Last revised: October, 2018

QUICK STUDY

Quick Study 1-1

There are a variety of questions and this list is certainly not exhaustive:
1. How much was spent on advertising last year? And/or how much is projected to be
spent this year?
2. What is the effect of advertising on sales? And/or what is the projected effect of
advertising on this year’s sales?
3. How much was spent on delivering flowers last year? And/or how much is projected
to be spent this year?
4. How much will it cost to create a webpage and sell flowers online?
5. Can sales be increased by selling online? And/or what is the experience of our
competitors in this regard?
6. When pricing flowers, how much is being charged for delivery?
7. Are there enough sales staff to answer phones/emails and/or are sales being lost
because of insufficient staffing and/or staffing issues?

Quick Study 1-2

a. Do not record Meeting with the mechanical staff to determine new machine
requirements for next year.
b. Record Receiving the company’s utility bill detailing the usage for the past month.
c. Do not record Analyzing last year’s sales report to determine if the discount policy
is effective in getting customers to buy in multiple quantities.
d. Record Downloading the online bank statements and identifying customer
payments.
e. Do not record Interviewing and then hiring an employee for an accounting position.

Quick Study 1-3

a. Highlands United Church Non-business d. University of Non-business
Toronto
b. Royal Alexandra Hospital Non-business e. Loblaw Business
c. Toronto-Dominion Bank Business f. World Vision Non-business

Quick Study 1-4

1. SP
2. C
3. P
4. SP
5. C
6. C
7. P

Solutions Manual to accompany Fundamental Accounting Principles, 16th Canadian Edition. © 2019 McGraw-Hill Education
Ltd. 1-1
Last revised: October, 2018

Quick Study 1-5

1. A
2. C
3. B
4. A
5. A
6. B
7. B
8. C

Quick Study 1-6

1. Relevant facts: You have failed your midterms and are at high risk of failing the
course. Your university policy will punish all academic acts of dishonesty. You
have faced a difficult personal situation during the semester.
2. Ethical issues involved: Whether it is ethical for you to look at accounting notes
during the final exam.
3. Fundamental principles and rules applicable to the matter in question: Your
university policy will punish all academic acts of dishonesty. You believe in the
principle of honesty. It is not honest to misrepresent the amount of accounting
knowledge you know.
4. Established internal procedures: The university’s policy will punish all acts of
academic dishonesty.
5. Alternative courses of action: Continue engaging in acts of academic dishonesty
until you are caught. The consequence will be that you may be caught in the
future and be punished for it. Resolve to not engage in any acts of academic
dishonesty in the future. The consequence will be that you avoid the chance of
being punished for unethical behaviour in the future.
Conclusion
The behaviour in the situation described appears to be unethical based on the
application of the Chartered Professional Accountants of Ontario’s Rules of
Professional Conduct - Approach to Ethical Conflict Resolution. You are acting against
your University’s policy and against your own personal value of being honest.

Quick Study 1-7

a. Business entity principle

b. Revenue recognition principle
c. Historical cost principle (see page 18)

Quick Study 1-8

Solutions Manual to accompany Fundamental Accounting Principles, 16th Canadian Edition. © 2019 McGraw-Hill Education
Ltd. 1-2
Last revised: October, 2018

1. Revenue Recognition
2. Historical Cost
3. Business Entity
4. Going Concern
5. Currency

Quick Study 1-9

Currency a. Delco performed work for a client located in China and collected
8,450,000 RMB (Chinese currency), the equivalent of about $1,320,000
Canadian. Delco recorded it as 8,450,000.
Revenue b. Delco collected $180,000 from a customer on December 20, 2020 for
Recognition work to be done in February 2021. The $180,000 was recorded as
revenue during 2020. Delco’s year end is December 31.
Going c. Delco’s December 31, 2020 balance sheet showed total assets of
Concern $840,000 and liabilities of $1,120,000. The income statement for the
past 6 years has shown a trend of increasing losses.
Historical d. Included in Delco’s assets was land and building purchased for
Cost $310,000 and reported on the balance sheet at $470,000.
Business e. Delco’s owner, Tom Del, consistently buys personal supplies and
Entity charges them to the company.

Quick Study 1-10

a. Equity = $ 75,000 – $ 40,500 = $ 34,500

b. Liabilities = $300,000 – $ 85,500 = $214,500
c. Assets = $187,500 + $ 95,400 = $282,900

Quick Study 1-11

a. Equity = $374,700 – $252,450 = $122,250

b. Liabilities = $150,900 – $126,000 = $ 24,900
c. Assets = $ 37,650 + $112,500 = $150,150

Solutions Manual to accompany Fundamental Accounting Principles, 16th Canadian Edition. © 2019 McGraw-Hill Education
Ltd. 1-3
Last revised: October, 2018

Quick Study 1-12

a.
b.
All-in Servicing
All-in Servicing
Income Statement
Income Statement
For Month Ended April 30, 2020
For Month Ended May 31, 2020
Revenues $300
Revenues $135
Expenses 125
Expenses 85
Profit (loss) 175
Profit (loss) $ 50

All-in Servicing
All-in Servicing
Statement of Changes in Equity
Statement of Changes in Equity
For Month Ended April 30, 2020
For Month Ended May 31, 2020
Tim Allin, capital, April 1 $ 50
Tim Allin, capital, May 1 $240
Investments by owner $ 30
Investments by owner $ 60
Profit 175 205
Profit 50 $110
Total $255
Total 350
Less: Withdrawals by owner 15
Less: Withdrawals by owner 75
Tim Allin, capital, April 30 $240
Tim Allin, capital, May 31 $275
All-in Servicing
Balance Sheet
All-in Servicing
April 30, 2020
Balance Sheet
Assets Liabilities
May 31, 2020
Cash $ 60 Accounts payable $ 25
Assets Liabilities
Equipment 205 Equity
Cash $120 Accounts payable $ 45
Tim Allin, capital 240
Equipment 200 Equity
Total liabilities and
Tim Allin, capital 275
Total assets $265 equity $265
Total liabilities and
Total assets $320 equity $320

Solutions Manual to accompany Fundamental Accounting Principles, 16th Canadian Edition. © 2019 McGraw-Hill Education Ltd. 1-4
Quick Study 1-13
1. $20,000 - $15,000 = $5,000 beginning capital on January 1, 2020
2. $5,000 + $3,000 + $8,000 - $4,000 = $12,000 ending capital on December 31, 2020

Quick Study 1-14

Assets = Liabilities + Equity
a. Increase/Decrease
b. Increase Increase
c. Decrease Decrease
d. Increase Decrease
e. Decrease Decrease

Quick Study 1-15

c 1. Supplies.................................................... $10
a 2. Supplies expense.................................... 22
c 3. Accounts receivable................................ 25
c 4. Accounts payable.................................... 12
c 5. Equipment................................................ 40
b 6. Tim Roadster’s withdrawals in April...... 35
c 7. Notes payable.......................................... 30
a 8. Utilities expense........................................ 10
c 9. Furniture..................................................... 20
a 10. Revenue..................................................... 70
a 11. Rent revenue.............................................. 35
a 12. Salaries expense....................................... 45
b 13. Tim Roadster’s investments in April....... 60
a+b 14. Profit*.......................................................... 28

*Calculated as: 70 + 35 – 22 – 10 – 45 = 28
Quick Study 1-16
1 Total revenues............................................. 70 + 35 = 105
.
2 Total operating expenses........................... 22 + 10 + 45 = 77
.
3 Profit............................................................. 105 – 77 = 28
.
4 Total assets.................................................. 10 + 25 + 40 + 20 = 95
.
5 Total liabilities.............................................. 12 + 30 = 42
.
6 Tim Roadster, capital (April 30, 2020)........ 60 – 35 + 28 = 53
.
7 Total liabilities and equity........................... 42 + 53 = 95
.

Quick Study 1-17

d 1. Loss......................................................... 2 Income statement &
Statement of changes in equity
d 2. Rent expense.......................................... 22 Income statement
b 3. Rent payable........................................... 6
a 4. Accounts receivable.............................. 14
d 5. Paul Sangha’s investments in May...... 30 Statement of changes in equity
d 6. Interest income...................................... 2 Income statement
d 7. Paul Sangha’s, capital, May 1, 2020..... 0 Statement of changes in equity
a 8. Repair supplies........................................ 5
b 9. Notes payable.......................................... 25
d 10 Paul Sangha’s withdrawals in May........ 5 Statement of changes in equity
.
a 11 Truck......................................................... 15
.
d 12 Consulting revenue................................. 18 Income statement
.
c 13 Paul Sangha, capital, May 31, 2020........ 23
. *
a 14 Cash.......................................................... 20
.

* See QS1-18 for details on how this amount was calculated; this calculation was not a
requirement of QS1-17.
Quick Study 1-18

SANGHA CONSULTING
Income Statement
For Month Ended May 31, 2020
Revenues:
Consulting revenue............................................ $18
Interest income.................................................. 2
Total revenues........................................................... $20
Operating expenses:
Rent expense..................................................... 22
Loss ..................................................................... $ 2

SANGHA CONSULTING
Statement of Changes in Equity
For Month Ended May 31, 2020
Paul Sangha, capital, May 1................................ $ 0
Investments by owner ........................................ 30
Total ..................................................................... $30
Less: Withdrawals by owner............................... $5
Loss............................................................ 2 7
Paul Sangha, capital, May 31.............................. $23

SANGHA CONSULTING
Balance Sheet
May 31, 2020

Assets Liabilities
Cash................................................. $20 Rent payable............................. $ 6
Accounts receivable....................... 14 Notes payable...........................   25
Repair supplies............................... 5 Total liabilities........................... $31
Truck................................................ 15 Equity
Paul Sangha, capital................. 23
Total liabilities and
Total assets..................................... $54 equity..................................... $54