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### 7252569-MIdterm-1 (dragged) 27

Course: ACCTG ACC423, Spring 2012
School: University of Phoenix
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Word Count: 312

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Weygandt, Kieso, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition TEACHING TIP Illustration 14-1 can be used to demonstrate how bond prices are affected by the stated rate of interest. A numerical example is given that calculates the selling price of bonds issued at a premium, at par, and at a discount. d. e. 4. The amortization period is the period of time that the bonds are...

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Weygandt, Kieso, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition TEACHING TIP Illustration 14-1 can be used to demonstrate how bond prices are affected by the stated rate of interest. A numerical example is given that calculates the selling price of bonds issued at a premium, at par, and at a discount. d. e. 4. The amortization period is the period of time that the bonds are outstanding. On the balance sheet the bonds are shown net of any premium or discount, though for bookkeeping purposes a bond discount or bond premium account can be used. The effective interest method must be used to calculate the periodic interest expense if GAAP is a constraint. The carrying amount of the bonds at the start of the period is multiplied by the effective interest rate. If GAAP is not a constraint, or for illustration purposes, the straight-line method is often used because of its simplicity. TEACHING TIP Illustration 14-2 compares the calculation of bond or discount premium amortization under straight-line and effective interest methods. Effective Interest Method. In teaching this part of the chapter the following relationships may be emphasized: a. Carrying Value of Bonds = Face Value Plus Premium or Less Discount b. Interest Expense = Market Interest Rate x Carrying Value of Bonds c. Interest Payable = Stated Interest Rate x Face Value of Bonds d. If a premium exists: Interest expense will be less than interest paid or payable. e. If a discount exists: Interest expense will be greater than interest paid or payable. f. Difference between interest expense and interest paid or payable is the amount of amortization of the discount or premium. 5. Review accounting for bonds issued between interest dates 6. Issuance expenses may be treated as an immediate expense or as a reduction of the related liability and amortized. Treatment as a deferred charge is no longer an acceptable method under GAAP. 14-11
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University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionTEACHING TIPIllustration 14-3 provides a review problem of accounting for bonds. The numericalexample requires calculating bond discount, recording issuance of bon
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekD.Intermediate Accounting, Eighth Canadian EditionExtinguishment of Debt/Derecognition1.Reacquisition of debt before maturitya.The difference between the net carrying amount and the reacquisition price(the a
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, Wiecek2.G.Intermediate Accounting, Eighth Canadian EditionFuture payments for sinking fund requirements and maturity amounts of long-termdebt during each of the next five years should be disclosed.Troubled Debt Rest
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionILLUSTRATION 14-1INTEREST RATES AND BOND PRICESMarket InterestRateBondStatedInterestRate12%Bonds SoldAt(1)10%Premium(2)12%Face Value(3)15%Discount
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionILLUSTRATION 14-2BOND AMORTIZATION METHODSComputation of AmortizationStraight-Line MethodBond Discountor PremiumNumber ofInterestPeriodsInterest Payable+ Di
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionILLUSTRATION 14-3BONDS PAYABLEREVIEW PROBLEMThree-year bond with an 8% coupon rate sold to yield 10% on January 1, 2005. Interest payableannually. Callable at 105
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionILLUSTRATION 14-3 (continued)5.Entries, if bonds recalled on 12/31/06. Expenses of recall: \$2,000Cash paid = (1.05 x \$100,000) + \$2,000 = \$107,000Net carrying am
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionSHAREHOLDERS' EQUITYCHAPTER 15CHAPTER TOPICS CROSS-REFERENCED WITH CICA HANDBOOKShare CapitalSection 3240Share Capital: Treasury Shares (Acquisition of Shares)
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Edition13.Compare current Canadian and international GAAP and understand which directioninternational GAAP is headed.14.Explain the accounting for par value shares (App
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionCHAPTER REVIEW1.Chapter 15 focuses on the shareholders' equity section of the corporate form of businessorganization. Shareholders' equity represents the amount t
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Editiondocuments are appropriately completed. Once the certificate of incorporation isissued, the corporation is recognized as a separate legal entity bound by the laws of
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Edition10.Profits of a corporation distributed to shareholders are referred to as dividends. In general,dividends can only be paid if the company's capital will be mainta
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Edition17.Where an entity advances money to its employees or officers for the purpose of purchasingshares of company stock, it is common practice to deduct the remaining
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Edition22.While the unencumbered credit balance in retained earnings is normally considered toprovide the basis for dividend distributions, very few companies pay dividen
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Editiondistribution. When a property dividend is declared, fair market value should be recognizedin the accounts with the appropriate gain or loss recorded. The fair marke
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Editionto share capital. When the stock dividend is &quot;paid,&quot; the appropriate share capital account iscredited, and the common stock dividend distributable account is debite
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Editiona.b.Participating. Preferred shares that are participating share proportionately with thecommon shareholders in any profit distribution beyond a prescribed amount
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, Wiecekd.e.f.g.39.Intermediate Accounting, Eighth Canadian EditionFinancial reorganizations (Appendix 15B)Stock rights and warrants (Chapter 16)Issue of convertible debt (Chapter 16)Share subscriptions forfeited
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Editionc.Price earnings ratio: The analyst, in discussing the investment possibility of agiven enterprise, mostly uses this ratio. It is calculated as follows: market pri
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Editiontreasury shares are reissued for less than acquisition cost, the difference should be debitedto any contributed capital from previous treasury share, or repurchase
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionLECTURE OUTLINEThe material in this chapter is relatively straightforward and can be covered in one or two classsessions.A.Nature of Shareholders' Equity1.The
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, Wiecek5.Intermediate Accounting, Eighth Canadian EditionShare Capital or Capital Stock System. Each share represents an ownership rightwith the following privileges:a.To share proportionately in profits and losses.
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Edition4.Callable at the option of the corporation5.Retractable at the option of the shareholder6.Nonvoting7.Cumulative8.ParticipatingPreferred shares sometimes h
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Edition1.2.E.Such reacquired shares may be retired (cancelled) or, where permitted, held astreasury shares. With rare exceptions, the CBCA does not allow a corporation
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekG.Intermediate Accounting, Eighth Canadian EditionTreasury SharesTreasury shares are not an asset. A corporation cannot own a part of itself.1.In Canada, the CICA Handbook recommends that treasury shares, if t
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionILLUSTRATION 15-1COMPONENTS OF SHAREHOLDERS' EQUITYPreferred SharesCommon SharesShareholders'EquityUnappropriatedRetained EarningsAppropriatedAccumulated Ot
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionILLUSTRATION 15-2ACCOUNTING FOR TREASURY SHARE TRANSACTIONSHTM Limited has the following shareholders' equity at September 30, 2004:Common shares, no par value, 1
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionILLUSTRATION 15-2SOLUTION:(a)October 12Treasury SharesCash100,000100,000October 29Cash30,900Contributed Surplus (T/S Transactions)Treasury Shares (3,000 x
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionCHAPTER 16COMPLEX FINANCIAL INSTRUMENTSCHAPTER TOPICS CROSS-REFERENCED WITH CICA HANDBOOKFinancial Instrumentsrecognition and measurementSection 3855Financial I
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Edition11.Understand how derivatives are used in hedging.12.Explain what hedge accounting is and identify the qualifying hedge criteria.13.Explain the difference betwe
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian EditionCHAPTER REVIEWIntroductionComplex financial instruments, once uncommon, are now widely used by companies in an effortto manage risk, access pools of financing, an
University of Phoenix - ACCTG - ACC423
Kieso, Weygandt, Warfield, Young, WiecekIntermediate Accounting, Eighth Canadian Editionliability.4.Mandatorily redeemable or term preferred shares (although legally equity), meet thedefinition of a liability since there is an obligation for the comp
University of Phoenix - ACC260 - AAAJ0OKG00
4-6The following four steps are used in process costing:(a) Analysis of physical flow of units: All of the units in the beginning and endinginventories, those started during the period, and those transferred out to finishedgoods are accounted for.(b)
University of Phoenix - ACC260 - AAAJ0OKG00
4-11The difference between normal and actual costing lies in the calculation of themanufacturing-overhead cost of the current period. Under actual costing, themanufacturing-overhead cost of the current period is the actual overhead costincurred during
University of Phoenix - ACC260 - AAAJ0OKG00
SOLUTIONS TO EXERCISESEXERCISE 4-16 (10 MINUTES)The general formula for all three cases is the following:Work-in-process,beginning+Units startedduring monthUnits completedduring month=Work-in-process,endingUsing this formula, the missing amou
University of Phoenix - ACC260 - AAAJ0OKG00
EXERCISE 4-18 (15 MINUTES)CALCULATION OF EQUIVALENT UNITS: PETROTECH COMPANY - AMARILLO PLANTWeighted-Average MethodPercentageofCompletionEquivalent UnitswithPhysicalRespect toDirectUnitsConversion Material ConversionWork in process, July 1.
University of Phoenix - ACC260 - AAAJ0OKG00
EXERCISE 4-20 (30 MINUTES)All three of these companies manufacture large amounts of relatively homogeneousproducts (i.e., lumber and paper). Therefore, process costing is an appropriate productcosting system.EXERCISE 4-21 (15 MINUTES)CALCULATION OF CO
University of Phoenix - ACC260 - AAAJ0OKG00
EXERCISE 4-23 (25 MINUTES)TUSCALOOSA PAPERBOARD COMPANYWeighted-Average MethodDirectMaterialConversionWork in process, March 1 .\$ 10,900\$ 28,950Costs incurred during March .112,700160,200Total costs to account for.\$123,600\$189,150Equivalent
University of Phoenix - ACC260 - AAAJ0OKG00
EXERCISE 4-24 (25 MINUTES)RALEIGH TEXTILES COMPANYWeighted-Average MethodDirectMaterialConversionWork in process, November 1 .\$ 85,750\$ 16,900Costs incurred during November .158,000267,300Total costs to account for.\$243,750\$284,200Equivalen
University of Phoenix - ACC260 - AAAJ0OKG00
EXERCISE 4-25 (45 MINUTES)1. Diagram of production process:Work-in-Process Inventory:Preparation DepartmentBatch P25 Batch S33AccumulatedbydepartmentConversion costs:Direct-laborManufacturingoverheadWork-in-Process Inventory:Finishing Departm
University of Phoenix - ACC260 - AAAJ0OKG00
EXERCISE 4-25 (CONTINUED)2. The product cost for each basketball is computed as follows:ProfessionalDirect material:.Batch P25 (\$42,000 2,000).Batch S33 (\$45,000 4,000).Conversion: Preparation Department .Conversion: Finishing Department .*Convers
University of Phoenix - ACC260 - AAAJ0OKG00
EXERCISE 4-25 (CONTINUED)Work-in-Process Inventory: Finishing Department .Applied Conversion Costs .*\$36,000 = 6,000 units36,000*36,000\$6.00 per unitWork-in-Process Inventory: Packaging Department .Finished-Goods Inventory .Work-in-Process Invent
University of Phoenix - ACC260 - AAAJ0OKG00
EXERCISE 4-26 (10 MINUTES)1.Work-in-Process Inventory: Preparation Department .Raw-Material Inventory .Wages Payable.Manufacturing Overhead .1,635,0002.Work-in-Process Inventory: Finishing Department .Work-in-Process Inventory: Preparation Depart
University of Phoenix - ACC260 - AAAJ0OKG00
SOLUTIONS TO PROBLEMSPROBLEM 4-27 (45 MINUTES)1.Work in process, June 1 .Units started during June.Total units to account for .PhysicalUnits40,000190,000230,000Units completed and transferred out during June .Work in process, June 30.Total un
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-27 (CONTINUED)4.Cost of goods completed and transferred out during June:number of unitstotal cost pertransferred outequivalent unit.180,000\$4.00\$720,000.50,000\$2.35\$117,500cost perequivalent.unit ofconversion27,500\$1.6545,3
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-28 (CONTINUED)4.Cost of goods completed and transferred out during April:number of unitstransferred outtotal cost per. 80,000equivalent unit\$3.81\$304,800cost perequivalent. 30,000unit ofdirect material\$2.00\$60,000cost perequiva
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-29 (50 MINUTES)1.Physical flow of units:Work in process, 1/1/x4 .Units started during 20x4 .Total units to account for .Units completed and transferred out during 20x4.Work in process, 12/31/x4 .Total units accounted for .2.PhysicalUn
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-29 (CONTINUED)3.Costs per equivalent unit:Work in process, 1/1/x4 .Costs incurred during 20x4 .Total costs to account for .Equivalent units .Costs per equivalent unit .DirectMaterial ConversionTotala \$ 920,800\$ 300,000 \$ 620,8001,40
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-29 (CONTINUED)4.Cost of ending inventories:Cost of goods completed and transferred out:number of unitstransferred outtotal cost per. 1,000,000equivalent unit\$4.80\$4,800,000Cost remaining in 12/31/x4 work-in-process inventory:Direct m
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-30 (40 MINUTES)1.Equivalent units:PhysicalUnitsWork in process, August 1.40,000Units started during August.80,000Total units to account for . 120,000Units completed and transferredout during August.Work in process, August 31.Total u
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-30 (CONTINUED)4.Cost remaining in August 31 work-in-process inventory:Direct material:number ofcost perequivalentequivalentunits ofunit ofdirect materialdirect material.20,000\$1.15\$23,0006,000\$10.2861,680Conversion:number of
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-31 (40 MINUTES)1.a. Equivalents units:PhysicalUnitsWork in process, June 1 .30,000Units started during June .34,000Total units to account for .64,000Units completed andtransferred out during June .Work in process, June 30 .Total un
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-31 (CONTINUED)c.Cost of goods completed and transferred out during June:number of unitstransferred outtotal cost perequivalent unit\$54.50\$2,180,000\$5.45\$130,800. 18,000 \$49.05882,90040,000Cost remaining in June 30 work-in-process i
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-32 (35 MINUTES)1.Direct material cost was \$1,390,000:JR1163 .JY1065 .DC0766 .Total .\$ 225,000710,000455,000\$1,390,000Texarkana Corporations total direct-labor payroll amounted to \$134,274 for 6,394hours of work (\$134,274 \$21 per hour
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-32 (CONTINUED)DirectMaterialWork in process, April 1Costs incurred during April.Total costs to account for.Equivalent units.Cost per equivalent unitConversionTotal\$ 230,0001,390,000\$1,620,00030,000\$54a\$ 63,940575,460\$639,40027,
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-33 (50 MINUTES)The missing amounts are shown below. A completed production report follows.Work in process, October 1 (in units).Units completed and transferred out during October .Total equivalent units: conversion .10,00075,00078,500Wor
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-33 (CONTINUED)Work in process, October 1.Costs incurred during October .Total costs to account for.Equivalent units .Costs per equivalent unit.DirectMaterial\$112,000600,000\$712,00080,000\$8.90*Conversion\$ 30,225900,000\$930,22578,
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-33 (CONTINUED)Cost of goods completed and transferred out during October:number of unitstransferred outtotal cost per. 75,000equivalent unit\$20.75\$1,556,250\$8.90\$44,500\$11.8541,475Total cost of October 31 work-in-process .\$85,975C
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-34 (30 MINUTES)1.The ending work-in-process inventory consisted of 400 units (200 + 800 600).2.The cost of goods completed during June totaled \$57,000 (600 units x \$95):PercentageOfEquivalent UnitsCompletion_WithDirectPhysical Respec
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-34 (CONTINUED)4.Equivalent units measure the amount of manufacturing activity (i.e., for directmaterial or conversion) that has been applied to a batch of physical units. If, forexample, a company has 1,000 physical units in process that are
University of Phoenix - ACC260 - AAAJ0OKG00
PROBLEM 4-35 (30 MINUTES)1.a. Equivalent units:TaxReturns(physicalunits)Returns in process, February 1 .300Returns started in February .900Total returns to account for . 1,200Returns completedduring February.800Returns in process, February