Fall 2007 final exam

# Fall 2007 final exam - MISCH FALL 2007 FINANCIAL ACCOUNTING...

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MISCH NAME_____________________________ FALL 2007 FINANCIAL ACCOUNTING FINAL EXAM PROBLEM POSSIBLE POINTS ACTUAL POINTS 1. Bonds Payable 21 2. Treasury Stock 10 3. Distribution of Dividends 08 4. Time Value of Money 06 5. Basic and Adjusting Journal Entries and Financial Statements 67 6. Multiple Choice 06 7. Quibble Point 02 ---------- Total 120 NOTE: A. If you are asked for an entry or an amount when none is required, write “no entry” or “zero” in the space provided. B. Round all answers to the nearest dollar. C. Partial credit will be given only when supporting computations are shown in good form. D. Calculators with stored-text capabilities are prohibited on this examination. Use of such calculators and/or possession of any unauthorized materials will result in your receiving a zero on the examination. E. Good Luck! Have a great Christmas holiday! 1

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PART I—BONDS PAYABLE (21 POINTS) On January 2, 2005, Jetson Corporation issued \$125,000 of 7.5%, 5-year bonds for \$130,195. The bonds pay interest annually each January 1 st . On the date of issuance, the market yield for bonds of similar risk was 6.5%. The company uses the effective interest method of amortization, and has a calendar year-end. Required: A. Prepare the journal entry required on Jetson’s books on January 2, 2005 to record the issuance of the bonds. (4 Points) DATE ACCOUNT DEBIT CREDIT B. Prepare a bond amortization table through December 31, 2007. (3.5 Points) C. Prepare, in good form, the balance sheet presentation related to the bonds that would appear on Jetson’s books at December 31, 2006. (Ignore cash.) (3.5 points) 2
PART I CONTINUED (BONDS PAYABLE) D. Prepare, in good form, the income statement presentation related to the bonds that would appear on Jetson’s books at December 31, 2006. (1 Point) E. Prepare any journal entry/entries required on Jetson’s books at December 31, 2007. (4 Points) DATE ACCOUNT DEBIT CREDIT F. Assume that on January 2, 2008 , Jetson redeemed the bonds at 102. Prepare the journal entry required on Jetson’s books to record the redemption. (5 Points) DATE ACCOUNT DEBIT CREDIT 3

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PART II—TREASURY STOCK (10 POINTS) Flintstone Corporation accounts for treasury stock under the cost method and had the following normal balances in its stockholders’ equity accounts at January 1, 2007: Common Stock, \$5 par value \$ 800,000 Additional Paid-in Capital—Common Stock \$2,200,000 Retained Earnings \$5,000,000 The following transactions occurred during the year: April 12 Repurchased 1,000 shares of common stock at \$25.00 per share.
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## Fall 2007 final exam - MISCH FALL 2007 FINANCIAL ACCOUNTING...

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