by
Carman G. Blough Professor of Accounting, Retired
and
O. Whitfield Broome, Jr.
Frank S. Kaulback, Jr. Professor of Commerce
both with the
This set of accounting case-problems, denoted "exercises," is intended to be used in conjunction with a standard accounting textbook in an introductory or intermediate accounting course. The full set is comprised of 35 exercises which are set up to utilize spreadsheet software.
The first 25 exercises are structured and are coded EX01 - EX25. Each exercise consists of two files: (1) a problem narrative in Wordperfect DOS and (2) a spreadsheet template in Lotus DOS. Each exercise includes a "what if" analysis that requires the student to deal with changed assumptions. In many cases, the student is also asked to provide explanations of the results.
The next 10 exercises are "open ended," and are coded ST1 - ST10. For each one, there is a narrative file, but no templates are provided. However, two of these exercises (ST4 and ST10) include data in related spreadsheet files. In these exercises, the student must build his or her own spreadsheet template. Although all Lotus files are in DOS, these files are acceptable for virtually all spreadsheet software, including EXCEL and QUATTRO-PRO, in either DOS or Windows.
These exercises allow the instructor to emphasize any or all of a wide variety of accounting applications. The title and purpose of each exercise is described in the table of contents shown below. Using this information, the instructor can select exercises--either with or without templates-- appropriate for the topics covered.
Solutions to all exercises are available on disk by sending a request on your university letterhead to:
McIntire School of Commerce
Monroe Hall
University of Virginia
Charlottesville, VA 22903
Following is a table of contents for the solutions which contains a description of each exercise together with an assessment of the degree of difficulty:
STRUCTURED EXERCISES:-
MISSING AMOUNTS: THE ACCOUNTING EQUATION (EX01)
The purpose of this exercise is to gain an understanding of the accounting equation and how the elements change from one period to the next.
Degree of difficulty: Easy
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
SUPPLYING MISSING AMOUNTS: GENERAL LEDGER ACCOUNTING (EX02)
The purpose of this exercise is to test your understanding of the relationship between debits and credits in general ledger accounting.
Degree of difficulty: Difficult
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
TRANSACTION ANALYSIS (EX03)
The purpose of this exercise is to analyze transactions for an accounting period.
Degree of difficulty: Easy
Solution No. 1 - Exhibit No. 1
Solution No. 1 - Exhibits No. 2 and No. 3
Solution No. 1 - Exhibit No. 4
Solution No. 2 - Exhibit No. 1
Solution No. 2 - Exhibits No. 2 and No. 3
Solution No. 2 - Exhibit No. 4
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Written Comments
TRANSACTION ANALYSIS FOR A MANUFACTURING ENTERPRISE (EX04)
The purpose of this exercise is to analyze transactions for a manufacturing company.
Degree of difficulty: Moderate
Solution No. 1 - Exhibit No. 1
Solution No. 1 - Exhibits No. 2 and No. 3
Solution No. 1 - Exhibit No. 4
Solution No. 2 - Exhibit No. 1
Solution No. 2 - Exhibits No. 2 and No. 3
Solution No. 2 - Exhibit No. 4
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Written Comments
BANK STATEMENT RECONCILIATION (EX05)
The purpose of this exercise is to reconcile a bank statement with the records of a company.
Degree of difficulty: Moderate
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
ACCOUNTING FOR BAD DEBTS (EX06)
The purpose of this exercise is to illustrate the accounting for bad debts.
Degree of difficulty: Easy
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
ACCOUNTING FOR INVENTORY: FIFO VS. LIFO (EX07)
The purpose of this exercise is to compare the impact of FIFO and LIFO on income measurement.
Degree of difficulty: Difficult
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
Solution No. 3 - Exhibit No. 1
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Written Comments
ACCOUNTING FOR INVENTORY (MULTIPERIOD): FIFO VS. LIFO (EX08)
The purpose of this exercise is to compare the impact of FIFO and LIFO on income measurement in a multiperiod environment.
Degree of difficulty: Difficult
Solution No. 1 - Exhibit No. 1
Solution No. 1 - Exhibit No. 2
Solution No. 1 - Exhibit No. 3
Solution No. 2 - Exhibit No. 1
Solution No. 2 - Exhibit No. 2
Solution No. 2 - Exhibit No. 3
Solution No. 3 - Exhibit No. 1
Solution No. 3 - Exhibit No. 2
Solution No. 3 - Exhibit No. 3
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Written Comments
RETAIL INVENTORY METHOD (EX09)
The purpose of this exercise is to illustrate inventory accounting by conventional retail, i.e., lower of cost or market.
Degree of difficulty: Difficult
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
ACCOUNTING FOR PRODUCTION COSTS (EX10)
FULL ABSORPTION COSTING VS. DIRECT COSTING
The purpose of this exercise is to compare the impact on income measurement of full absorption costing and direct costing.
Degree of difficulty: Easy
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
FIXED ASSETS - ACQUISITION COSTS (EX11)
The purpose of this exercise is to evaluate elements of cost associated with an equipment acquisition to determine which are to be included and which are to be excluded from the cost of the equipment.
Degree of difficulty: Moderate
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
ANALYZING FIXED ASSET ACCOUNTS USING A BARDE-TYPE ANALYSIS (EX12)
The purpose of this exercise is to analyze changes in fixed asset accounts.
Degree of difficulty: Moderate
Solution - Exhibit No. 1
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Written Comments
FIXED ASSETS - IN-USE COSTS (EX13)
The purpose of this exercise is to evaluate elements of cost associated with equipment after it is in use to determine whether it is to be added to the equipment's cost or be charged to expense.
Degree of difficulty: Difficult
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
Solution No. 3 - Exhibit No. 1
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Written Comments
INVESTMENTS - EQUITY METHOD OF ACCOUNTING (EX14)
The purpose of this exercise is to illustrate the equity method of accounting for investments.
Degree of difficulty: Moderate
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
ACCRUAL OF PAYROLL AND RELATED BENEFITS (EX15)
The purpose of this exercise is to journalize the monthly accrual of payroll and related benefits based on time records and benefits data.
Degree of difficulty: Difficult
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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PRODUCT WARRANTIES (EX16)
The purpose of this exercise is to illustrate the accounting for contingent liabilities that are both probable and estimable using product warranties as an example.
Degree of difficulty: Easy
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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BOND ACCOUNTING (EX17)
The purpose of this exercise is to gain an understanding of accounting for the time value of money, using bond accounting to illustrate the concepts.
Degree of difficulty: Easy
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
LESSEE ACCOUNTING FOR CAPITAL LEASES (EX18)
The purpose of this exercise is to illustrate lessee accounting for capital leases, i.e., lease arrangments considered equivalent to properties acquired for mortgage debt.
Degree of difficulty: Moderate
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
SUPPLYING MISSING AMOUNTS: REVENUE RECOGNITION (EX19)
PERCENTAGE-OF-COMPLETION METHOD
The purpose of this exercise is to gain an understanding of the production basis of recognizing revenue, using percentage-of-completion to illustrate the concepts.
Degree of difficulty: Difficult
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
TRANSACTION ANALYSIS FOR A MAGAZINE PUBLISHER (EX20)
The purpose of this exercise is to illustrate the accounting for revenues earned and unearned.
Degree of difficulty: Easy
Solution No. 1 - Exhibit No. 1
Solution No. 1 - Exhibits No. 2 and No. 3
Solution No. 1 - Exhibit No. 4
Solution No. 2 - Exhibit No. 1
Solution No. 2 - Exhibits No. 2 and No. 3
Solution No. 2 - Exhibit No. 4
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Written Comments
INSTALLMENT SALES (EX21)
The purpose of this exercise is to illustrate the accounting for installment sales when the installment method of accounting is appropriate.
Degree of difficulty: Moderate
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
DIVIDEND ALLOCATION (EX22)
The purpose of this exercise is to allocate dividends among preferred and common shareholders under various preference provisions.
Degree of difficulty: Moderate
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
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Written Comments
EARNINGS PER SHARE (EX23)
The purpose of this exercise is to illustrate the computation of earnings per share when the threat of dilution exists.
Degree of difficulty: Moderate
Solution No. 1 - Exhibit No. 1
Solution No. 2 - Exhibit No. 1
Solution No. 3 - Exhibit No. 1
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Written Comments
CASH VS ACCRUAL ACCOUNTING (EX24)
The purpose of this exercise is to examine the difference between cash accounting and accrual accounting with emphasis on converting accrual accounting to cash flows.
Degree of difficulty: Moderate
Solution No. 1 - Exhibits No. 1 and No. 2
Solution No. 1 - Exhibit No. 3
Solution No. 1 - Exhibits No. 1 and No. 2
Solution No. 1 - Exhibit No. 3
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Written Comments
CASH VS ACCRUAL ACCOUNTING (EX25)
The purpose of this exercise is to examine the difference between cash accounting and accrual accounting with emphasis on converting cash flows to accrual accounting numbers.
Degree of difficulty: Difficult
Solution No. 1 - Exhibits No. 1 and No. 2
Solution No. 1 - Exhibit No. 3
Solution No. 1 - Exhibits No. 1 and No. 2
Solution No. 1 - Exhibit No. 3
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Written Comments
MODELS FOR STUDENTS TO BUILD:
ACCOUNTING FOR THE TIME VALUE OF MONEY-1 (ST1)
Student Template No. 1
The purpose of this exercise to illustrate that in accounting we must account for the time value of money at the prevailing interest rate.
Degree of difficulty: Easy
Solution ST1S1
Solution ST1S2
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ACCOUNTING FOR THE TIME VALUE OF MONEY-2 (ST2)
Student Template No. 2
The purpose of this exercise to illustrate that in accounting we must account for the time value of money at the prevailing interest rate.
Degree of difficulty: Easy
Solution ST2S1
Solution ST2S2
HI-TECH SALES (ST3)
Student Template No. 3
The purpose of this exercise is to create a set of T-Accounts related to the corresponding financial statements.
Degree of difficulty: Moderate
Solution ST3S1
General ledger
Trial Balance
Balance sheet & Statement of Income and retained earnings
Statement of cash flows
Solution ST3S2
General ledger
Trial Balance
Balance sheet & Statement of Income and retained earnings
Statement of cash flows
BANK RECONCILIATION (ST4)
Student Template No. 4
The purpose of this exercise is to create a template to reconcile a bank account as of a specific date, given data from a bank statement and the company's cash records.
Degree of difficulty: Difficult
Solution ST4
Page 1 - Record of cash account - May
Page 2 - Record of cash account - June
Page 3 - Reconciation and macro
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ESTIMATION OF INVENTORY FROM GROSS PROFIT DATA (ST5)
Student Template No. 5
The purpose of this exercise is to create a template to estimate the cost of inventory as of a certain date, given a reliable history of gross profit margins and certain accounting data for the curent period.
Degree of difficulty: Moderate
Solution ST5S1
Solution ST5S2
Solution ST5S3
DEPRECIATION COMPUTATIONS (ST6)
Student Template No. 6
The purpose of this exercise is to create a template to compute depreciation for each year of an asset's life by each of the recognized methods - straight line, sum-of-years' digits, and declining balance (at double the straight-line rate).
Degree of difficulty: Easy
Solution ST6S1
Solution ST6S2
Solution ST6S3
DEPRECIATION COMPUTATIONS (ST7)
ALLOCATION AMONG FISCAL YEARS
Student Template No. 7
Asset depreciation schedules are based on "asset-years." Only rarely will the fiscal year of the acquiring company coincide with the asset year - i.e., when an asset is acquired in the first month of the fiscal year. Thus, depreciation by asset-years must be allocated among fiscal years. The purpose of this exercise is to prepare a template to accomplish this purpose.
Degree of difficulty: Easy
Solution ST7S1
Solution ST7S2
Solution ST7S3
Solution ST7S4
Solution ST7S5
Solution ST7S6
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PRODUCT WARRANTIES (ST8)
Student Template No. 8
The purpose of this exercise is to illustrate the accounting for product warranty revenues and related costs when the warranty contract is sold as an item separate from the related product being warranted.
Degree of difficulty: Easy
Solution ST8S1
Solution ST8S2
SHAREHOLDERS' EQUITY TRANSACTIONS (ST9)
Student Template No. 9
The purpose of this exercise is to set up a template to capture owners' equity data to facilitate preparation of the statement of owners equity.
Degree of difficulty: Moderate
Solution ST9S
THE TRIAL BALANCE WORKSHEET (ST10)
Student Template No. 10
The purpose of this exercise is to develop a template to incorporate adjusting entries into an unadjusted trial balance so that the content of the financial statements can be seen before the formal statements are prepared.
Degree of difficulty: Moderate
Solution ST10S
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