College Accounting (A Contemporary Approach), 6th Edition
David Haddock, John Price and Michael Farina
Contents
Chapter 1 Accounting: The Language of Business 1
Section 1 What Is Accounting? 2
The Need for Financial Information 2
Accounting in Everyday Life 2
Accounting Defined 3
Accounting Careers 3
Users of Financial Information 5
Section 1 Review 8
Section 2 Business and Accounting 10
Types of Business Entities 10
Generally Accepted Accounting Principles 12
Section 2 Review 15
Chapter Review and Applications 16
Chapter Summary 16 Discussion Questions 18
Learning Objectives 16 Problem 19
Glossary 17 Business Connections 20
Comprehensive Self Review 18 Answers to Comprehensive Self Review 21
Chapter 2 Analyzing Business Transactions 23
Section 1 Property and Financial Interest 25
Beginning with Analysis 25
Assets, Liabilities, and Owner’s Equity 30
Section 1 Review 31
Section 2 The Accounting Equation and Financial Statements 32
The Fundamental Accounting Equation 32
The Income Statement 37
The Statement of Owner’s Equity and the Balance Sheet 38
The Importance of Financial Statements 41
Section 2 Review 41
Chapter Review and Applications 43
Chapter Summary 43 Applications 45
Learning Objectives 43 Problems 48
Glossary 44 Business Connections 53
Comprehensive Self Review 44 Answers to Comprehensive Self Review 54
Discussion Questions 44
Chapter 3 Analyzing Business Transactions Using T Accounts 55
Section 1 Transactions That Affect Assets, Liabilities,
and Owner’s Equity 56
Asset, Liability, and Owner’s Equity Accounts 56
Account Balances 62
Section 1 Review 64
Section 2 Transactions That Affect Revenue, Expenses,
and Withdrawals 65
Revenue and Expense Accounts 65
The Drawing Account 69
The Rules of Debit and Credit 70
The Trial Balance 72
Financial Statements 73
Chart of Accounts 73
Permanent and Temporary Accounts 74
Section 2 Review 75
Chapter Review and Applications 77
Chapter Summary 77 Applications 79
Learning Objectives 77 Problems 82
Glossary 77 Business Connections 88
Comprehensive Self Review 78 Answers to Comprehensive Self Review 89
Discussion Questions 78
Chapter 4 The General Journal and the General Ledger 91
Section 1 The General Journal 93
Journals 93
The General Journal 93
Section 1 Review 101
Section 2 The General Ledger 102
Ledgers 102
Correcting Journal and Ledger Errors 106
Section 2 Review 107
Chapter Review and Applications 108
Chapter Summary 108 Applications 110
Learning Objectives 108 Problems 112
Glossary 109 Business Connections 122
Comprehensive Self Review 109 Answers to Comprehensive Self Review 123
Discussion Questions 109
Chapter 5 Adjustments and the Worksheet 125
Section 1 The Worksheet 126
The Trial Balance Section 126
The Adjustments Section 127
Section 1 Review 132
Section 2 Financial Statements 133
The Adjusted Trial Balance Section 133
The Income Statement and Balance Sheet Sections 134
Preparing Financial Statements 136
Summary of Financial Statements 146
Journalizing and Posting Adjusting Entries 147
Section 2 Review 149
Chapter Review and Applications 150
Chapter Summary 150 Applications 152
Learning Objectives 150 Problems 156
Glossary 151 Business Connections 164
Comprehensive Self Review 151 Answers to Comprehensive Self Review 165
Discussion Questions 151
Chapter 6 Closing Entries and the Postclosing Trial Balance 167
Section 1 Closing Entries 168
The Closing Process 168
Section 1 Review 176
Section 2 Using Accounting Information 177
Interpreting the Financial Statements 178
The Accounting Cycle 180
Section 2 Review 182
Chapter Review and Applications 183
Chapter Summary 183 Applications 184
Learning Objectives 183 Problems 187
Glossary 183 Business Connections 195
Comprehensive Self Review 184 Answers to Comprehensive Self Review 196
Discussion Questions 184
Mini-Practice Set 1 Service Business Accounting Cycle 197
Eli’s Consulting Services 197
Chapter 7 Accounting for Sales, Accounts Receivable, and Cash Receipts 199
Section 1 Understanding Merchandising Companies 200
Recording Sales for Cash and On Account 201
Recording Sales with Sales Tax Payable for Cash and On Account 202
Recording Sales Returns and Sales Allowances 203
Credit Policies 205
Accounting for Different Types of Credit Sales 206
Accounting for Credit Card Sales 206
Section 1 Review 208
Section 2 Special Topics in Merchandising 209
Computing Trade Discounts 209
Cash Discounts on Sales 210
Cash Discounts on Sales, with Sales Returns 211
Reporting Net Sales 211
The Accounts Receivable Ledger 212
Schedule of Accounts Receivable 213
Sales Taxes 215
Section 2 Review 217
Chapter Review and Applications 218
Chapter Summary 218 Exercises 220
Learning Objectives 218 Problems 223
Glossary 218 Business Connections 234
Comprehensive Self Review 219 Answers to Comprehensive Self Review 235
Discussion Questions 219
Chapter 8 Accounting for Purchases, Accounts Payable, and Cash Payments 237
Section 1 Merchandising Purchases 238
Accounting for Purchases 238
Purchase Returns and Allowances 241
Determining the Net Delivered Cost of Purchases 245
Section 1 Review 246
Section 2 Accounts Payable 247
The Accounts Payable Ledger 248
Schedule of Accounts Payable 249
Internal Control of Purchases 250
Section 2 Review 251
Appendix to Chapter 8: The Perpetual Inventory System 252
Purchasing Transactions 252
Sales Transactions 255
Chapter Review and Applications 260
Chapter Summary 260 Exercises 262
Learning Objectives 260 Problems 268
Glossary 260 Business Connections 279
Comprehensive Self Review 261 Answers to Comprehensive Self Review 281
Discussion Questions 261
Chapter 9 Cash 283
Section 1 Cash Receipts 284
Cash Transactions 284
Section 1 Review 287
Section 2 Petty Cash and Internal Controls for Cash 288
The Petty Cash Fund 288
Internal Control over Cash 290
Section 2 Review 292
Section 3 Banking Procedures 293
Writing Checks 293
Endorsing Checks 294
Preparing the Deposit Slip 295
Handling Postdated Checks 296
Reconciling the Bank Statement 296
Adjusting the Financial Records 299
Internal Control of Banking Activities 302
Using Online Banking 302
Section 3 Review 304
Chapter Review and Applications 305
Chapter Summary 305 Exercises 307
Learning Objectives 305 Problems 311
Glossary 305 Business Connections 320
Comprehensive Self Review 306 Answers to Comprehensive Self Review 322
Discussion Questions 306
Chapter 10 Payroll Computations, Records, and Payment 323
Section 1 Payroll Laws and Taxes 324
Who Is an Employee? 324
Federal Employee Earnings and Withholding Laws 324
State and Local Taxes 326
Employer’s Payroll Taxes and Insurance Costs 326
Employee Records Required by Law 327
Section 1 Review 328
Sectin 2 Calculating Earnings and Taxes 329
Computing Total Earnings of Employees 329
Determining Pay for Hourly Employees 330
Determining Pay for Salaried Employees 335
Recording Payroll Information for Employees 336
Section 2 Review 338
Section 3 Recording Payroll Information 339
Recording Payroll 339
Paying Employees 340
Individual Earnings Records 342
Completing January Payrolls 343
Section 3 Review 345
Chapter Review and Applications 346
Chapter Summary 346 Exercises 348
Learning Objectives 346 Problems 350
Glossary 346 Business Connections 357
Comprehensive Self Review 347 Answers to Comprehensive Self Review 358
Discussion Questions 347
Chapter 11 Payroll Taxes, Deposits, and Reports 359
Section 1 Social Security, Medicare, and Employee Income Tax 360
Payment of Payroll Taxes 360
Wage and Tax Statement, Form W-2 369
Annual Transmittal of Wage and Tax Statements, Form W-3 371
Section 1 Review 372
Section 2 Unemployment Tax and Workers’ Compensation 373
Unemployment Compensation Insurance Taxes 373
Internal Control over Payroll Operations 380
Section 2 Review 381
Chapter Review and Applications 382
Chapter Summary 382 Exercises 384
Learning Objectives 382 Problems 385
Glossary 383 Business Connections 393
Comprehensive Self Review 383 Answers to Comprehensive Self Review 394
Discussion Questions 383
Chapter 12 Accruals, Deferrals, and the Worksheet 395
Section 1 Calculating and Recording Adjustments 396
The Accrual Basis of Accounting 396
Using the Worksheet to Record Adjustments 397
Section 1 Review 406
Section 2 Completing the Worksheet 407
Preparing the Adjusted Trial Balance Section 407
Preparing Income Statement and Balance Sheet Sections 410
Calculating Net Income or Net Loss 410
Section 2 Review 412
Chapter Review and Applications 413
Chapter Summary 413 Exercises 415
Learning Objectives 413 Problems 416
Glossary 413 Business Connections 432
Comprehensive Self Review 414 Answers to Comprehensive Self Review 433
Discussion Questions 414
Chapter 13 Financial Statements and Closing Procedure 435
Section 1 Preparing the Financial Statements 436
The Classified Income Statement 436
The Statement of Owner’s Equity 439
The Classified Balance Sheet 440
Section 1 Review 442
Section 2 Completing the Accounting Cycle 443
Journalizing and Posting the Adjusting Entries 443
Journalizing and Posting the Closing Entries 446
Preparing a Postclosing Trial Balance 448
Interpreting the Financial Statements 449
Journalizing and Posting Reversing Entries 451
Review of the Accounting Cycle 455
Section 2 Review 457
Chapter Review and Applications 459
Chapter Summary 459 Exercises 462
Learning Objectives 459 Problems 468
Glossary 459 Business Connections 481
Comprehensive Self Review 460 Answers to Comprehensive Self Review 483
Discussion Questions 461
Mini-Practice Set 2 Merchandising Business Accounting Cycle 484
The Fashion Rack 484
Appendix A The Home Depot 2018 Financial Statements A-1
Glossary G-1
Index I-1
Sample General Ledger Accounts
Rules of Debit and Credit