................................... 8,400 Cash/Accounts payable .......................................................... 8,400 To record expenditures in year 2 for warranty work

Requirement 2

If revenue is recognized only when the warranty period has expired, the following journal entries would be used to record the transactions for the two years:

Year 1

Accounts receivable ...................................................................... 310,000 Inventory ................................................................................. 220,000 Deferred gross margin ............................................................ 90,000 To record sale of goods on account

Deferred gross margin .................................................................. 12,400 Accounts receivable ............................................................... 12,400 To record return of goods within the 30-day return period. It is assumed the goods have

no value and are disposed of.

Deferred warranty costs (B/S) ...................................................... 18,600 Cash/Accounts payable .......................................................... 18,600 To record expenditures for warranty work in year 1. The warranty costs incurred are deferred because the related revenue has not yet been recognized

Cash .............................................................................................. 297,600* Accounts receivable ............................................................... 297,600 To record collection of Accounts receivable

* $310,000 – $12,400

Year 2

Deferred warranty costs ................................................................ 8,400 Cash/Accounts payable .......................................................... 8,400 To record warranty costs incurred in year 2 related to year 1 sales. The warranty costs incurred are deferred because the related revenue has not yet been recognized.

Deferred gross margin .................................................................. **77,600

Cost of goods sold ........................................................................ 220,000 Sales revenue ......................................................................... 297,600* To record recognition of sales revenue from year 1 sales and related cost of goods sold

at expiry of warranty period

* $310,000 – $12,400

** ($90,000 – $12,400)

Warranty expense ......................................................................... 27,000* Deferred warranty costs ......................................................... 27,000 To record recognition of warranty expense at same time as related sales revenue recognition

* $18,600 + $8,400

Requirement 3

Allied Auto Parts Inc. might choose to recognize revenue only after the warranty period

has expired if they are not able to make a good estimate, at the time of sale, of the

amount of warranty work that will be required under the terms of the one-year warranty. If Allied is not able, at the time of sale, to make a good estimate of the warranty work that

will be required, then the measurability criterion of revenue recognition is not met at the time of sale. The measurability criterion means that the amount of revenue can be

reliably measured. If the seller is not able to estimate the amount of work that will have to be done under the warranty agreement, then it is not able to reasonably measure the

profit that it will eventually earn on the sales. The performance criteria might also be invoked here. The performance criterion means that the seller has transferred the significant risks and rewards of ownership to the buyer. As long as there is warranty work

to be performed after the sale that is the responsibility of the seller, you might argue that performance is not substantially complete. However, if the seller was able to reliably estimate the amount of warranty work, then performance would be satisfied on the assumption that we could measure the risk that remains with the seller, and make a provision for it.

Percentage-of-completion method:

The first step in applying revenue recognition using the percentage-of-completion method (using costs incurred to date compared to estimated total costs to determine the percentage of completion) is to estimate the percentage of completion of the project at

the end of each year. This is done in the following table (in $000s):

End of 2005 End of 2006 End of 2007

Total costs incurred $ 5,400 $ 12,950 $ 18,800 Total estimated costs 18,000 18,500 18,800 % completed 30% 70% 100%

Once the percentage of completion at the end of each year has been calculated as

above, the next step is to allocate the appropriate amount of revenue to each year, based

on the percentage completed to date, less what has previously been recorded in revenue. This is done in the following table (in $000s):

2005 2006 2007

2005 $20,000 × 30% $ 6,000

2006 $20,000 × 70% $ 14,000

2007 $20,000 × 100% $ 20,000 Less: Revenue recognized in prior years (0) (6,000) (14,000) Revenue for year $ 6,000 $ 8,000 $ 6,000

Therefore, the profit to be recognized each year on the construction project would be:

2005 2006 2007 Total

Revenue recognized $ 6,000 $ 8,000 $ 6,000 $ 20,000 Construction costs incurred (expenses) (5,400) (7,550) (5,850) (18,800) Gross profit for the year $ 600 $ 450 $ 150 $ 1,200

The following journal entries are used to record the transactions under the percentage-of-completion method of revenue recognition:

2005 2006 2007

1. Costs of construction:

Construction in progress .................. 5,400 7,550 5,850 Cash, payables, etc. ..... 5,400 7,550 5,850 2. Progress billings:

Accounts receivable ............ 3,100 4,900 12,000 Progress billings ............ 3,100 4,900 12,000 3. Collections on billings:

Cash .................................... 2,400 4,000 12,400 Accounts receivable ...... 2,400 4,000 12,400 4. Recognition of profit:

Construction in progress ..... 600 450 150

Construction expense.......... 5,400 7,550 5,850 Revenue from long-term

contract ...................... 6,000 8,000 6,000 5. To close construction in progress:

Progress billings .................. 20,000

Construction in progress . 20,000

2005 2006 2007

Balance sheet

Current assets:

Accounts receivable $ 700 $ 1,600 $ 1,200 Inventory:

Construction in process 6,000 14,000 Less: Progress billings (3,100) (8,000)

Costs in excess of billings 2,900 6,000

Income statement

Revenue from long-term contracts $ 6,000 $ 8,000 $ 6,000 Construction expense (5,400) (7,550) (5,850) Gross profit $ 600 $ 450 $ 150

a. The three criteria of revenue recognition are performance, measurability, and

collectibility.

Performance means that the seller or service provider has performed the work.

Depending on the nature of the product or service, performance may mean quite

different points of revenue recognition. For example, for the sale of products, IAS18 defines performance as the point when the seller of the goods has transferred the

risks and rewards of ownership to the buyer. Normally, this means that performance is done at the time of sale. Although the seller may have performed much of the work prior to the sale (production, selling efforts, etc.), there is still significant risk to the

seller that a buyer may not be found. Therefore, from a reliability point of view,

revenue recognition is delayed until the point of sale. Also, there may be significant risks remaining with the seller of the product even after the sale. Warranties given by the seller are a risk that remains with the seller. However, if this risk can be reliably estimated at the time of sale, revenue can be recognized at the point of sale.

Performance is quite different under a long-term construction contract. Here,

performance really is considered to be a measure of the work done. Revenue is

recognized over the production period as the work is performed. It is intended to

reflect the amount of effort expended by the seller (contractor). Although legal title

won’t transfer to the buyer until the proje ct is completed, revenue can be recognized because there is a known and committed buyer. If the contractor is not able to

estimate how much of the work has been done (perhaps because he or she can’t

reliably estimate how much work must still be done), then profit would not be

recognized until the extent of performance is known.

Measurability means that the seller or service provider must be able to reliably

estimate the amount of the revenue from the sale or service. For the sale of products this is generally known at the time of sale (the sales price is set). However, if the

seller provides a return period, it may be necessary to estimate the volume of returns at the time of sale in order to measure the revenue that will be recognized.

Collectibility means that the seller or the service provider has reasonable assurance that the sales price will actually be collected. In most cases for the sales of products, the seller is able to recognize revenue at the time of sale even if the sale is on

account. This is because the seller has experience with its customers and is able to estimate reliably the risk of non payment. As long as the seller is able to make this

estimate, it is appropriate to recognize the revenue but to offset it with a provision for possible non collection. If the seller is unable to make reliable estimates of future

collection of amounts owing, the recognition of revenue would be delayed until the

cash is actually received. This is what is done using the instalment sales method of revenue recognition.

b. Because of the performance criterion of revenue recognition, it would seem to be most appropriate to recognize most revenue as the seller or service provider performs

the work. This would be the best measure of performance. This would mean, for example, that sellers of products would recognize their revenue over the whole production, selling, and post sales servicing periods. As we saw above, this is not commonly done because,

in many cases, there are still significant risks that are retained by the seller (risk of not being able to sell the product, for example). There are also measurement risks (knowing

the selling price) that exist prior to the sale. The percentage-of-completion method of revenue used for some long-term construction contracts would seem to most closely recognize revenue as the work is performed. As mentioned in Part 1, we are able to recognize revenue on this basis since a contract exists which commits the purchaser to

buy the project (assuming certain conditions are met) and the sales price is known because of the existence of the contract.

If all revenue is recognized when a student registers for the course, profit for 2007 would be:

Sales Revenue1:

Manuals and initial lessons (200 × $100) $ 20,000 Additional lessons ((200 × 8) × $30) 48,000 Examinations ((200 × 80%) × $130) 20,800 Total sales revenue 88,800

Cost of sales:

Manuals and initial lessons (200 × ($15 + $3)) 3,600

Additional lessons ((200 × 8) × $3)) 4,800 Examinations ((200 × 80%) × $30) 4,800 Total cost of sales 13,200

Depreciation of development costs:

$180,000 × (200/1,000) 36,000

Profit $ 39,600

FINISH ENTERPRISES

Income Statement

for the year ending December 31, 2005

Continuing operations (excluding the chemical division)

Sales ($35,000,000 – $5,500,000) $ 29,500,000

Cost of sales ($15,000,000 – $2,800,000) (12,200,000)

Gross profit 17,300,000

Selling & administration expenses

($18,000,000 – $3,200,000) (14,800,000)

Profit from operations 2,500,000

Income tax expense (40%) 1,000,000

Profit after tax $ 1,500,000

Discontinuing operations (Chemical division)

Sales 5,500,000

Cost of sales (2,800,000)

Gross profit 2,700,000

Selling & administration expenses (3,200,000)

Loss from operations (500,000)

Income tax expense(40%) 200,000

Loss after tax (300,000) Gain on discontinuance of the Chemical division 3,500,000

Tax thereon (1,400,000)

After-tax gain on discontinuance of the Chemical division 2,100,000 Enterprise net profit $ 3,300,000

会计英语课后习题参考答案

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