College Accounting, Chapters 1-16

by Heintz, James A.; Parry, Robert W.

• ISBN13: 9780324201499
• ISBN10: 0324201494
• Edition: 18th
• Format: Hardcover
• Copyright: 2004-01-07
• Publisher: South-Western College Pub

Summary

This book presents concepts simply while ensuring the best, most accurate coverage. College Accounting is designed to make accounting understandable to virtually everyone without sacrificing substance and technical correctness. A step-by-step, straightforward approach helps students build practical accounting skills that are needed when entering the world of work. The text presents simple topics first and gradually builds to more advanced topics, so learners are not overwhelmed. The narrative approach covers a simple example of a service business before moving to a merchandising business.

Table of Contents

PART 1 ACCOUNTING FOR A SERVICE BUSINESS
Chapter 1 Introduction to Accounting	1	(14)
The Purpose of Accounting	2	(1)
The Accounting Process	3	(1)
Generally Accepted Accounting Principles (GAAP)	3	(1)
Three Types of Ownership Structures	4	(1)
Sole Proprietorship	4	(1)
Partnership	5	(1)
Corporation	5	(1)
Types of Businesses	5	(1)
Career Opportunities in Accounting	6	(3)
Accounting Clerks	6	(1)
Bookkeepers and Para-Accountants	6	(1)
Accountants	6	(2)
Job Opportunities	8	(1)
Managing Your Writing	9	(2)
Key Points	11	(1)
Key Terms	12	(1)
Review Questions	13	(1)
Managing Your Writing	13	(1)
Exercises	14	(1)
Chapter 2 Analyzing Transactions: The Accounting Equation	15	(32)
The Accounting Elements	16	(2)
Assets	16	(1)
Liabilities	16	(1)
Owner's Equity	17	(1)
The Accounting Equation	18	(1)
Analyzing Business Transactions	18	(1)
Effect of Transactions on the Accounting Equation	19	(9)
Expanding the Accounting Equation: Revenues, Expenses, and Withdrawals	20	(2)
Effect of Revenue, Expense, and Withdrawal Transactions on the Accounting Equation	22	(6)
Financial Statements	28	(3)
The Income Statement	28	(2)
The Statement of Owner's Equity	30	(1)
The Balance Sheet	30	(1)
Overview of the Accounting Process	31	(3)
Key Points 33
Demonstration Problem	34	(3)
Key Terms	37	(1)
Review Questions	38	(1)
Self-Study Test Questions	38	(1)
Managing Your Writing	39	(1)
Exercises and Problems	39	(6)
Mastery Problem	45	(1)
Challenge Problem	46	(1)
Chapter 3 The Double-Entry Framework	47	(40)
The T Account	48	(1)
Balancing a T Account	48	(1)
Debits and Credits	49	(3)
Assets	49	(1)
Liabilities and Owner's Equity	49	(1)
Normal Balances	50	(1)
Revenues	51	(1)
Expenses	51	(1)
Drawing	51	(1)
Normal Balances for the Owner's Equity Umbrella	51	(1)
Transaction Analysis	52	(15)
Debits and Credits: Asset, Liability, and Owner's Equity Accounts	52	(3)
Debits and Credits: Including Revenues, Expenses, and Drawing	55	(10)
Summary of Transactions	65	(2)
The Trial Balance	67	(2)
Key Points	69	(1)
Demonstration Problem	70	(4)
Key Terms	74	(1)
Review Questions	74	(1)
Self-Study Test Questions	75	(1)
Managing Your Writing	75	(1)
Exercises and Problems	76	(8)
Mastery Problem	84	(1)
Challenge Problem	85	(2)
Chapter 4 Journalizing and Posting Transactions	87	(46)
Flow of Data	88	(1)
The Chart of Accounts	89	(1)
Source Documents	90	(1)
The General Journal	91	(6)
Journalizing	92	(5)
The General Ledger	97	(9)
Four-Column Account	97	(1)
Posting to the General Ledger	98	(1)
Steps in the Posting Process	99	(6)
The Trial Balance	105	(1)
Finding and Correcting Errors in the Trial Balance	106	(3)
Ruling Method	107	(1)
Correcting Entry Method	108	(1)
Key Points	109	(1)
Demonstration Problem	110	(5)
Key Terms	115	(1)
Review Questions	115	(1)
Self-Study Test Questions	116	(1)
Managing Your Writing	117	(1)
Exercises and Problems	117	(11)
Mastery Problem	128	(1)
Challenge Problem	129	(4)
Chapter 5 Adjusting Entries and the Work Sheet	133	(42)
End-of-Period Adjustments	134	(8)
Supplies	135	(2)
Prepaid Insurance	137	(1)
Wages Expense	138	(1)
Depreciation Expense	139	(2)
Expanded Chart of Accounts	141	(1)
The Work Sheet	142	(2)
The Ten-Column Work Sheet	142	(1)
Preparing the Work Sheet	142	(1)
Preparing the Work Sheet	142	(2)
Finding Errors on the Work Sheet	144	(1)
Journalizing Adjusting Entries	144	(1)
Posting Adjusting Entries	144	(2)
Key Points	146	(1)
Demonstration Problem	147	(3)
Key Terms	150	(1)
Review Questions	151	(1)
Self-Study Test Questions	152	(1)
Managing Your Writing	153	(1)
Exercises and Problems	153	(15)
Mastery Problem	168	(1)
Challenge Problem	169	(2)
Appendix Depreciation Methods	171	(4)
Straight-Line Method	171	(1)
Sum-of-the-Years'-Digits	172	(1)
Double-Declining-Balance Method	173	(1)
Modified Accelerated Cost Recovery System	173	(1)
Exercises	174	(1)
Chapter 6 Financial Statements and the Closing Process	175	(42)
The Financial Statements	176	(5)
The Income Statement	176	(1)
The Statement of Owner's Equity	176	(3)
The Balance Sheet	179	(1)
Additional Investments by the Owner	180	(1)
The Closing Process	181	(6)
Journalize Closing Entries	183	(2)
Post the Closing Entries	185	(2)
Post-Closing Trial Balance	187	(1)
The Accounting Cycle	188	(4)
Key Points	192	(1)
Demonstration Problem	193	(3)
Key Terms	196	(1)
Review Questions	197	(1)
Self-Study Test Questions	198	(1)
Managing Your Writing	198	(1)
Exercises and Problems	199	(9)
Mastery Problem	208	(2)
Challenge Problem	210	(1)
Appendix Statement of Cash Flows	211	(202)
Types of Business Activities	211	(2)
Preparing the Statement of Cash Flows	213	(2)
Key Points	215	(1)
Key Terms	215	(1)
Review Questions	215	(1)
Exercises and Problems	216	(1)
COMPREHENSIVE PROBLEM 1: THE ACCOUNTING CYCLE	217	(8)
PART 2 ACCOUNTING FOR CASH, PAYROLL AND SERVICE BUSINESSES
Chapter 7 Accounting for Cash	225	(36)
Checking Account	226	(6)
Opening a Checking Account	226	(1)
Making Deposits	226	(3)
Writing Checks	229	(2)
Bank Statement	231	(1)
Reconciling the Bank Statement	232	(5)
Deposits	232	(1)
Cash Payments	232	(1)
Reasons for Differences Between Bank and Book Balances	233	(1)
Steps in Preparing the Bank Reconciliation	233	(1)
Illustration of a Bank Reconciliation	234	(1)
Journal Entries	235	(2)
Electronic Funds Transfer	237	(1)
The Petty Cash Fund	237	(4)
Establishing a Petty Cash Fund	237	(1)
Making Payments from a Petty Cash Fund	238	(1)
Petty Cash Payments Record	238	(1)
Replenishing the Petty Cash Fund	239	(2)
The Change Fund and Cash Short and Over	241	(2)
Establishing and Operating the Change Fund	241	(1)
Cash Short and Over	241	(2)
Key Points	243	(1)
Demonstration Problem	244	(2)
Key Terms	246	(1)
Review Questions	247	(1)
Self-Study Test Questions	248	(1)
Managing Your Writing	248	(1)
Ethics Case	249	(1)
Web Work	249	(1)
Exercises and Problems	249	(9)
Mastery Problem	258	(2)
Challenge Problem	260	(1)
Chapter 8 Payroll Accounting: Employee Earnings and Deductions	261	(36)
Employees and Independent Contractors	262	(1)
Employee Earnings and Deductions	262	(9)
Salaries and Wages	263	(1)
Computing Total Earnings	263	(2)
Deductions from Total Earnings	265	(5)
Computing Net Pay	270	(1)
Payroll Records	271	(3)
Payroll Register	271	(1)
Payroll Check	272	(2)
Employee Earnings Record	274	(1)
Accounting for Employee Earnings and Deductions	274	(4)
Journalizing Payroll Transactions	274	(2)
Wages and Salaries Expense	276	(1)
Employee Income Tax Payable	277	(1)
Social Security and Medicare Taxes Payable	277	(1)
Other Deductions	277	(1)
Payroll Record-Keeping Methods	278	(1)
Key Points	279	(1)
Demonstration Problem	280	(3)
Key Terms	283	(1)
Review Questions	284	(1)
Self-Study Test Questions	285	(1)
Managing Your Writing	286	(1)
Ethics Case 286	286	(1)
Web Work	286	(1)
Exercises and Problems	286	(12)
Mastery Problem 293	298
Challenge Problem	294	(3)
Chapter 9 Payroll Accounting: Employer Taxes and Reports	297	(34)
Employer Payroll Taxes	298	(3)
Employer FICA Taxes	298	(1)
Self-Employment Tax	299	(1)
Employer FUTA Tax	300	(1)
Employer SUTA Tax	300	(1)
Accounting for Employer Payroll Taxes	301	(3)
Journalizing Employer Payroll Taxes	301	(1)
Payroll Taxes Expense	302	(1)
Social Security and Medicare Taxes Payable	302	(1)
FUTA Tax Payable	303	(1)
SUTA Tax Payable	303	(1)
Total Payroll Cost of an Employee	303	(1)
Reporting and Payment Responsibilities	304	(8)
Federal Income Tax Withholding and Social Security and Medicare Taxes	304	(2)
FUTA Taxes	306	(3)
SUTA Taxes	309	(1)
Employee Wage and Tax Statement	309	(1)
Summary of Employee Wages and Taxes	310	(1)
Summary of Reports and Payments	310	(2)
Workers' Compensation Insurance	312	(3)
Key Points	315	(1)
Demonstration Problem	316	(2)
Key Terms	318	(1)
Review Questions	318	(1)
Self-Study Test Questions	319	(1)
Managing Your Writing	320	(1)
Ethics Case	320	(1)
Web Work	320	(1)
Exercises and Problems	321	(7)
Mastery Problem	328	(1)
Challenge Problem	329	(2)
Chapter 10 Accounting for a Professional Service Business: The Combination Journal	331
Accrual Basis Versus Cash Basis	332	(3)
Accounting for a Professional Service Business	335	(2)
The Combination Journal	337	(4)
Journalizing in a Combination Journal	339	(2)
Proving the Combination Journal	341	(1)
Posting from the Combination Journal	341	(2)
Determining the Cash Balance	343	(1)
Performing End-of-Period Work for a Professional Service Business	343	(5)
Preparing the Work Sheet	343	(3)
Preparing Financial Statements	346	(1)
Preparing Adjusting and Closing Entries	347	(1)
Key Points	348	(1)
Demonstration Problem	349	(5)
Key Terms	354	(1)
Review Questions	354	(1)
Self-Study Test Questions	355	(1)
Managing Your Writing	356	(1)
Ethics Case	356	(1)
Web Work	356	(1)
Exercises and Problems	356	(10)
Mastery Problem	366	(1)
Challenge Problem	367
PART 3 ACCOUNTING FOR A MERCHANDISING BUSINESS
Chapter 11 Accounting for Sales	171	(242)
Merchandise Sales Transactions	372	(3)
Retailer	372	(1)
Wholesaler	373	(1)
Credit Memorandum	374	(1)
Merchandise Sales Accounts	375	(4)
Sales Account	376	(1)
Sales Tax Payable Account	377	(1)
Sales Returns and Allowances Account	377	(1)
Sales Discounts Account	378	(1)
Journalizing and Posting Sales and Cash Receipts Transactions	379	(8)
Sales	379	(1)
Posting to the General Ledger	380	(1)
Posting to the Accounts
Receivable Ledger	381	(2)
Sales Returns and Allowances	383	(1)
Cash Receipts	383	(3)
Posting to the General Ledger and Accounts Receivable Ledger	386	(1)
Schedule of Accounts Receivable	387	(2)
Key Points	389	(2)
Demonstration Problem	391	(6)
Key Terms	397	(1)
Review Questions	398	(1)
Self-Study Test Questions	399	(1)
Managing Your Writing	400	(1)
Ethics Case	400	(1)
Web Work	400	(1)
Exercises and Problems	401	(9)
Mastery Problem	410	(2)
Challenge Problem	412	(1)
Chapter 12 Accounting for Purchase and Cash Payments	413	(42)
Merchandise Purchases Transactions	414	(3)
Purchase Requisition	414	(1)
Purchase Order	415	(1)
Receiving Report and Purchase Invoice	416	(1)
Cash and Trade Discounts	416	(1)
Merchandise Purchases Accounts	417	(6)
Purchases Account	418	(1)
Purchases Returns and Allowances Account	419	(1)
Purchases Discounts Account	419	(1)
Freight-In Account	420	(1)
Computation of Gross Profit	421	(2)
Journalizing and Posting Purchases and Cash Payments Transactions	423	(8)
Purchases	423	(1)
Posting to the General Ledger	423	(1)
Posting to the Accounts Payable Ledger	424	(2)
Purchases Returns and Allowances	426	(1)
Cash Payments	427	(1)
Posting to the General Ledger and Accounts Payable Ledger	427	(2)
Schedule of Accounts Payable	429	(2)
Key Points	431	(1)
Demonstration Problem	432	(5)
Key Terms	437	(1)
Review Questions	438	(1)
Self-Study Test Questions	438	(1)
Managing Your Writing	439	(1)
Ethics Case	439	(1)
Web Work	440	(1)
Exercises and Problems	440	(9)
Mastery Problem	449	(1)
Challenge Problem	450	(1)
Appendix The Net-Price Method of Recording Purchases	451	(98)
Net-Price Method	451	(1)
Recording with the Net-Price Method	451	(1)
Key Points	452	(1)
Key Terms	452	(1)
Exercises	453	(2)
Chapter 13 Special Journals	455	(50)
Special Journals	456	(1)
Sales Journal	457	(3)
Posting from the Sales Journal	458	(2)
Cash Receipts Journal	460	(7)
Posting from the Cash Receipts Journal	463	(4)
Purchases Journal	467	(4)
Posting the Purchases Journal	468	(3)
Cash Payments Journal	471	(7)
Posting the Cash Payments Journal	472	(6)
Key Points	478	(4)
Demonstration Problem	482	(6)
Key Terms	488	(1)
Review Questions	488	(1)
Self-Study Test Questions	489	(1)
Managing Your Writing	489	(1)
Ethics Case	490	(1)
Exercises and Problems	490	(12)
Mastery Problem	502	(1)
Challenge Problem	503	(2)
Chapter 14 The Voucher System	505	(44)
Internal Control of Expenditures	506	(3)
Elements of Internal Control	506	(1)
Voucher System	507	(2)
Preparing a Voucher	509	(2)
Voucher Register	511	(4)
Filing Unpaid Vouchers	512	(1)
Posting from the Voucher Register	512	(3)
The Payment Process Using a Voucher System	515	(1)
Check Register	516	(5)
Posting from the Check Register	518	(2)
Schedule of Vouchers Payable	520	(1)
Returns, Allowances, and Partial Payments	521	(2)
Purchases Returns and Allowances	521	(1)
Partial Payments	522	(1)
Key Points	523	(1)
Demonstration Problem	524	(6)
Key Terms	530	(1)
Review Questions	530	(1)
Self-Study Test Questions	531	(1)
Managing Your Writing	532	(1)
Ethics Case	532	(1)
Web Work	532	(1)
Exercises and Problems	533	(13)
Mastery Problem	546	(1)
Challenge Problem	547	(2)
Chapter 15 Adjustments and the Work Sheet for a Merchandising Business	549	(46)
Adjustment for Merchandise Inventory	550	(3)
Adjustment for Unearned Revenue	553	(3)
Expanded Chart of Accounts	554	(2)
Preparing a Work Sheet for a Merchandising Business	556	(7)
Adjustments for Northern Micro	556	(1)
Preparing a Work Sheet for Northern Micro	556	(7)
Adjusting Entries	563	(1)
Preparing and Journalizing Adjusting Entries Under the Perpetual Inventory System	563	(2)
Key Points	565	(2)
Demonstration Problem	567	(3)
Key Terms	570	(1)
Review Questions	571	(1)
Self-Study Test Questions	571	(1)
Managing Your Writing	572	(1)
Ethics Case	573	(1)
Web Work	573	(1)
Exercises and Problems	573	(13)
Mastery Problem	586	(3)
Challenge Problem	589	(2)
Appendix Expense Method of Accounting for Prepaid Expenses	591	(4)
The Expense Method	591	(1)
Adjusting Entries Under the Expense Method	591	(1)
Key Points	592	(1)
Key Terms	593	(1)
Exercises	593	(2)
Chapter 16 Financial Statements and Year-End Accounting for a Merchandising Business	595	(45)
The Income Statement	596	(4)
The Statement of Owner's Equity	600	(1)
The Balance Sheet	601	(2)
Current Assets	602	(1)
Property, Plant, and Equipment	602	(1)
Current Liabilities	602	(1)
Long-Term Liabilities	602	(1)
Owner's Equity	603	(1)
Financial Statement Analysis	603	(3)
Balance Sheet Analysis	603	(1)
Interstatement Analysis	604	(2)
Closing Entries	606	(2)
Post-Closing Trial Balance	608	(1)
Reversing Entries	608	(3)
Key Points	611	(2)
Demonstration Problem	613	(7)
Key Terms	620	(1)
Review Questions	621	(1)
Self-Study Test Questions	621	(1)
Managing Your Writing	622	(1)
Ethics Case	623	(1)
Web Work	623	(1)
Exercises and Problems	623	(14)
Mastery Problem	637	(2)
Challenge Problem	639	(1)
COMPREHENSIVE PROBLEM 2: ACCOUNTING CYCLE WITH SUBSIDIARY LEDGERS, PART 1	640	(3)
COMPREHENSIVE PROBLEM 2: ACCOUNTING CYCLE WITH SUBSIDIARY LEDGERS, PART 2	643	(2)
Answers to Self Study Test Questions	645	(2)
Index	647