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

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Decision Problems
Req. 1 and 2  (40-50 min.)  DP2-1
Car Finders
Cash  Accounts Receivable
(a)  50,000 (d)  1,600  (g)  15,600 (i)  2,400
(b)  8,000 (e)  1,200  Bal.  13,200
(h)  7,500 (f)  16,000 
(i)  2,400 (c)  27,000 
Bal.  22,100
Supplies  Vehicle
(d)  1,600 (c)  27,000
Bal.  1,600 Bal.  27,000
Note Payable 
(b)  8,000 
Bal.  8,000 
Samina Hin, Capital 
(a)  50,000 
Bal.  50,000 
Advising Revenue  Advertising Expense
(g)  15,600  (e)  1,200
(h)  7,500  Bal.  1,200
Bal.  23,100 
Interest Expense  Rent Expense
(f)  200 (f)  1,800
Bal.  200 Bal.  1,800
Commission Expense  Utilities Expense
(f)  12,400 (f)  600
Bal.  12,400 Bal.  600
Gas Expense 
(f)  1,000
Bal.  1,000
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(continued)  DP2-1
Req. 3 
CAR FINDERS
Unadjusted Trial Balance
March 31, 2020
Account Title  Debit  Credit
Cash  $22,100 
Accounts receivable  13,200 
Supplies  1,600 
Vehicle  27,000 
Note payable  $ 8,000
Samina Hin, capital  50,000
Advising revenue  23,100
Advertising expense  1,200 
Commission expense  12,400 
Gas expense  1,000 
Interest expense  200 
Rent expense  1,800 
Utilities expense  600 
Total  $81,100  $81,100
Req. 4 ( Net income or loss for first month of operations) 
CAR FINDERS
Income Statement
For the Month Ended March 31, 2020
Revenue 
Advising revenue  $23,100
Expenses 
Advertising expense  $ 1,200 
Commission expense  12,400 
Gas expense  1,000 
Interest expense  200 
Rent expense  1,800 
Utilities expense  600 
Total expenses  17,200
Net income  $ 5,900
Recommendations: Do not continue the business because the business is not earning the
minimum amount expected by the owner.
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Financial Statement Cases
(10 min.)  FSC2-1
1.  Indigo Books & Music Inc. presents its financial statements in Canadian dollars.
2.  Amounts are recorded in thousands of dollars.
3.  April 1, 2017, is the date of the most recent financial statement. In 2016 it was dated
April 2.
4.  Indigo is a publicly traded company so it must follow IFRS. It also tells us that they
follow IFRS in Note 3. Basis of Preparation.
5. In Note 3. Basis of Preparation, it states that the Board of Directors approved them on
May 30, 2017.
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(20-30 min.)  FSC2-2
Req. 2
All amounts in millions of dollars
Journal
Date
2016  Account Titles and Explanations
Post.
Ref.  Debit  Credit
Dec.  a. Accounts Receivable  950 
Service Revenue  950
b. Goods and Services Purchased  1,100 
Cash 1,100
c. Financing Costs  520 
Cash  520
d. Cash  2,100 
Accounts Receivable  2,100
e. Prepaid Expenses  24 
Cash  24
f. Property, Plant and Equipment  550 
Accounts Payable and Accrued Liabilities  550
g. Goods and Services Purchased  1,800 
Cash  1,800
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(continued) FSC2-2
Req. 1, 3, 4
Partial list of accounts – all amounts in millions of dollars
Cash  Accounts Receivable
Bal.  1,776  b.  1,100  Bal.  2,621 d.  2,100
d.  2,100  c.  520  a.  950
e.  24  Bal.  1,471
g.  1,800 
Bal.  432 
Prepaid Expenses  Property, Plant, and Equipment
Bal.  209  Bal.  9,914
f.  24  f.  550
Bal.  233  Bal.  10,464