Horngren’s Accounting, Volume 1, 11th Canadian Edition by Tracie Miller-Nobles Solution manual

21  14,000
Bal.  110,800
Furniture  Building
Dec.  15  57,800 Dec.  15  200,000
Land  Accounts Payable
Dec.  15  30,000 Dec.  15  12,000
21  7,400
Bal.  19,400
Mortgage Payable  B. Palmiter, Capital
Dec.  24  2,000 Dec.  15  30,000  Dec.  15  209,800
Bal.  28,000 
B. Palmiter, Withdrawals  Guest Revenue
Dec.  27  14,000 Dec.  15  310,800*
17  1,550
21  1,600
23  2,800
29  2,000
Bal.  318,750
*adjusted for Dec 31 note
Horngren’s Accounting, 11Ce  Chapter 2  Instructor’s Solutions Manual
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(continued)  P2-7B
Maquina Lodge
Interest Earned  Equipment Rental Expense
Dec.  18  2,400  Dec.  15  11,800
Insurance Expense  Legal Expense
Dec.  15  6,800 Dec.  29  900
Salaries Expense  Supplies Expense
Dec.  15  81,000 Dec.  15  2,800
Utilities Expense 
Dec.  15  21,000
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(continued)  P2-7B
Maquina Lodge
Req. 4
MAQUINA LODGE
Unadjusted Trial Balance
December 31, 2020
Account Title  Debit  Credit
Cash  $8,650 
Accounts receivable  8,800 
Note receivable  8,000 
Supplies inventory  5,800 
Office equipment  10,200 
Boating equipment  110,800 
Furniture  57,800 
Building  200,000 
Land  30,000 
Accounts payable  $ 19,400
Mortgage payable  28,000
B. Palmiter, capital  209,800
B. Palmiter, withdrawals  14,000 
Guest revenue  318,750
Interest earned  2,400
Equipment rental expense  11,800 
Insurance expense  6,800 
Legal expense  900 
Salaries expense  81,000 
Supplies expense  2,800 
Utilities expense  21,000 
Total  $578,350  $578,350
Horngren’s Accounting, 11Ce  Chapter 2  Instructor’s Solutions Manual
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Challenge Problems
(15-20 min.)  P2-1C
Req. 1
The students may need a hint. Use the statement of Owner’s Equity as a model.
Owner’s Equity  + Owner’s  –  Owner’s equity =  Income during
at the end of the  withdrawals or  at the beginning  the year
year  expenditures  of the year
(A-L)  (A-L)
In other words, Canada Revenue Agency values what Donna has at the end of the year and
subtracts what she had at the beginning ($8,000 in this case) plus an estimate of what she
spent on herself during the year; the remainder is the income she must have earned during the
year and the amount on which she should be taxed.
Req. 2
Note – no additional owner’s investments have occurred.
The accounting concept is the accounting equation restated. Use the statement of Owner’s
Equity equation.
Beg OE
+
Investment
–
Withdrawals
±
Net income
=
End OE
8,000  0  0  X  ?
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(20-25 min.)  P2-2C
Dear Friend,
This trial balance lists the accounts of Archer Communications, along with their balances at
December 31, 2020. The trial balance is an internal document used by accountants. It is not
the same as a balance sheet or an income statement. The balance sheet and the income
statement are financial statements used by managers, creditors, and potential investors for
decision making.
The fact that the trial balance is in balance does not mean that Archer Communications is a
sound company. It merely means that total debits equal total credits in the company ledger.
This says nothing about the soundness of the business.
To compute Archer Communications’ net income or net loss for the current period, subtract
total expenses from service revenue. In this instance, Archer Communications earned net
income of $55,000 [sales revenue of $151,000 minus total expenses of $96,000 ($4,500 +
$39,000 + $10,500 + $42,000)].
Instructional Note: Student responses may vary considerably.
Horngren’s Accounting, 11Ce  Chapter 2  Instructor’s Solutions Manual