Final Exam Review Problems - Answers

Final Exam Review Problems - Answers - Final Exam Review...

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Final Exam Review Problems – Answers Chapter 10 1. a. Cash 60,000 Notes Payable 60,000 b . Interest Expense (60,000 x 8% x 4/12) 1,600 Interest Payable 1,600 c. Notes Payable 60,000 Interest Payable 1,600 Interest Expense (60,000 x 8% x 2/12) 800 Cash 62,400 2. Please note the change to this question (see announcement and reposted review questions). The sales of $54,250 does not include sales tax. Cash 58,590 Sales 54,250 Sales Tax Payable (54,250 x 8%) 4,340 3. a. Cash ($200,000 x 102%) 204,000 Bonds Payable 200,000 Premium on Bonds Payable 4,000 b. $200,000 x 8% = $16,000 c. Amortization of bond premium - $4,000 / 10 years = $400 per year Interest expense = $16,000 - $400 = $15,600 The interest expense is the same every year 2007 interest expense = $15,600 d . Bond Interest Expense 15,600 Premium on Bonds Payable 400 Bond Interest Payable 16,000 e, Premium on Bonds Payable on January 1, 2008 = $4,000 - $400 - $400 = $3,200 Bonds Payable $200,000 Plus: Premium on Bonds Payable 3,200 Carrying Value $203,200
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4. a. Cash ($800,000 x 95%) 760,000 Discount on Bonds Payable 40,000 Bonds Payable 800,000 b. $800,000 x 6% = $48,000 c. Amortization of bond discount = $40,000 / 5 years = $8,000 per year Interest expense = $48,000 + $8,000 = $56,000 The interest expense is the same every year 2007 interest expense = $56,000 d . Bond Interest Expense 56,000 Bond Interest Payable 48,000 Discount on Bonds Payable 8,000 e. Discount on Bonds Payable on January 1, 2008 = $40,000 - $8,000 - $8,000 = $24,000 Bonds Payable $800,000 Less: Discount on Bonds Payable 24,000 Carrying Value $776,000 5. Bonds Payable 160,000 Loss on Redemption of Bonds Payable (143,700 – 163,200) 19,500 Cash (160,000 x 102%) 163,200 Discount on Bonds Payable (160,000 – 143,700) 16,300 6. Bonds Payable 200,000 Premium on Bonds Payable (214,000 – 200,000 ) 14,000 Cash (200,000 x 96%) 192,000 Gain on Redemption of Bonds Payable (214,000 – 192,000) 22,000 7. a. Long-term liabilities Bonds payable 10% $400,000 Less: Unamortized bond discount 30,000 $370,000 Notes payable, 9% 70,000 Mortgage payable (long-term portion) 170,000 Total long-term liabilities $610,000 (b) Bond interest payable, the current portion of the mortgage payable ($10,000), accounts payable, and taxes payable should be classified as current liabilities.
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8. a. 1/18 Cash (50,000 x 23) 1,150,000 Common Stock (50,000 x 10) 500,000 Paid-in Capital in Excess of Par Value (50,000 x 13) 650,000 8/20 Treasury Stock (15,000 x 24) 360,000 Cash 360,000 b. $5,970,000 Stockholder’s Equity Paid-in Capital Common stock, $10 par value, 4,000,000 shares authorized;
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This note was uploaded on 01/17/2009 for the course ACC 211 taught by Professor Bunch during the Fall '08 term at SUNY Albany.

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Final Exam Review Problems - Answers - Final Exam Review...

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