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Solution Manual for Financial and Managerial

Accounting, 15th Edition, Carl Warren, Jefferson P.
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CHAPTER 1 Introduction to Accounting and Business
BASIC EXERCISES
BE 1–1
$275,000. Under the cost principle, the land should be recorded at the cost to Ritts Roofing.
BE 1–2
a. A = L + SE
$395,000 = $97,000
SE = $298,000
b. A = L + SE
–$65,000 = $36,000
SE = –$101,000
SE on December 31, 20Y2 = $298,000
SE on December 31, 20Y3 = $197,000
BE 1–3
(2) Expense (Advertising Expense) increases by $4,850;

Asset (Cash) decreases by $4,850.
(3) Asset (Supplies) increases by $2,100;
Liability (Accounts Payable) increases by $2,100.
(4) Asset (Accounts Receivable) increases by $14,700;
Revenue (Delivery Service Fees) increases by $14,700.
(5) Asset (Cash) increases by $8,200;
Asset (Accounts Receivable) decreases by $8,200.
BE 1–4
Paradise Travel Service

Income Statement
For the Year Ended May 31, 20Y6
Fees earned $ 900,000
Expenses:
Wages expense $450,000
Office expense 300,000
Miscellaneous expense 15,000
Total expenses (765,000)
Net income $ 135,000
1-2
© 2019 Cengage Learning. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
BE 1–5

Statement of Stockholders’ Equity
Common Retained
Stock Earnings Total
Balances, June 1, 20Y5 $ 60,000 $300,000 $360,000
Issued common stock 40,000 40,000
Net income 135,000 135,000
Dividends (10,000) (10,000)
Balances, May 31, 20Y6 $100,000 $425,000 $525,000
BE 1–6

Balance Sheet
May 31, 20Y6
Assets
Cash $ 52,000
Accounts receivable 38,000
Supplies 3,000
Land 450,000
Total assets $ 543,000
Liabilities
Accounts payable $ 18,000
Stockholders’ Equity
Common stock $100,000
Retained earnings 425,000
Total stockholders’ equity 525,000
Total liabilities and stockholders’ equity $ 543,000
1-3
BE 1–7
Statement of Cash Flows
Cash flows from (used for) operating activities:
Cash received from customers $ 880,000
Cash paid for operating expenses (758,000)
Net cash flows from operating activities $ 122,000
Cash flows from (used for) investing activities:
Cash paid for purchase of land (150,000)
Cash flows from (used for) financing activities:
Cash received from issuing common stock $ 40,000
Cash paid for dividends (10,000)
Net cash flows from financing activities 30,000
Net increase in cash $ 2,000
Cash balance, June 1, 20Y5 50,000
Cash balance, May 31, 20Y6 $ 52,000
BE 1–8
a. Dec. 31, Dec. 31,
20Y4 20Y3
Total liabilities ........................................................... $4,085,000 $2,880,000
Total stockholders’ equity........................................ $4,300,000 $3,600,000
Ratio of liabilities to stockholders’ equity .............. 0.95* 0.80**
* $4,085,000 ÷ $4,300,000
** $2,880,000 ÷ $3,600,000
b. Increased
1-4
EXERCISES
Ex. 1–1
a. 1. manufacturing 6. manufacturing 11. service
2. manufacturing 7. service 12. service
3. manufacturing 8. service 13. manufacturing
4. service 9. manufacturing 14. service
5. retail 10. retail 15. retail
b. The accounting equation is relevant to all companies. It serves as the basis of the
accounting information system.
Ex. 1–2
As in many ethics issues, there is no one right answer. Oftentimes, disclosing only what is
legally required may not be enough. In this case, it would be best for the company’s chief
executive officer to disclose both reports to the county representatives. In doing so, the chief
executive officer could point out any flaws or deficiencies in the fired researcher’s report.
Ex. 1–3
a. 1. M 5. O 9. X
2. L 6. O 10. O
3. O 7. X
4. M 8. L
b. A business transaction is an economic event or condition that directly changes an entity’s
financial condition or results of operations.
Ex. 1–4
McDonald’s stockholders’ equity: $37,939 – $30,851 = $7,088
Starbucks’ stockholders’ equity: $14,330 – $8,446 = $5,884
Ex. 1–5
Dollar Tree’s stockholders’ equity: $15,901 – $11,494 = $4,407
Target’s stockholders’ equity: $40,262 – $27,305 = $12,957
1-5
Ex. 1–6
a. $1,895,000 ($550,000 + $1,345,000)
b. $187,700 ($776,500 – $588,800)
c. $10,295,000 ($14,750,000 – $4,455,000)
Ex. 1–7
a. $3,650,000 ($5,250,000 – $1,600,000)
b. $4,120,000 ($3,650,000 + $800,000 – $330,000)
c. $2,910,000 ($3,650,000 – $600,000 – $140,000)
d. $4,180,000 ($3,650,000 + $440,000 + $90,000)
e. Net income: $540,000 ($6,140,000 – $1,950,000 – $3,650,000)
Ex. 1–8
a. (2) liability
b. (1) asset
c. (3) stockholders’ equity (revenue)
d. (1) asset
e. (3) stockholders’ equity (expense)
f. (3) stockholders’ equity (expense)
Ex. 1–9
a. Increases assets and increases stockholders’ equity.
b. Decreases assets and decreases stockholders’ equity.
c. Decreases assets and decreases stockholders’ equity.
d. Increases assets and increases liabilities.
e. Increases assets and increases stockholders’ equity.
Ex. 1–10
a. (1) Total assets increased $183,000 ($298,000 – $115,000).
(2) No change in liabilities.
(3) Stockholders’ equity increased $183,000.
b. (1) Total assets decreased $80,000.
(2) Total liabilities decreased $80,000.
(3) No change in stockholders’ equity.
c. No, it is false that a transaction always affects at least two elements (Assets, Liabilities, or
Stockholders’ Equity) of the accounting equation. Some transactions affect only one
element of the accounting equation. For example, purchasing supplies for cash only
affects assets.
1-6
Ex. 1–11
1. (a) increase
2. (a) increase
3. (b) decrease
4. (b) decrease
Ex. 1–12
1. c 6. c
2. a 7. d
3. e 8. a
4. e 9. e
5. c 10. e
Ex. 1–13
a. (1) Provided catering services for cash, $71,800.
(2) Purchase of land for cash, $15,000.
(3) Payment of cash for expenses, $47,500.
(4) Purchase of supplies on account, $1,100.
(5) Paid cash dividends, $5,000.
(6) Payment of cash to creditors, $4,000.
(7) Recognition of cost of supplies used, $1,500.
b. $300 ($40,300 – $40,000)
c. $17,800 (–$5,000 + $71,800 – $49,000)
d. $22,800 ($71,800 – $49,000)
e. $17,800 ($22,800 – $5,000)
Ex. 1–14
No. It would be incorrect to say that the business had incurred a net loss of $8,000. The
excess of the dividends over the net income for the period is a decrease in the amount of
stockholders’ equity (retained earnings) in the business.
1-7
Ex. 1–15
Amber
Stockholders’ equity at end of year ($1,730,000 – $1,150,000) ......................... $ 580,000
Deduct stockholders’ equity at beginning of year ($1,220,000 – $990,000).......... (230,000)
Net income (increase in stockholders’ equity) .............................................. $ 350,000
Blue
Increase in stockholders’ equity (as determined for Amber) ........................... $ 350,000
Add dividends ...................................................................................................... 60,000
Net income ....................................................................................................... $ 410,000
Coral
Deduct additional issuance of common stock .................................................. (140,000)
Net income ....................................................................................................... $ 210,000
Daffodil
Deduct additional issuance of common stock .................................................. (140,000)
$ 210,000
Add dividends ...................................................................................................... 60,000
Net income ....................................................................................................... $ 270,000
Ex. 1–16
Balance sheet items: 1, 2, 3, 5, 7, 8, 10
Ex. 1–17
Income statement items: 4, 6, 9
1-8
Ex. 1–18
a. Organic Products Company
For the Month Ended June 30, 20Y9
Common Retained
Balances, June 1, 20Y9 $180,000 $1,630,000 $1,810,000
Net income 115,000 115,000
Dividends (25,000) (25,000)
Balances, June 30, 20Y9 $230,000 $1,720,000 $1,950,000
b. The statement of stockholders’ equity is prepared before the June 30, 20Y9, balance sheet
because common stock and retained earnings as of June 30, 20Y9, are needed for the
June 30, 20Y9, balance sheet.
Ex. 1–19
Imaging Services
Income Statement
For the Month Ended March 31, 20Y5
Expenses:
Rent expense 41,500
Supplies expense 3,600
1-9
Ex. 1–20
In each case, solve for a single unknown, using the following equation:
Stockholders’ Equity (beginning) + Additional Common Stock Issued – Dividends +
Revenues – Expenses = Stockholders’ Equity (ending)
Freeman
Stockholders’ equity at end of year ($1,260,000 – $330,000) .......................... $ 930,000
Stockholders’ equity at beginning of year ($900,000 – $360,000) ................... (540,000)
Increase in stockholders’ equity ....................................................................... $ 390,000
Deduct increase due to net income ($570,000 – $240,000).............................. (330,000)
$ 60,000
Add dividends .................................................................................................... 75,000
Additional common stock issued ................................................................. (a) $ 135,000
Heyward
Stockholders’ equity at end of year ($675,000 – $220,000) ............................. $ 455,000
Stockholders’ equity at beginning of year ($490,000 – $260,000) ................... (230,000)
Increase in stockholders’ equity ....................................................................... $ 225,000
Add dividends .................................................................................................... 32,000
$ 257,000
Deduct additional common stock issued ......................................................... (150,000)
Increase due to net income ............................................................................... $ 107,000
Add expenses ..................................................................................................... 128,000
Revenue ..........................................................................................................
(b) $ 235,000
Jones
Stockholders’ equity at end of year ($100,000 – $80,000) ............................... $ 20,000
Stockholders’ equity at beginning of year ($115,000 – $81,000) ..................... (34,000)
Decrease in stockholders’ equity...................................................................... $ (14,000)
Decrease in stockholders’ equity due to net loss ............................................
($115,000 – $122,500)..................................................................................... 7,500
$ (6,500)
Deduct common stock issued ........................................................................... (10,000)
Dividends .......................................................................................................
(c) $ (16,500)
Ramirez
Stockholders’ equity at end of year ($270,000 – $136,000) ............................. $ 134,000
Add decrease due to net loss ($115,000 – $128,000) ....................................... 13,000
$ 147,000
Add dividends .................................................................................................... 39,000
Stockholders’ equity at beginning of year ....................................................... $ 186,000
Deduct additional investment ........................................................................... (55,000)
$ 131,000
Add liabilities at beginning of year ................................................................... 120,000
Assets at beginning of year ..........................................................................
(d) $ 251,000
1-10
Ex. 1–21
a.
Ebony Interiors
Balance Sheet
February 28, 20Y3
Assets
Cash $ 320,000
Supplies 30,000
Total assets $1,150,000
Liabilities
Retained earnings 640,000*
Total liabilities and stockholders’ equity $1,150,000
* $640,000 = $320,000 + $800,000 + $30,000 – $310,000 – $200,000
Ebony Interiors
Balance Sheet
March 31, 20Y3
Assets
Cash $ 380,000
Supplies 35,000
Liabilities
Retained earnings 775,000*
* $775,000 = $380,000 + $960,000 + $35,000 – $400,000 – $200,000
b. Stockholders’ equity, March 31 ..................................................................... $ 975,000

Stockholders’ equity, February 28 ................................................................ (840,000)
Net income.................................................................................................. $ 135,000
1-11
Ex. 1–21 (Concluded)

c. Stockholders’ equity, March 31 ..................................................................... $ 975,000
Stockholders’ equity, February 28 ................................................................. (840,000)
Increase in stockholders’ equity ................................................................ $ 135,000
Add dividends ................................................................................................. 50,000
Net income .................................................................................................. $ 185,000
Ex. 1–22
a. Balance sheet: 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 13
Income statement: 5, 12, 14, 15
b. Yes, an item can appear on more than one financial statement. For example, cash appears
on both the balance sheet and statement of cash flows. However, the same item cannot
appear on both the income statement and balance sheet.
c. Yes, the accounting equation is relevant to all companies, including Exxon Mobil
Corporation. The accounting equation is the basis for all accounting systems.
Ex. 1–23
1. (c) financing activity
2. (a) operating activity
3. (b) investing activity
4. (c) financing activity
Ex. 1–24
Parker Consulting Group
For the Year Ended January 31, 20Y4
Cash received from customers $1,200,000
Cash paid for expenses (800,000)
Cash paid for purchase of land (300,000)
Cash balance, February 1, 20Y3 66,000
Cash balance, January 31, 20Y4 $ 220,000
1-12
Ex. 1–25
a. 1. All financial statements should contain the name of the business in their heading. The
statement of stockholders’ equity is incorrectly headed as “Omar Farah” rather than
We-Sell Realty. The heading of the balance sheet needs to be the name of the
business.
2. The income statement covers a period of time and should be labeled “For the Month
Ended August 31, 20Y7.”
3. The year in the heading for the statement of stockholders’ equity should be 20Y7
rather than 20Y6.
4. The balance sheet should be labeled “August 31, 20Y7,” rather than “For the Month
Ended August 31, 20Y7.”
5. On the income statement, the miscellaneous expense amount should be listed as the
last expense.
6. On the income statement, the total expenses are subtracted from the sales
commissions, resulting in an incorrect net income amount of $25,000. The correct net
income should be $24,150. This also affects the statement of stockholders’ equity and
the amount of retained earnings that appears on the balance sheet.
7. On the statement of stockholders’ equity, there is no column for common stock. Also,
the statement is for the “month” rather than for the “year” ended August 31, 20Y7.
8. Accounts payable should be listed as a liability on the balance sheet.
9. Accounts receivable and supplies should be listed as assets on the balance sheet.
10. The balance sheet assets should equal the sum of the liabilities and stockholders’
equity.
1-13
Ex. 1–25 (Concluded)

b. Corrected financial statements appear as follows:
We-Sell Realty
Income Statement
For the Month Ended August 31, 20Y7
Sales commissions $ 140,000
Expenses:
Office salaries expense $87,000
Rent expense 18,000
Automobile expense 7,500
Net income $ 24,150
We-Sell Realty
Common Retained
Balances, August 1, 20Y7 $ 0 $ 0 $ 0
Net income 24,150 24,150
Dividends (10,000) (10,000)
Balances, August 31, 20Y7 $15,000 $14,150 $ 29,150
We-Sell Realty
Balance Sheet
August 31, 20Y7
Assets
Cash $ 8,900
Supplies 4,000
Total assets $51,500
Liabilities
Accounts payable $22,350
Total liabilities and stockholders’ equity $51,500
1-14
PROBLEMS
Prob. 1–1A
1. Assets = Liabilities + Stockholders’ Equity
Accts. Accts. Common Fees Rent Salaries Supplies Auto Misc.

Cash + Rec. + Supplies = Payable + Stock – Dividends + Earned – Expense – Expense – Expense – Exp. – Exp.
a. + 60,000 + 60,000
b. + 1,800 + 1,800
Bal. 60,000 1,800 1,800 60,000
c. + 22,300 + 22,300
Bal. 82,300 1,800 1,800 60,000 22,300
d. – 7,000 – 7,000
Bal. 75,300 1,800 1,800 60,000 22,300 – 7,000
e. – 1,100 – 1,100
Bal. 74,200 1,800 700 60,000 22,300 – 7,000
f. + 3,600 + 3,600
Bal. 74,200 3,600 1,800 700 60,000 25,900 – 7,000
g. – 1,750 – 750 – 1,000
Bal. 72,450 3,600 1,800 700 60,000 25,900 – 7,000 – 750 – 1,000
h. – 4,000 – 4,000
Bal. 68,450 3,600 1,800 700 60,000 25,900 – 7,000 – 4,000 – 750 – 1,000
i. – 1,550 – 1,550
Bal. 68,450 3,600 250 700 60,000 25,900 – 7,000 – 4,000 – 1,550 – 750 – 1,000
j. – 5,000 – 5,000
Bal. 63,450 3,600 250 700 60,000 – 5,000 25,900 – 7,000 – 4,000 – 1,550 – 750 – 1,000
2. Stockholders’ equity is the right of stockholders (owners) to the assets of the business. These rights are increased by issuing common stock and
revenues and decreased by dividends and expenses.
3. $11,600 ($25,900 – $7,000 – $4,000 – $1,550 – $750 – $1,000)
4. April’s transactions increased stockholders’ equity by $66,600, which is the common stock of $60,000 that was issued plus April’s net income of
$11,600 less dividends of $5,000.
1-15
Prob. 1–2A
1. Global Travel Agency
Income Statement
For the Year Ended December 31, 20Y5
Expenses:
Rent expense 56,000
Utilities expense 34,800

For the Year Ended December 31, 20Y5
Common Retained
Balances, January 1, 20Y5 $525,000 $1,250,000 $1,775,000
Net income 402,000 402,000
Dividends (90,000) (90,000)
Balances, December 31, 20Y5 $575,000 $1,562,000 $2,137,000

Balance Sheet
December 31, 20Y5
Assets
Cash $ 200,000
Supplies 6,000
Land 1,500,000
Liabilities
Common stock $ 575,000
Retained earnings 1,562,000
Total stockholders’ equity 2,137,000
1-16
Prob. 1–2A (Concluded)

4. Ending common stock and retained earnings appear on both the statement of stockholders’
equity and the balance sheet. For Global Travel Agency, the December 31, 20Y5, common
stock of $575,000 and retained earnings of $1,562,000 appear on the statement of
stockholders’ equity and balance sheet.
Prob. 1–3A
1. Reliance Financial Services
Income Statement
For the Month Ended July 31, 20Y2
Fees earned $144,500
Expenses:
Salaries expense $55,000
Rent expense 33,000
Auto expense 16,000
Net income $ 31,200

Common Retained
Balances, July 1, 20Y2 $ 0 $ 0 $ 0
Net income 31,200 31,200
Dividends (15,000) (15,000)
Balances, July 31, 20Y2 $50,000 $ 16,200 $ 66,200
1-17

Balance Sheet
July 31, 20Y2
Assets
Cash $32,600
Supplies 2,500
Liabilities
4. (Optional)
Reliance Financial Services
Cash paid for expenses
and to creditors* (112,400)
Net cash flows used for operating activities $ (2,400)
Cash flows from (used for) investing activities 0
Net increase in cash $32,600
Cash balance, July 1, 20Y2 0
Cash balance, July 31, 20Y2 $32,600
* $3,600 + $33,000 + $20,800 + $55,000; these amounts are taken from the Cash column
shown in the problem.
1-18
Prob. 1–4A
Accts. Common Sales Salaries Rent Auto Supplies Misc.
Cash + Supplies = Payable + Stock – Dividends + Comm. – Exp. – Exp. – Exp. – Exp. – Exp.
a. + 35,000 + 35,000
b. + 2,750 + 2,750
Bal. 35,000 2,750 2,750 35,000
c. – 1,800 – 1,800
Bal. 33,200 2,750 950 35,000
d. + 52,800 + 52,800
Bal. 86,000 2,750 950 35,000 52,800
e. – 4,500 – 4,500
Bal. 81,500 2,750 950 35,000 52,800 – 4,500
f. – 3,000 – 3,000
Bal. 78,500 2,750 950 35,000 – 3,000 52,800 – 4,500
g. – 2,300 – 1,100 – 1,200
Bal. 76,200 2,750 950 35,000 – 3,000 52,800 – 4,500 – 1,100 – 1,200
h. – 5,250 – 5,250
Bal. 70,950 2,750 950 35,000 – 3,000 52,800 – 5,250 – 4,500 – 1,100 – 1,200
i. – 1,000 – 1,000
Bal. 70,950 1,750 950 35,000 – 3,000 52,800 – 5,250 – 4,500 – 1,100 – 1,000 – 1,200
1-19

2. Western Realty
Income Statement
Sales commissions $ 52,800
Expenses:
Rent expense 4,500
Net income $ 39,750
Western Realty
Common Retained
Net income 39,750 39,750
Dividends (3,000) (3,000)
Balances, August 31, 20Y9 $35,000 $36,750 $71,750
Western Realty
Balance Sheet
August 31, 20Y9
Assets
Cash $70,950
Supplies 1,750
Liabilities
Accounts payable $ 950
1-20
Prob. 1–5A
Accounts Accounts Common Retained
Cash + Receivable + Supplies + Land = Payable + Stock + Earnings
Retained
$45,000 + $93,000 + $7,000 + $75,000 = $40,000 + $60,000 + Earnings
$220,000 = $100,000 + Retained Earnings
$120,000 = Retained Earnings
1-21
Prob. 1–5A (Continued)

Accts. Accts. Common Retained

Cash + Rec. + Supplies + Land = Payable + Stock + Earnings – Dividends
Bal. 45,000 93,000 7,000 75,000 40,000 60,000 120,000

a. + 35,000 + 35,000
Bal. 80,000 93,000 7,000 75,000 40,000 95,000 120,000
b. – 50,000 + 50,000
Bal. 30,000 93,000 7,000 125,000 40,000 95,000 120,000
c. + 32,125
Bal. 62,125 93,000 7,000 125,000 40,000 95,000 120,000
d. – 6,000
Bal. 56,125 93,000 7,000 125,000 40,000 95,000 120,000
e. + 2,500 + 2,500
Bal. 56,125 93,000 9,500 125,000 42,500 95,000 120,000
f. – 22,800 – 22,800
Bal. 33,325 93,000 9,500 125,000 19,700 95,000 120,000
g. + 84,750
Bal. 33,325 177,750 9,500 125,000 19,700 95,000 120,000
h. + 29,500
Bal. 33,325 177,750 9,500 125,000 49,200 95,000 120,000
i. – 14,000
Bal. 19,325 177,750 9,500 125,000 49,200 95,000 120,000
j. + 88,000 – 88,000
Bal. 107,325 89,750 9,500 125,000 49,200 95,000 120,000
k. – 3,600
Bal. 107,325 89,750 5,900 125,000 49,200 95,000 120,000
l. – 12,000 – 12,000
Bal. 95,325 89,750 5,900 125,000 49,200 95,000 120,000 – 12,000
1-22

Stockholders’ Equity (Continued)
Dry Dry
Cleaning Cleaning Wages Rent Supplies Truck Utilities Misc.
+ Revenue – Exp. – Exp. – Exp. – Exp. – Exp. – Exp. – Exp.
Bal.
a.
Bal.
b.
Bal.
c. + 32,125
Bal. 32,125
d. – 6,000
Bal. 32,125 – 6,000
e.
Bal. 32,125 – 6,000
f.
Bal. 32,125 – 6,000
g. + 84,750
Bal. 116,875 – 6,000
h. – 29,500
Bal. 116,875 – 29,500 – 6,000
i. – 7,500 – 2,500 – 1,300 – 2,700
Bal. 116,875 – 29,500 – 7,500 – 6,000 – 2,500 – 1,300 – 2,700
j.
Bal. 116,875 – 29,500 – 7,500 – 6,000 – 2,500 – 1,300 – 2,700
k. – 3,600
Bal. 116,875 – 29,500 – 7,500 – 6,000 – 3,600 – 2,500 – 1,300 – 2,700
l.
Bal. 116,875 – 29,500 – 7,500 – 6,000 – 3,600 – 2,500 – 1,300 – 2,700
1-23

3. D’Lite Dry Cleaners
Income Statement
Dry cleaning revenue $116,875
Expenses:
Dry cleaning expense $29,500
Wages expense 7,500
Rent expense 6,000
Truck expense 2,500
Net income $ 63,775
D’Lite Dry Cleaners

Common Retained
Balances, July 1, 20Y4 $60,000 $120,000 $180,000
Net income 63,775 63,775
Dividends (12,000) (12,000)
Balances, July 31, 20Y4 $95,000 $171,775 $266,775

Balance Sheet
July 31, 20Y4
Assets
Cash $ 95,325
Supplies 5,900
Land 125,000
Liabilities
1-24

4. (Optional)
Cash received from customers* $120,125
and to creditors** (42,800)
Cash paid for acquisition of land (50,000)
Cash balance, July 1, 20Y4 45,000
Cash balance, July 31, 20Y4 $ 95,325
* $32,125 + $88,000; these amounts are taken from the Cash column of the spreadsheet in Part 2.
** $6,000 + $22,800 + $14,000; these amounts are taken from the Cash column of the spreadsheet in
Part 2.
1-25
Prob. 1–6A
a. Fees earned, $750,000 ($275,000 + $475,000)
b. Supplies expense, $30,000 ($475,000 – $300,000 – $100,000 – $20,000 – $25,000)
c. The common stock, $375,000; the amount shown on the balance sheet
d. Net income for April, $275,000 from the income statement
e. $150,000 ($275,000 – $125,000)
f. Total stockholders’ equity, $525,000 ($375,000 + $150,000)
g. Total assets, $625,000 ($462,500 + $12,500 + $150,000)
h. Retained earnings, $150,000; same as (e)
i. Total stockholders’ equity, $525,000 ($375,000 + $150,000); same as (f)
j. Total liabilities and stockholders’ equity, $625,000 ($100,000 + $525,000)
k. Cash received from customers, $750,000 ($387,500 + $362,500); this is the same as fees
earned (a) since there are no accounts receivable.
l. Net cash flows from operating activities, $362,500 ($750,000 – $387,500)
m. Cash paid for land, ($150,000)
n. Cash received from issuing common stock, $375,000
o. Cash dividends, ($125,000)
p. Net cash flows from financing activities, $250,000 ($375,000 – $125,000)
q. Net increase in cash, $462,500 ($362,500 – $150,000 + $250,000)
r. Cash as of April 30, 20Y0, $462,500; same as (q) since Wolverine Realty was
organized on April 1, 20Y0; also cash balance on the balance sheet.
1-26
Prob. 1–1B
Accts. Accts. Common Fees Rent Salaries Supplies Auto Misc.
Cash + Rec. + Supplies = Payable + Stock – Dividends + Earned – Expense – Expense – Expense – Exp. – Exp.
a. + 50,000 + 50,000
b. + 4,000 + 4,000
Bal. 50,000 4,000 50,000
c. – 2,300 4,000 – 2,300
Bal. 47,700 1,700 50,000
d. + 13,800 4,000 + 13,800
Bal. 61,500 1,700 50,000 13,800
e. – 5,000 4,000 – 5,000
Bal. 56,500 1,700 50,000 13,800 – 5,000
f. – 1,450 4,000 – 1,150 – 300
Bal. 55,050 1,700 50,000 13,800 – 5,000 – 1,150 – 300
g. – 2,500 4,000 – 2,500
Bal. 52,550 4,000 1,700 50,000 13,800 – 5,000 – 2,500 – 1,150 – 300
h. – 1,300 – 1,300
Bal. 52,550 2,700 1,700 50,000 13,800 – 5,000 – 2,500 – 1,300 – 1,150 – 300
i. + 12,500 + 12,500
Bal. 52,550 12,500 2,700 1,700 50,000 26,300 – 5,000 – 2,500 – 1,300 – 1,150 – 300
j – 3,900 – 3,900
Bal. 48,650 12,500 2,700 1,700 50,000 – 3,900 26,300 – 5,000 – 2,500 – 1,300 – 1,150 – 300
2. Stockholders’ equity is the right of stockholders (owners) to the assets of the business. These rights are increased by
issuing common stock and revenues and decreased by dividends and expenses.
3. $16,050 ($26,300 – $5,000 – $2,500 – $1,300 – $1,150 – $300)
4. March’s transactions increased stockholders’ equity by $62,150, which is the common stock that was issued of
$50,000 plus the excess of March’s net income of $16,050 over dividends of $3,900.
1-27
Prob. 1–2B
1. Wilderness Travel Service
Income Statement
For the Year Ended April 30, 20Y7
Expenses:
Rent expense 75,000
Taxes expense 10,000

For the Year Ended April 30, 20Y7
Common Retained
Balances, May 1, 20Y6 $25,000 $155,000 $180,000
Net income 200,000 200,000
Dividends (40,000) (40,000)
Balances, April 30, 20Y7 $35,000 $315,000 $350,000

Balance Sheet
April 30, 20Y7
Assets
Cash $156,000
Supplies 9,000
Liabilities
4. Net income (or net loss) appears on both the income statement and the statement of
stockholders’ equity. For Wilderness Travel Service, net income for the year of $200,000
appears on the income statement and statement of stockholders’ equity.
1-28
Prob. 1–3B
1. Bronco Consulting
Income Statement
Expenses:
Rent expense 27,000
Auto expense 15,500
Net income $ 10,900
Common Retained
Net income 10,900 10,900
Dividends (5,000) (5,000)
Balances, August 31, 20Y1 $ 75,000 $ 5,900 $80,900
Balance Sheet
August 31, 20Y1
Assets
Cash $48,000
Supplies 2,900
Liabilities
1-29
Prob. 1–3B (Concluded)

4. (Optional)
Bronco Consulting
and to creditors* (114,000)
Net cash flows used for operating activities $(22,000)
Cash flows from (used for) investing activities 0
Cash balance, August 1, 20Y1 0
Cash balance, August 31, 20Y1 $ 48,000
* $27,000 + $6,000 + $23,000 + $58,000; these amounts are taken from the Cash column shown in
the problem.
1-30
Prob. 1–4B
Accts. Common Sales Rent Salaries Auto Supplies Misc.
Cash + Supplies = Payable + Stock – Dividends + Comm. – Exp. – Exp. – Exp. – Exp. – Exp.
a. + 24,000 + 24,000
b. – 3,600 – 3,600
Bal. 20,400 24,000 – 3,600
c. – 1,950 – 1,350 – 600
Bal. 18,450 24,000 – 3,600 – 1,350 – 600
d. + 1,200 + 1,200
Bal. 18,450 1,200 1,200 24,000 – 3,600 – 1,350 – 600
e. + 19,800 + 19,800
Bal. 38,250 1,200 1,200 24,000 19,800 – 3,600 – 1,350 – 600
f. – 750 – 750
Bal. 37,500 1,200 450 24,000 19,800 – 3,600 – 1,350 – 600
g. – 2,500 – 2,500
Bal. 35,500 1,200 450 24,000 19,800 – 3,600 – 2,500 – 1,350 – 600
h. – 3,500 – 3,500
Bal. 31,500 1,200 450 24,000 – 3,500 19,800 – 3,600 – 2,500 – 1,350 – 600
i. – 900 – 900
Bal. 31,500 300 450 24,000 – 3,500 19,800 – 3,600 – 2,500 – 1,350 – 900 – 600
1-31

2. Custom Realty
Income Statement
For the Month Ended April 30, 20Y8
Sales commissions $19,800
Expenses:
Rent expense $3,600
Salaries expense 2,500
Supplies expense 900
Miscellaneous expense 600
Net income $10,850
Custom Realty
For the Month Ended April 30, 20Y8
Common Retained
Balances, April 1, 20Y8 $ 0 $ 0 $ 0
Net income 10,850 10,850
Dividends (3,500) (3,500)
Balances, April 30, 20Y8 $24,000 $ 7,350 $31,350
Custom Realty
Balance Sheet
April 30, 20Y8
Assets
Cash $31,500
Supplies 300
Liabilities
1-32
Prob. 1–5B
Accounts Accounts Common Retained
Cash + Receivable + Supplies + Land = Payable + Stock + Earnings
Retained
$39,000 $80,000 + $11,000 + $50,000 = $31,500 + $50,000 + Earnings
$180,000 = $81,500 + Retained Earnings
$98,500 = Retained Earnings
1-33
Prob. 1–5B (Continued)

Accts. Accts. Common Retained
Cash + Rec. + Supplies + Land = Payable + Stock + Earnings – Dividends
39,000 80,000 11,000 50,000 31,500 50,000 98,500
Bal. a. + 21,000 + 21,000
Bal. 60,000 80,000 11,000 50,000 31,500 71,000 98,500
b. – 35,000 + 35,000
Bal. 25,000 80,000 11,000 85,000 31,500 71,000 98,500
c. – 4,000
Bal. 21,000 80,000 11,000 85,000 31,500 71,000 98,500
d. + 72,000
Bal. 21,000 152,000 11,000 85,000 31,500 71,000 98,500
e. – 20,000 – 20,000
Bal. 1,000 152,000 11,000 85,000 11,500 71,000 98,500
f. + 8,000 + 8,000
Bal. 1,000 152,000 19,000 85,000 19,500 71,000 98,500
g. + 38,000
Bal. 39,000 152,000 19,000 85,000 19,500 71,000 98,500
h. + 77,000 – 77,000
Bal. 116,000 75,000 19,000 85,000 19,500 71,000 98,500
i. + 29,450
Bal. 116,000 75,000 19,000 85,000 48,950 71,000 98,500
j. – 29,200
Bal. 86,800 75,000 19,000 85,000 48,950 71,000 98,500
k. – 7,200
Bal. 86,800 75,000 11,800 85,000 48,950 71,000 98,500
l. – 5,000 – 5,000
Bal. 81,800 75,000 11,800 85,000 48,950 71,000 98,500 – 5,000
1-34

Dry Dry
Cleaning Cleaning Wages Supplies Utilities Misc.
+ Revenue – Exp. – Exp. – Exp. – Rent Exp. – Truck Exp. – Exp. – Exp.
Bal.
a.
Bal.
b.
Bal.
c. – 4,000
Bal. – 4,000
d. + 72,000
Bal. 72,000 – 4,000
e.
Bal. 72,000 – 4,000
f.
Bal. 72,000 – 4,000
g. + 38,000
Bal. + 110,000 – 4,000
h.
Bal. 110,000 – 4,000
i. – 29,450
Bal. 110,000 – 29,450 – 4,000
j. – 24,000 – 2,100 – 1,800 – 1,300
Bal. 110,000 – 29,450 – 24,000 – 4,000 – 2,100 – 1,800 – 1,300
k. – 7,200
Bal. 110,000 – 29,450 – 24,000 – 7,200 – 4,000 – 2,100 – 1,800 – 1,300
l.
Bal. 110,000 – 29,450 – 24,000 – 7,200 – 4,000 – 2,100 – 1,800 – 1,300
1-35

3. Bev’s Dry Cleaners
Income Statement
For the Month Ended November 30, 20Y3
Dry cleaning revenue $110,000
Expenses:
Dry cleaning expense $ 29,450
Wages expense 24,000
Rent expense 4,000
Truck expense 2,100
Net income $ 40,150
Bev’s Dry Cleaners

Common Retained
Balances, November 1, 20Y3 $ 50,000 $ 98,500 $ 148,500
Net income 40,150 40,150
Dividends (5,000) (5,000)
Balances, November 30, 20Y3 $ 71,000 $133,650 $ 204,650

Balance Sheet
November 30, 20Y3
Assets
Cash $ 81,800
Supplies 11,800
Land 85,000
Liabilities
1-36

4. (Optional)
Cash received from customers* $ 115,000
Cash paid for expenses and to creditors** (53,200)
Cash paid for acquisition of land (35,000)
Cash balance, November 1, 20Y3 39,000
Cash balance, November 30, 20Y3 $ 81,800
* $38,000 + $77,000; these amounts are taken from the Cash column of the spreadsheet in Part 2.
** $4,000 + $20,000 + $29,200; these amounts are taken from the Cash column of the spreadsheet in
Part 2.
1-37
Prob. 1–6B
a. Wages expense, $203,200 ($288,000 – $48,000 – $17,600 – $14,400 – $4,800)
b. Net income, $112,000 ($400,000 – $288,000)
c. Common stock, $160,000; from statement of cash flows.
d. Net income for May, $112,000; from (b)
e. Dividends, $64,000; from statement of cash flows
f. Increase in retained earnings, $48,000 ($112,000 – $64,000)
g. Total stockholders’ equity, $208,000 ($160,000 + $48,000)
h. Land, $120,000; from statement of cash flows.
i. Total assets, $256,000 ($123,200 + $12,800 + $120,000)
j. Common stock, $160,000; from statement of cash flows.
k. Retained earnings, $48,000; same as (f)
l. Total stockholders’ equity, $208,000; same as (g)
m. Total liabilities and stockholders’ equity, $256,000 ($48,000 + $208,000)
n. Cash received from customers, $400,000; this is the same as fees earned since there are
no accounts receivable.
o. Net cash flows from operating activities, $147,200 ($400,000 – $252,800)
p. Net cash flows from financing activities, $96,000 ($160,000 – $64,000)
q. Net increase in cash, $123,200 ($147,200 – $120,000 + $96,000)
r. Cash as of May 31, 20Y6, $123,200; same as (q) since Atlas Realty was organized on
May 1, 20Y6; also the cash balance on the balance sheet.
1-38
CONTINUING PROBLEM

Accts. Common Fees
Cash + Accts. Rec. + Supplies = Payable + Stock – Dividends + Earned
June 1 + 4,000 + 4,000
June 2 + 3,500 + 3,500
Bal. 7,500 4,000 3,500
June 2 – 800
Bal. 6,700 4,000 3,500
June 4 + 350 + 350
Bal. 6,700 350 350 4,000 3,500
June 6 – 500
Bal. 6,200 350 350 4,000 3,500
June 8 – 675
Bal. 5,525 350 350 4,000 3,500
June 12 – 350
Bal. 5,175 350 350 4,000 3,500
June 13 – 100 – 100
Bal. 5,075 350 250 4,000 3,500
June 16 + 300 + 300
Bal. 5,375 350 250 4,000 3,800
June 22 + 1,000 + 1,000
Bal. 5,375 1,000 350 250 4,000 4,800
June 25 + 500 + 500
Bal. 5,875 1,000 350 250 4,000 5,300
June 29 – 240
Bal. 5,635 1,000 350 250 4,000 5,300
June 30 + 900 + 900
Bal. 6,535 1,000 350 250 4,000 6,200
June 30 – 400
Bal. 6,135 1,000 350 250 4,000 6,200
June 30 – 300
Bal. 5,835 1,000 350 250 4,000 6,200
June 30 – 180
Bal. 5,835 1,000 170 250 4,000 6,200
June 30 – 415
Bal. 5,420 1,000 170 250 4,000 6,200
June 30 – 1,000
Bal. 4,420 1,000 170 250 4,000 6,200
June 30 – 500 – 500
Bal. 3,920 1,000 170 250 4,000 – 500 6,200
1-39
Continuing Problem (Continued)

Music
Office Rent Equip. Adver- Wages Utilities Supplies
Exp.
– – Exp. – Rent Exp. – tising Exp. – Exp. – Exp. – Exp. – Misc. Exp.
June 1
June 2
Bal.
June 2 – 800
Bal. – 800
June 4
Bal. – 800
June 6 – 500
Bal. – 800 – 500
June 8 – 675
Bal. – 800 – 675 – 500
June 12 – 350
Bal. – 350 – 800 – 675 – 500
June 13
Bal. – 350 – 800 – 675 – 500
June 16
Bal. – 350 – 800 – 675 – 500
June 22
Bal. – 350 – 800 – 675 – 500
June 25
Bal. – 350 – 800 – 675 – 500
June 29 – 240
Bal. – 590 – 800 – 675 – 500
June 30
Bal. – 590 – 800 – 675 – 500
June 30 – 400
Bal. – 590 – 800 – 675 – 500 – 400
June 30 – 300
Bal. – 590 – 800 – 675 – 500 – 400 – 300
June 30 – 180
Bal. – 590 – 800 – 675 – 500 – 400 – 300 – 180
June 30 – 415
Bal. – 590 – 800 – 675 – 500 – 400 – 300 – 180 – 415
June 30 – 1,000
Bal. – 1,590 – 800 – 675 – 500 – 400 – 300 – 180 – 415
June 30
Bal. – 1,590 – 800 – 675 – 500 – 400 – 300 – 180 – 415
1-40
Continuing Problem (Concluded)

2. PS Music
Income Statement
Fees earned: $ 6,200
Expenses:
Music expense $1,590
Office rent expense 800
Equipment rent expense 675
Advertising expense 500
Wages expense 400
Utilities expense 300
Net income $ 1,340
3. PS Music
Common Retained
Balances, June 1, 20Y5 $ 0 $ 0 $ 0
Net income 1,340 1,340
Dividends (500) (500)
Balances, June 30, 20Y5 $4,000 $ 840 $ 4,840
4. PS Music
Balance Sheet
June 30, 20Y5
Assets
Cash $ 3,920
Supplies 170
Liabilities
Retained earnings 840
1-41
MAKE A DECISION
MAD 1–1
Total Liabilities
a. Ratio of Liabilities to Stockholders' Equity 
Total Stockholders' Equity
$51,363
Amazon :  3.84
$13,384
$9,141
Best Buy :  2.09
$4,378
b. Amazon’s ratio is 3.84, which means the total liabilities are almost four times as great as
the stockholders’ equity. For Best Buy, the ratio is only 2.09, which means total liabilities
are over two times as great as the stockholders’ equity. Thus, the margin of protection is
less for Amazon’s creditors than it is for Best Buy’s creditors.
MAD 1–2
Total Liabilities
$27,996
Year 1 :  2.24
$12,522
$30,624
Year 2 :  3.29
$9,322
$36,233
Year 3 :  5.74
$6,316
b. The ratio of liabilities to stockholders’ equity for Home Depot increased from 2.24 in Year 1
to 5.74 in Year 3, causing the margin of protection to creditors to decrease. This is a
significant increase in this ratio for the three-year period.
Note to Instructor: This increase is due to the company using debt to finance the
repurchase of its common stock. This caused liabilities to increase and stockholders’
equity to decrease. The increased use of debt financing was probably due to the low
interest rates during this three-year period.
1-42
MAD 1–3
Total Liabilities
$20,879
Year 1 :  1.76
$11,853
$21,753
Year 2 :  2.18
$9,968
$23,612
Year 3 :  3.08
$7,654
b. The ratio of liabilities to stockholders’ equity for Lowe’s increased from 1.76 in Year 1 to
3.08 in Year 3, causing the margin of protection to creditors to decrease. This is a
significant increase in this ratio for the three-year period.
Note to Instructor: This increase occurred because the company used debt to finance the
repurchase of its common stock. This caused liabilities to increase and stockholders’
equity to decrease over the three-year period. The increased use of debt financing was
probably due to the low interest rates during this three-year period.
MAD 1–4
The ratios of liabilities to stockholders’ equity are summarized below for Home Depot (MAD 1–2)
and Lowe’s (MAD 1–3).
Year 3 Year 2 Year 1

Home Depot 5.74 3.29 2.24
Lowe’s 3.08 2.18 1.76
Lowe’s ratio of liabilities to stockholders’ equity is less than that of Home Depot for all three
years. Thus, the risk to Lowe’s creditors is less than that of Home Depot’s creditors. The
three-year trend for both companies shows that the size of this ratio is increasing. However,
Home Depot appears to be more aggressive than Lowe’s in its use of debt.
1-43
MAD 1–5
Total Liabilities
a. Ratio of Liabilities to Stockholders’ Equity =
$444
Papa John' s :  8.7
$51
$7,164
Yum! Brands :  7.9
$911
b. The ratio of liabilities to stockholders’ equity is 8.7 for Papa John’s and 7.9 for Yum!
Brands. These are both very high ratios and suggest that creditors have risk with their
investments in these two companies. The small level of stockholders’ equity provides
only a narrow margin of protection to creditors.
c. Papa John’s ratio of liabilities to stockholders’ equity of 8.7 is higher than that of Yum!
Brands. This implies that the creditors of Papa John’s have more risk than the creditors of
Yum! Brands.
1-44
TAKE IT FURTHER
TIF 1–1
1. The car repair is a personal expense and is Marco’s personal responsibility. By
using partnership funds to pay for the repair, Marco is behaving unethically because
he is violating the business entity assumption. The business entity assumption
treats the business as a separate entity from its owners. By taking money from the
partnership for a personal expense, Marco is effectively stealing from his partners.
2. The partnership’s net income will be reduced by the $2,000 Marco has taken. This
will reduce the amount of net income available to Marco’s partners.
3. Marco could ask his partners for a loan from the partnership. The loan could be
repaid out of his salary or from his share of the partnership income.
1-45
TIF 1–2
1. Acceptable professional conduct requires that Colleen Fernandez supply First Federal
Bank with all the relevant financial statements necessary for the bank to make an
informed decision. Therefore, Colleen should provide the complete set of financial
statements. These can be supplemented with a discussion of the net loss in the past year
or other data explaining why granting the loan is a good investment for the bank.
2. a. Owners are generally willing to provide bankers with information about the operating
and financial condition of the business, such as the following:
• Operating Information:
• Description of business operations
• Results of past operations
• Preliminary results of current operations
• Plans for future operations
• Financial Condition:
• List of assets and liabilities (balance sheet)
• Estimated current values of assets
• Owner’s personal investment in the business
• Owner’s commitment to invest additional funds in the business
Owners are normally reluctant to provide the following types of information to

bankers:
• Proprietary Operating Information. Such information, which might hurt the
business if it becomes known by competitors, might include special processes
used by the business or future plans to expand operations into areas that are not
currently served by a competitor.
• Personal Financial Information. Owners may have little choice here because banks
often require owners of small businesses to pledge their personal assets as
security for a business loan. Personal financial information requested by bankers
often includes the owner’s net worth, salary, and other income. In addition, bankers
usually request information about factors that might affect the personal financial
condition of the owner. For example, a pending divorce by the owner might
significantly affect the owner’s personal wealth.
b. Bankers typically want as much information as possible about the ability of the
business and the owner to repay the loan with interest. Examples of such information
are described above.
c. Both bankers and business owners share the common interest of the business doing
well and being successful. If the business is successful, the bankers will receive their
loan payments on time with interest, and the owners will increase their personal
wealth.
1-46
TIF 1–3
A sample solution based on Twitter’s Form 10-K for the fiscal year ended
December 31, 2016, follows:
1. Twitter, Inc.
2. San Francisco, CA
3. Jack Dorsey
4. Service
5. Twitter is a global platform for public self-expression and conversation in real time.
Twitter allows people to consume, create, distribute and discover content and has
democratized content creation and distribution.
6. Balance sheet, statement of operations (income statement), statement of comprehensive
loss (discussed in Appendix 2 of Chapter 14), statement of stockholders’ equity,
statement of cash flows.
TIF 1–4
Example Memo
To: Teacher
From: Student
Date: Current Date
Subject: Causes of Accounting Fraud
Business and accounting fraud typically result from either a failure of individual character or
a culture of greed within an organization. Managers and accountants often face pressure to
meet or exceed a company’s financial goals. At times, supervisors can place pressure on
individuals to violate accounting standards to improve a company’s reported financial
results. Individuals who give in to these pressures exhibit a failure of individual character. In
other situations, a company may indirectly encourage employees to violate accounting rules
as part of their job. This occurs in organizations that do not value ethical decision making or
fair financial reporting and exhibit a culture of ethical indifference.
TIF 1–5
The difference in the two bank balances, $55,000 ($80,000 – $25,000), may not be pure profit from
an accounting perspective. To determine the accounting profit for the six-month period, the
revenues for the period would need to be matched with the related expenses. The revenues
minus the expenses would indicate whether the business generated net income (profit) or a net
loss for the period. Using only the difference between the two bank account balances ignores
such factors as amounts due from customers (receivables), liabilities (accounts payable) that
need to be paid for wages or other operating expenses, additional investments that Dr. Cousins
may have made in the business during the period, or dividends paid during the period that Dr.
Cousins might have taken for personal reasons unrelated to the business.
Some businesses that have few, if any, receivables or payables may use a “cash” basis of
accounting. The cash basis of accounting ignores receivables and payables because they are
assumed to be insignificant in amount. However, even with the cash basis of accounting,
additional investments during the period and any dividends paid during the period have to be
considered in determining the net income (profit) or net loss for the period.
1-47
TIF 1–6
1. Assets = Liabilities + Owner’s Equity
Lisa
Accts. Lisa Duncan, Duncan, Fees Salaries Supplies Misc.
Cash + Supplies = Payable + Capital – Drawing + Earned – Expense – Rent Expense – Expense – Exp.
a. + 950 + 950
b. – 300 + 300
Bal. 650 300 950
c. – 275 – 275
Bal. 375 300 950 – 275
d. – 100 + 150 – 250
Bal. 275 300 150 950 – 525
e. + 1,750 + 1,750
Bal. 2,025 300 150 950 1,750 – 525
f. + 600 + 600
Bal. 2,625 300 150 950 2,350 – 525
g. – 800 – 800
Bal. 1,825 300 150 950 2,350 – 800 – 525
h. – 290 – 290
Bal. 1,535 300 150 950 2,350 – 800 – 525 – 290
i. + 1,300 + 1,300
Bal. 2,835 300 150 950 3,650 – 800 – 525 – 290
j. – 120 – 120
Bal. 2,835 180 150 950 3,650 – 800 – 525 – 120 – 290
k. – 400 – 400
Bal. 2,435 180 150 950 – 400 3,650 – 800 – 525 – 120 – 290
1-48
TIF 1–6 (Continued)

2. Serve–N–Volley
Income Statement
For the Month Ended September 30, 20Y2
Fees earned: $ 3,650
Expenses:
Salaries expense $800
Rent expense 525
Net income $ 1,915
Statement of Owner’s Equity
For the Month Ended September 30, 20Y2
Lisa Duncan, capital, September 1, 20Y2 $ 0
Investment on September 1, 20Y2 $ 950
Net income for September 1,915
Owner’s withdrawals (400)
Increase in owner’s equity 2,465
Lisa Duncan, capital, September 30, 20Y2 $2,465
Balance Sheet
September 30, 20Y2
Assets
Cash $2,435
Supplies 180
Total assets $2,615
Liabilities
Owner’s Equity
Lisa Duncan, capital 2,465
Total liabilities and owner’s equity $2,615
1-49
TIF 1–6 (Concluded)

5. a. Serve-N-Volley would provide Lisa with $715 more income per month
than working as a waitress. This amount is computed as follows:
Net income of Serve-N-Volley, per month ......................................... $1,915
Earnings as waitress, per month:
30 hours per week  $10 per hour  4 weeks .............................. 1,200
Difference ............................................................................................ $ 715
b. Other factors that Lisa should consider before discussing a long-term

arrangement with the Phoenix Tennis Club include the following:
Lisa should consider whether the results of operations for September are
indicative of what to expect each month. For example, Lisa should consider
whether club members will continue to request lessons or use the ball machine
during the fall months when interest in tennis may slacken. Lisa should
evaluate whether the additional income of $715 per month from Serve-N-Volley
is worth the risk being taken and the effort being expended.
Lisa should also consider how much her investment in Serve-N-Volley could
have earned if invested elsewhere. For example, if the initial investment of $950
had been invested to earn a rate of return of 6% per year, it would have earned
$4.75 in September, or $57 for the year.
Note to Instructor: Numerous other considerations could be mentioned by
students, such as the ability of Lisa to withdraw cash from Serve-N-Volley for
personal use. For example, some of her investment in Serve-N-Volley will be in the
form of supplies (tennis balls, etc.), which are not readily convertible to cash. The
objective of this case is not to mention all possible considerations but, rather, to
encourage students to begin thinking about the use of accounting information in
making business decisions.
1-50
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foreword in order to declare it in spite of the things which hereafter I
am made to say.
‘You cannot unscramble eggs,’ is a dictum as applicable to gods as
to mortals. And if people would remember that in their prayers,
prayers would be less foolish and fatuous than they often are.
You cannot unscramble eggs. And so, having scrambled Mr.
Trimblerigg in the making, his god was attempting a vain thing in
trying to unscramble him; and when Mr. Trimblerigg went on his
knees and prayed, as he occasionally did, to be unscrambled, he
was only scrambling himself yet more in the fry-pan of his tribal
theology.
And indeed, when I look at him, I have to admire what a scramble of
a man he was!—how the yolk and the white of it, the good and the
evil, the thick and the thin of his character did mix, ‘yea, meet and
mingle,’ as he would have said himself when his platform sense of
poetry got the better of him. And so, in the exercise of those
contradictory agilities of soul and brain which made him so mixed yet
so divided a character, he skipped through life like a flea to
Abraham’s bosom, and there—after so many an alias hastily
assumed and as hastily discarded—lies waiting to answer to his true
name when true names are called.
What kind of a name, one wonders, did he finally make for himself in
the Book of Life? In that desperate saving of his own face which
constitutes his career, he put out of countenance many that were his
betters; but it was himself that, in the process, he put out of
countenance most of all. Yet in the end revelation came to him; and
when, in that ghastly moment of self-discovery, he stood fully
charged with the truth, who shall say what miraculous, what
fundamental change it may not have wrought in him? When he
followed the upward rope which led him so expeditiously Elsewhere,
it may have been with the equipment of a new self capable of much
better and more honest things that he finally entered Heaven. I
cannot believe that such a genius for self-adaptation has
incontinently missed its mark. But, in that forward aim, it may well be
that he and his tribal deity have parted company; for it is to be noted
that, at the last gasp, the god loses sight—does not know what has
become of him: thinks, perhaps, that he has gone irretrievably and
abysmally—Down. I, on the contrary, have a suspicion and a hope
that his tendency may have been—up.
L. H.
CHAPTER ONE
Deus Loquitur
OF course when I made Mr. Trimblerigg, though I had shaped him—I
will not say to my liking, but at least to my satisfaction—I did not
foresee how he would turn out. It is not my custom to look ahead. I
can, to be sure, do so when I please: but that makes the
dénouement so dull. I prefer, therefore—and have now made it a rule
—that my creations shall, in what they do, come upon me as a
surprise—pleasant or the reverse. For since I have given them free-
will, let me also have the benefit of it: let them make their own plans,
their own careers,—attributing to me, if they must, those features of
both for which they do not feel themselves responsible; and let me
(in the moment when they think to have fulfilled themselves)
experience that small stimulus of novelty which the infinite variety
and individuality of my creatures is always capable of providing.
For it is this spice of novelty alone which keeps me from being
unutterably disinterested in the workings of what theologians are
pleased to call ‘the moral purpose of the universe.’
So it was that, having shaped Mr. Trimblerigg to my satisfaction, I let
him go. And as, with his future in his own very confident hands, he
went, I did not for the moment trouble to look after him.
When I say that I shaped him to my satisfaction, I am speaking
merely as a craftsman. I knew that I had made a very clever man. As
to liking him, that had nothing to do with craftsmanship, but would
depend entirely on what he did with himself—how he appealed to me
as a student of life, when—laying aside my rôle of maker, I became
merely the observer.
It is always an interesting experiment whether I shall be drawn to my
creations before they become drawn to me. Sometimes I find that
they interest me enormously, even while denying me with their last
breath. But the unrequited affections of a god have always an
element of comedy; for though, in the spiritual direction, one’s
creations may take a way of their own, they are never as quit of us
as they suppose; and when they know it least they come back to us
for inspection and renovation. Even the soul that thinks itself lost is
not so lost as to leave one unaware of its condition; though it may
have ceased to call, its address is still known.
In Mr. Trimblerigg’s case it was all the other way—from the moment
that he discovered me he never let me alone; though I had cast him
forth like bread upon the waters, not expecting to see him again for
many days, he came back to me early, and from that time on gave
me the advantage of his intimate and varying acquaintance to the
very end.
I wonder to myself sometimes whether I tried him as much as he
tried me, and whether he managed to like me up to the last. This at
least I found—that by the time he was five years old, whether I liked
him or not, Mr. Trimblerigg liked me; and the reason for his liking was
simple—he found me useful.
For one day, having done something which deserved, or was
supposed to deserve punishment, he lied about it, and was
discovered. The discovery came to his ears before he was actually
taxed with it. The small world on which he stood became suddenly
an abyss; lifting up his feet he fled for refuge to his own chamber,
and was about to hide in the cupboard, when he heard the awful
tread of judgment ascending the stairs. Being clever (for which I
admit I was responsible) he realized how temporary a refuge the
cupboard must necessarily be; what he needed was the eternal; and
so, throwing himself on his knees he began praying to me—aloud.
And in his prayer he told the truth, volubly, abundantly, and without
making any excuse for himself. ‘I have told a lie,’ he cried, ‘O God, I
have told a lie!’
The agony of his prayer was heard, not so much by me as by the
elder for whose entry he had so accurately timed it. And who, looking
upon that youthful and ingenuous countenance, could doubt the
sincerity of his grief? His lips quivered, his eyes streamed tears, his
nails dug into his tender flesh, leaving marks. At that sight, at those
sounds, the paternal heart was deeply moved; the birch was laid
aside; elder and younger knelt together and prayed for quite a long
time, with great fervour, fixity, and unanimity of purpose, that
henceforth young Mr. Trimblerigg should be a good boy, and never
never again be caught telling a lie.
That prayer unfortunately was not entirely answered—though
between us we did our best. In the years that followed Mr.
Trimblerigg lied often and well, but was very seldom caught, and still
more seldom punished.
The only really important outcome of that incident was that Mr.
Trimblerigg found he liked me; I had been useful to him. And yet I
had done, I protest, absolutely nothing—except making him clever. It
was not through my providential intervention that he liked me, but
through his own. The prayer of faith had saved him from a whipping;
it was a lesson he never forgot.
And so, from that day on, he made me his general help and stay;
and on every occasion of doubt, difficulty, or distress, was able, by
coming to me, to convince himself that he meant well. Never in my
whole world’s existence have I come upon anybody who was able to
answer his own prayers about himself, and about other people, with
such conviction, avidity, and enthusiasm as Mr. Trimblerigg. And why
should I complain? It made him a great power in the world, without
my having to lift a finger, or turn a hair, or do anything, in fact, except
wink an eye, or seem to.
The virtuous incentives of family life, though only provided on a small
scale, were not lacking for the development of Mr. Trimblerigg’s
character. He had three uncles, two aunts, a great-uncle and a
grandfather—all fairly contiguous, the family being of the indigenous
not of the migratory kind—besides a father, a mother and a sister,
with whom contact was continuous and unescapable. Even in their
naming the children had been linked for lovely and pleasant
relationship in after-life; for when the Trimblerigg first-born, whom its
parents confidently expected to be a son, turned into a daughter—
adapting the forechosen name to suit her sex, they called her
Davidina; and when, nearly two years later, our own Mr. Trimblerigg
struggled out into the world, nearly killing his mother in the process,
the destined name Jonathan was there waiting for him.
And so, very early in his career, Mr. Trimblerigg’s sister Davidina
became the whetstone of his virtues—its operation summed up in
the word ‘emulation.’ Nature would perhaps have brought it about in
any case, even if the parental plan had not inculcated and forced it
home; but when it became clear to Mr. and Mrs. Trimblerigg senior
that no more children were to be theirs, they conceived the idea of
blending the business with the moral instincts, and in the training of
their two offspring making virtue competitive.
No wonder then, that, as their moral sense dawned, the germ of
mutual suspicion and hatred grew lodged in their souls. This,
however, did not prevent them, when self-interest prompted, from
being also allies, as the following may show.
The parental idea of making virtue competitive had taken one of its
earlier forms—for economic reasons, I fancy—in the matter of
pocket-money; and the weekly penny was tendered not as a right
nor even as a reward for good average behaviour, but as a prize to
be wrestled for, gain by the one involving loss by the other—a device
that had the incidental advantage of halving the tax on the pocket
which provided it.
The fact that Davidina won it far more frequently and easily than he
did, set Mr. Trimblerigg his first problem in goodness run as a means
to profit. He accordingly invited his sister to an arrangement
whereby, irrespective of conduct, they should go shares; and when
this accommodating olive-branch was scornfully rejected, he became
so offensively good for three weeks on end that Davidina, left
penniless, capitulated on terms, and, in order to get a remnant of her
money’s worth, bargained that they should be good—or at least each
better than the other—in alternate weeks, this being a more tolerable
arrangement to her careful soul than that brother Jonathan, with no
effort at all, ever secondary in virtue, should share equally the
pennies which she had earned.
For a while the plan worked well; Mr. Trimblerigg by calculated effort
bettered his sister in the alternate weeks, got the penny and shared
it grudgingly but honourably—while Davidina, remaining merely
herself, received it in the natural course when Jonathan reverted to
his more normal standard.
But there came a day when Mr. Trimblerigg had privily done certain
things about which his elders knew less than did Davidina, and so
got wrongfully the penny he had not earned. Davidina demanded it;
on the denial of her claim they fought, and between them the penny
got lost. The next week, though Davidina earned it, Mr. Trimblerigg
claimed it, arguing that as last week’s penny had been lost to him
through her, this week’s should be his. Davidina thought differently;
and putting the penny for safety in her mouth, in the resulting
struggle by accident swallowed it.
After that the alliance was over. Thenceforth Jonathan had a
permanent and lively incentive for becoming good; and in the
competition that ensued Davidina was decisively worsted. Goodness
became for Mr. Trimblerigg a matter of calculation, habit, resolute
will, and in the long series of defeats which followed, Davidina might,
had she chosen, have found satisfaction in the large part she played
toward the reshaping of her brother’s character.
So decisive was the change that it became apparent to the world,
and was reckoned as proof of that conversion to grace which was
necessary for full church-membership in the sect where he
belonged. And so, at an unusually early age, Jonathan was baptized
into the congregation of the Free United Evangelicals. That incident
decided his career; he became destined for the ministry.
Thus out of evil comes good.
When the matter was first decided Mr. Trimblerigg himself knew
nothing about it. It was the elders of the family, the parents,
grandparents, uncles and aunts—sitting together in conclave for the
adjustment of ways to narrow means, who foresaw the convenience
of the call which in due time came to him.
Mr. Trimblerigg himself was then making other plans of his own. A
sense of his abilities had begun to stir his mind to the prospects of
life. He had become conscious that a career was awaiting him—or,
to put it more accurately, several careers—of which he had only to
choose. One day, in a weak moment of expansiveness, when
Davidina by a histrionic show of sisterly sympathy had led him on, he
confided to her the sparkling alternatives which he had in mind. And
she, when her first admiration had become tempered with criticism,
passed word of them carefully on to the ears of his Uncle Jonah.
Jonah, who was anti-romantic by temperament, made it his duty to
strip these pretensions bare before the eyes of the assembled family
—doing it no doubt for his nephew’s good. ‘Jonathan is thinking,’
said he, ‘that he would like to be Prime Minister; and well he might
be if he had the ability to be consistent in his principles. Seems also
he’d like to be President to the Free Church Conference; but for that
he needs to be spiritual and one that speaks nothing but the truth.
Failing that he’s for being Lord Chief Justice and Master of the Rolls;
but Jonathan hasn’t the judicial mind. And to be Field-Marshal rising
from the ranks (which is another flea he has in his bonnet) God in
His great mercy hasn’t given him sufficient inches to meet the
military requirements. You’ll do well, Jonathan; for you’re quick in the
turnover, and your convictions don’t trouble you; and you’ve a
wonderful courage for thinking yourself right when all the evidence is
against you. But what you’ll do if you’re wise is find a master who’ll
let you hide behind his back and be clever for him in the ways that
don’t show; one who’ll take over all the responsibility for your
mistakes, for the sake of all the times when you’ve guessed right.
Given he’s got the patience to put up with you, you’ll be worth it to
him, and a credit to your family. But there’s a deal of practice you’ve
to get before you can do the thing well. Don’t spread yourself.’
But Uncle Jonah, being an undertaker by trade, had narrow and
confining views; and the shadow of his daily occupation, entailing a
too-frequent wearing of black, caused him to set foot on life
sombrely, especially on life that was young. This also was said
before the time when nephew Jonathan had become conspicuously
good.
With his higher aspirations thus blown upon, Mr. Trimblerigg, after
watering Davidina’s pet fern with strong tea which it did not like,
diverted his invention to more practical ends, and for a time wished
to be a conjurer, having read accounts of the wonders performed at
the Egyptian Hall, London, by Messrs. Maskelyne & Cooke. But as
ill-luck would have it, his first sight of conjuring came to him at a
village fair; and there, while others stared and were amazed, he with
his sharp eyes saw how everything was done, and found the
entertainment dull. Now had he only been interested and stirred to
emulation thus early, I am quite convinced that Mr. Trimblerigg could
have become a conjurer such as the world has never seen. If his
parents could only have afforded to take him to London, and to the
Egyptian Hall, the world’s history might have been different. It was
not to be.
JONATHAN TRIMBLERIGG
(aged 7) with his Mother & Sister Davidina
Mr. Trimblerigg’s attention was first attracted to the career his elders
designed for him, not so much by the habitual goodness with which
the rivalry of Davidina had imbued his character, as by his
observation of the sensation caused in his native village by the
missionizing efforts of a certain boy-preacher, then known to fame as
‘The Infant Samuel Samuel,’ whose call, beginning at his baptism in
that strange invocative reduplication of the family name imposed by
his godparents, went on till it suddenly passed in silence to an
obscurity from which the veil has never been lifted. What happened
then nobody knows, or nobody chooses to tell. But between the ages
of seven and fifteen, while sustained by the call, Samuel Samuel
never saw a vacant seat, or an uncrowded aisle, or had sitting under
him a congregation unrent by sobs in the hundreds of chapels to
which the spirit bore him.
When Mr. Trimblerigg heard him, Samuel Samuel at the age of ten
was still in the zenith of his powers; and it has been credibly reported
that, in the mining villages which he passed through, publicans went
bankrupt and committed suicide because of him, and pit-ponies, their
ears robbed of the familiar expletives to which they had been trained,
no longer obeyed orders; and that alongside of these manifestations
of grace, the illegitimate birth-rates went up and struck a record; till,
six months later, things settled back and became the same; birth-
rates went down, pit-ponies obeyed a restored vocabulary, and
ruined publicans were vindicated in the prosperity of their
successors.
But these things only happened after; and when Mr. Trimblerigg
heard the cry of the Infant Samuel Samuel, he discerned a kindred
spirit, and saw a way opening before his feet, under a light which
thereafter continued to shine. And so at the age of twelve the
designs which Mr. Trimblerigg’s elders had on him, and the designs
which he had on himself, coalesced and became one; and even
Davidina, borne down by the sense of the majority, had to accept the
fact that her brother Jonathan had received a call.
Thus early did the conversion of souls enter into the life and
calculations of Mr. Trimblerigg. A striking justification of his chosen
calling followed immediately, when, without in the least intending it,
he converted an almost lost soul in a single day—the soul of an
Uncle, James Hubback by name, the only uncle upon his mother’s
side left over from a large family—who while still clinging to the
outward respectability of a Free Church minister, had taken secretly
to drink.
Mr. Trimblerigg had been born and brought up in a household where
the idea that spirits were anything to drink had never been allowed to
enter his head. He only knew of spirit as of something that would
catch fire and boil a kettle, or embrace death in a bottle and preserve
it from decay. These aspects of its beneficence he had gathered first
in the back kitchen of his own home, and secondly in the natural
history department of the County Museum, to which as a Sunday-
school treat he had been taken. Returning therefrom, he had been
bitten for a short while with a desire to catch, kill, and preserve frogs,
bats, beetles, snakes, and other low forms of existence, and make a
museum of his own—his originality at that time being mainly
imitative. To this end he clamoured to his mother to release his
saved pennies which she held in safe-keeping for him, in order that
he might buy spirit for collecting purposes; and so pestered her that
at last she promised that if for a beginning he could find an adder, he
should have a bottle of spirit to keep it in.
Close upon that his Uncle James arrived for a stay made sadly
indefinite by the low water in which he found himself. He still wore
his clerical garb but was without cure of souls: Bethel and he had
become separated, and his family in consequence was not pleased
with him. Nevertheless as a foretaste of reformation he wore a blue
ribbon, and was prevented thereby from letting himself be seen on
licensed premises; while a totally abstaining household, and a village
with only one inn which had been warned not to serve him, and no
shop that sold liquor, seemed to provide a safe environment for
convalescence.
It is at this point that Mr. Trimblerigg steps in. One day, taking down a
book from the shelf in the little study, he discovered behind it a small
square bottle of spirits: he did not have to taste or smell it—the label
‘old brandy’ was enough; and supposing in his innocence the word
‘old’ to indicate that it had passed its best use, at once his volatile
mind was seized with the notion that here was a mother’s surprise
waiting for him, and that he had only to provide the adder for the
bottle and its contents to become his. And so with that calculating
larkishness which made him do audacious things that when done
had to be swallowed, he determined to give his mother a surprise in
return.
Going off in search of his adder and failing to get it himself, he gave
another boy a penny for finding him a dead one. An hour later the
adder was inside the brandy bottle behind the books; and an hour
after that his Uncle James had achieved complete and lifelong
conversion to total abstinence.
The dénouement presented itself to Mr. Trimblerigg at first with a
shock of disappointment in the form of smashed glass, and his dead
adder lying in a spent pool of brandy on the study floor; and only
gradually did it dawn upon him after a cautious survey of the
domestic situation that this was not as he had at first feared his
mother’s angry rejection of the surprise he had prepared for her: on
the contrary she was pleased with him. His uncle, he learned, was
upstairs lying down, without appetite either for tea or supper. Mr.
Trimblerigg heard him moaning in the night, and he came down to
breakfast the next day a changed character. Within a year he had
secured reinstatement in the ministry, and was become a shining
light on the temperance platform, telling with great fervour anecdotes
which give hope. There was, however, one story of a drunkard’s
reformation which he never told: perhaps because, on after-
reflection, though he had accepted their testimony against him, he
could not really believe his eyes, perhaps because there are certain
experiences which remain too deep and sacred and mysterious ever
to be told.
But to Mr. Trimblerigg the glory of what he had done was in a while
made plain. More than ever it showed him destined for the ministry: it
also gave colour to his future ministrations, opening his mind in the
direction of a certain school of thought in which presently he became
an adept. ‘The Kingdom of Heaven is taken by tricks,’ became the
subconscious foundation of his belief; and when he entered the
pulpit at the age of twenty-one, he was by calculative instinct that
curious combination of the tipster, the thimblerigger, and the prophet,
the man of vision and the man of lies, which drew to itself the
adoration of one half and the detestation of the other half of the Free
United Evangelical Connection, eventually dividing that great body
into two unequal portions, and driving its soul into a limbo of spiritual
frustration and ineffectiveness till it found itself again under new
names.
CHAPTER TWO
The Early Worm
THOUGH Mr. Trimblerigg had not at the time taken the advice of his
Uncle Jonah in very good part, he did eventually accept a large part
of it—good or otherwise—in the shaping of his career. His wish to
become a great functionary of State gradually faded away, giving
place to others. But his intention to be President of the Free Church
Conference remained and grew strong. And to that end—spirituality
being required—he accepted faithfully Uncle Jonah’s last bit of
advice, and seeking a master behind whose back he could hide and
be clever in ways that didn’t show—have responsibility taken for his
mistakes, and get adequate recognition for the many things which he
did right—seeking for such a master, he found him to his own
satisfaction in the oldest of old ways; and never from that day on did
the suspicion enter his head, that the master whom he chose under
so devout an alias was himself.
If, in the process, he received a call, so did I; and it was at this stage
of his career that I began to watch him with real interest. His calls
became frequent; and though there was not always an apparent
answer there was always an attentive ear.
It may well be that when human nature appears, to those whose
business is to understand it, most unexpected and incalculable, is
the very time when it is or ought to be most instructive to eyes which
are open. And certainly at this preliminary period—before I got
accustomed to him—Mr. Trimblerigg did make me open my eyes
wider and wider, till he got me to the point when nothing that he did
surprised me. But that was not because I became able to anticipate
his reactions to any given circumstance or tight hole in which he
might find himself: but merely that experience of him caused me to
give up all rules based on the law of averages: he was a law by
himself. What at first baffled me was the passionate sincerity with
which he was always able to deceive himself—doing it mainly, I
admit, by invoking my assistance: that is to say, by prayer.
To see him fall upon his knees and start busily lighting his own little
lamp for guidance through the perils immediately surrounding him—
while firmly convinced all the time that the lamp was not his lighting
but mine—gave me what I can only describe as an extraordinary
sense of helplessness. The passionate fervour of his prayer to
whatever end he desired, put him more utterly beyond reach of
instruction than a conscious plunge into sin. Against that there might
have been a natural reaction; but against the spiritual avidity with
which he set to work saving his own skin day by day, no reaction
was possible. The day-spring from on high visited him with a light-
heeled nimbleness which cleared not only all obstacles of a material
kind but all qualms of conscience as well. In the holy of holies of his
inmost being self-interest sat rapturously enshrined; there lay its ark
of the covenant, and over it the twin cherubim of faith and hope
stretched their protecting wings. Mr. Trimblerigg might bow himself in
single spirit when first his prayer began; but always, before it ended,
his spirits had got the better of him, and he would rise from his knees
as beautifully unrepentant as a puppy that has dodged a whipping,
his face radiant with happiness, having found an answer to his
prayer awaiting him in the direction to which from the first it had been
set, much as your Arctic explorer finds the North Pole by a faithful
following of his nose after having first pointed it to the north.
I date my completed understanding of Mr. Trimblerigg, and of the use
he had made of me, to the day when—faced with an exposure which
would have gone far to reduce his ministerial career to a nullity—he
put up a prayer which (had I been a mere mortal) would have made
me jump out of my skin. I will not skin him retributively by quoting
him in full, but the gist of it all was that, much to his perplexity he
found himself suffering from a strange temptation, out of keeping
with his whole character, and threatening destruction to that life of
energetic usefulness in the service of others which he was striving to
lead. And so he prayed to be kept (‘kept’ was the very word)
—‘humble, and honest, and honourable.’ It was no change that he
desired; but only a continuance in that narrow and straight path of
acquired virtue down which (since the truth must be told) he had
hitherto danced his way more like a cat on hot bricks, than the
happily-banded pilgrim he believed himself to be. ‘Kept’ was the
word; and as I heard him I thought of it in all its meanings—and
wondered which. I thought of how dead game ‘keeps’ up to a point,
and is better in flavour for the keeping; but how, after that point is
reached, the keeping defeats itself, and the game is game no longer,
but mere offal. Was it in that sense that he wished to be ‘kept’? For
certainly I had found him good game, quick in the uptake, and brisk
on the wing.
It is difficult in this record to remain consecutive. Those who would
follow with accuracy the career of Mr. Trimblerigg, must jump to and
fro with the original—one of whom it has to be said that though he
denied himself many times (even in the face of the clearest
evidence) he denied himself nothing that held out any prospect of
keeping his fortunes on the move; and the stitch in time with which
he so often and so nimbly saved himself ran in no straight line of
machine-made regularity, but rather in a series of diversions this way
and that, stepping sideways and back preparatory to the next
forward leap; and in this feather-stitching along life’s road he covered
more ground, and far more ornamentally, than do those who go
merely upon their convictions, holding to one opinion and doing only
one thing at a time.
Yet it would be wrong to say that he was ever false to his
convictions, for these he seldom knew. Enough that so long as they
lasted his intuitions were sacred to him; and as it is the very essence
of intuitions that at any moment they may change, his
changeableness had about it a sort of truth, of consistency, to which
slower minds cannot attain.
But why call it ‘intuition’; why not ‘vision’? Well, if a camera of
powerful lens and stocked with highly sensitive films may be said to
have vision, vision he had in abundance. Adjusting his focus to the
chosen point of view, he clicked the switch of his receptivity, snapt a
picture, wound it off upon its wheel, and was ready for another. In the
space of a few minutes he had as many pictures stored as he had a
mind for. ‘Vision’? You may grant it him, if you will, so long as you
remember that that was the process. I would rather be inclined to call
it ‘optics’; and I see his career now rather as a series of optical
delusions, through every one of which he remained quite convinced
that he was right, and that the truth had come to him by way of
revelation. An early example will serve.
The small hill-side village in which Mr. Trimblerigg first learned to
escape the limitations of ordinary life was a place where things
seldom happened; and there were times in his early upbringing when
he found himself at a loose end, a rose wasting its sweetness to the
desert air; there was nothing doing in the neighbourhood on which
he could decisively set his mark. This was to live in vain; and often
he searched through his small world of ideas to find inspiration.
Should he run away from home, and be found wandering with his
memory a blank? Should he be kidnapped by gipsies and escape in
nothing but his shirt? Should a sheep fall into the stone quarry so
that he might rescue it, or a lamb get lost in the snow during the
lambing-season, that he might go out, and find, and return bearing it
in his bosom? Or should he go forth and become famous as a boy-
missionary, preaching to the heathen in an unknown tongue? These
were all possibilities, only the last suggested any difficulty.
Whenever in doubt, adopting the method of old Uncle Trimblerigg, he
turned to the Scriptures: he did not search them, for that would have
been self-willed and presumptuous; he merely opened them, putting
a blind finger to the spot where divine guidance awaited him. It was
in this way that Uncle Trimblerigg had become rich; forty years ago
he had invested his savings in house property all through having set
thumb to the text, ‘I have builded an house to Thy name.’ And
without searching the Scriptures further he had built twenty of them.
At a later date, slate-quarrying having started in the district, their
value was doubled.
So one day, in a like faith, our own Mr. Trimblerigg committed himself
to the same experiment. His first point on opening drew a startling
reply, ‘Get thee behind me, Satan, for thou savourest not the things
which be of God, but the things which be of men.’ Very right and
proper, of course: Satan thus safely disposed of, he tried again.
‘Remember Lot’s wife,’ failed for the moment to convey any
meaning; he knew that it could not refer to him: it seemed rather to
indicate that his Bible had not yet given him its thorough attention. To
warm it to its task he lifted it as a heave-offering, administered to it
the oath, as he had seen done in a police court, kissed it, and set it
down again. This time it answered sharply, but still not to the point:
‘Ye generation of vipers, who hath warned you to flee from the wrath
to come?’ Evidently the Lord was trying him. He turned from the New
Testament to the old: perhaps it was only the old he should have
consulted, for he had an idea that this was an Old Testament
method. That would account for the delay.
The Old Testament made a better response to his appeal. ‘The zeal
of Thy House hath eaten me up,’ suggested something at any rate,
but did not make the way quite clear; ‘Down with it, down with it,
even unto the ground!’ was practical in its bearing upon the Lord’s
House, but puzzling; ‘Behold how great a matter a little fire kindleth’
gave him the light he sought.
For at that time Bethesda, the chapel of the Free Evangelicals, had
fallen lamentably into disrepair, and since Uncle Trimblerigg, the only
man of substance in the district, had retired from the innovation of
hymn-singing to a stricter Bethel of his own, there seemed little
chance of raising the necessary funds for demolition and restoration.
And so decay went on, while still, from old habit, the chapel
continued to be insured.
Now whether we call it ‘vision’ or ‘optical illusion,’ there can be no
doubt that, thus aided by Scripture, Mr. Trimblerigg visualized rapidly
and clearly the means to an end which so many desired. And so it
came about one Saturday night, while frost held the village water-
supply firmly in its grip, and the road running up from the valley
slipped with ice, that Bethesda, through a supposed leakage in her
heating apparatus, caught fire; and only the fact that Mr. Trimblerigg
fetched the fire-engine from the town four miles away, saved it from
utter destruction. He had been sent into the town by his mother to do
errands, when at the foot of the hill he suddenly remembered Lot’s
wife, and looking back saw the chapel windows gustily ablaze, and
interpreting the peradventure aright had sped on with the news. The
miraculous arrival of the fire-engine with him on it, only half an hour
after the villagers’ discovery of an already well-established insurance
claim in swift operation, had caused an immense sensation and
some inquiry.
But Mr. Trimblerigg had a case on which no suspicion could rest; that
the fire was fought expeditiously, though under difficulties, was
largely owing to him, and the subsequent inquiries of the insurance
office agent who came to inspect the damage were only of a formal
kind. Every effort had been made, and a half-saved chapel was the
result; but its previous dilapidation made it easier to rebuild than to
restore, and when a new Bethesda rose from the ruins of the old, the
insurance company paid for it.
It was two days after the happy catastrophe, that Davidina remarked
(when, to be sure, he was taking them to light the lamp in another
room), ‘I wish you wouldn’t always go taking away the matches!’
‘I’m bringing them back,’ said Jonathan correctively.
‘You didn’t the last time,’ Davidina retorted. And at the word and the
tone of her voice, Jonathan trepidated and fled.
Was it ‘vision’ that made him do so, or only optical illusion on the
mental plane? For as far as I have been able to probe into
Davidina’s mind, which is not always clear to me, she knew nothing.
It was merely her way: the hunting instinct was strong in her, and he
her spiritual quarry: never in all their born days together was she to
let him go.
Of course Mr. Trimblerigg did not go on doing things like that. It was
an act of crude callow youth, done at a time when the romantic
instinct takes unbalanced forms; yet in a way it was representative of
him, and helped me to a larger insight into his character and
motives. For here was Mr. Trimblerigg, thus early, genuinely anxious
to have guidance from above for the exploitation of his
superabundant energies; and when, at first showing, the guidance
seemed rather to head him off from being energetic at all, he
persisted till his faith in himself found ratification, and thereafter went
his way with the assurance that what he decided to do must almost
necessarily be right.

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Solution Manual for Financial &

Managerial Accounting 15th by Warren

Solution Manual for Financial and Managerial

Test bank for Financial & Managerial Accounting 14th

Solution Manual for Financial Accounting 12th Edition

Financial &amp; Managerial Accounting Warren 12th

Financial and Managerial Accounting 13th Edition Warren

Solution Manual For Financial &amp; Managerial

Financial and Managerial Accounting 14th Edition Warren

Test Bank for Financial and Managerial Accounting, 15th

(2) Expense (Advertising Expense) increases by $4,850;

Paradise Travel Service

Paradise Travel Service

Paradise Travel Service

* $640,000 = $320,000 + $800,000 + $30,000 – $310,000 – $200,000

* $775,000 = $380,000 + $960,000 + $35,000 – $400,000 – $200,000

b. Stockholders’ equity, March 31 ..................................................................... $ 975,000

Ex. 1–21 (Concluded)

Ex. 1–25 (Concluded)

Accts. Accts. Common Fees Rent Salaries Supplies Auto Misc.

2. Global Travel Agency

3. Global Travel Agency

Prob. 1–2A (Concluded)

2. Reliance Financial Services

Prob. 1–3A (Concluded)

Prob. 1–4A (Concluded)

$220,000 = $100,000 + Retained Earnings

$120,000 = Retained Earnings

Prob. 1–5A (Continued)

Accts. Accts. Common Retained

Bal. 45,000 93,000 7,000 75,000 40,000 60,000 120,000

Prob. 1–5A (Continued)

Prob. 1–5A (Continued)

D’Lite Dry Cleaners

D’Lite Dry Cleaners

Prob. 1–5A (Concluded)

2. Wilderness Travel Service

3. Wilderness Travel Service

Prob. 1–3B (Concluded)

Prob. 1–4B (Concluded)

$180,000 = $81,500 + Retained Earnings

$98,500 = Retained Earnings

Prob. 1–5B (Continued)

2. Assets = Liabilities + Stockholders’ Equity

Prob. 1–5B (Continued)

Prob. 1–5B (Continued)

Bev’s Dry Cleaners

Bev’s Dry Cleaners

Prob. 1–5B (Concluded)

1. Assets = Liabilities + Stockholders’ Equity

Continuing Problem (Continued)

Continuing Problem (Concluded)

Year 3 Year 2 Year 1

Owners are normally reluctant to provide the following types of information to

TIF 1–6 (Continued)

TIF 1–6 (Concluded)

b. Other factors that Lisa should consider before discussing a long-term

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