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Spring 2007 final exam

Spring 2007 final exam - MISCH SPRING 2007 FINANCIAL...

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MISCH NAME_____________________________ SPRING 2007 FINANCIAL ACCOUNTING FINAL EXAM PROBLEM POSSIBLE POINTS ACTUAL POINTS 1. Bonds Payable 24 2. Basic and Adjusting Journal Entries and Financial Statements 67 3. Time Value of Money 08 4. Dividends 10 5. Multiple Choice 09 6. Quibble Points 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 summer! 1

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PART I—BONDS PAYABLE (24 POINTS) On January 2, 2006, Glacier, Inc. received \$493,120 for issuing \$500,000 of 10-year, 7.25% bonds at a time when the market interest rate for similar bonds was 7.45%. The bonds pay interest annually each December 31 st . The company uses the effective interest method of amortization, and has a calendar year-end. Required: A. Prepare an amortization table for the Glacier bonds covering January 2, 2006 through December 31, 2008. (3.5 Points) B. Prepare, in good form, all of the journal entries required on Glacier’s books related to the bonds in 2006 and 2007. (12 Points) DATE ACCOUNT DEBIT CREDIT PART I—BONDS PAYABLE (CONTINUED) C. Prepare, in good form, the disclosure related to the bonds that would appear on Glacier’s balance sheet at December 31, 2007 . (Ignore cash.) (3.5 points) 2
Balance Sheet: Income Statement: D. Prepare, in good form, the journal entry that would be required on Glacier’s books at January 2, 2009 if Glacier retires the bonds on that date at 97. (5 Points) DATE ACCOUNT DEBIT CREDIT 3

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PART II—JOURNAL ENTRIES AND FINANCIAL STATEMENTS (67 POINTS) Ocean Outfitter Corporation had the following normal balances in its accounts at February 1, 2007. ACCOUNT BALANCE Accounts Payable 5,400 Accounts Receivable 69,400 Accumulated Depreciation—Furniture 22,500 Additional Paid-in Capital—Common Stock 59,000 Allowance for Bad Debts 700 Cash 133,600 Common Stock 232,300 Depreciation Expense--Furniture 2,500 Dividends 4,000 Furniture 150,000 Inventory 108,900 Payroll Tax Expense 1,300 Prepaid Rent 6,400 Purchases 37,600 Rent Expense 3,000 Retained Earnings 123,600 Salaries Payable 18,100 Salary Expense 22,400 Sales 94,800 Treasury Stock, 1,000 shares at cost 14,200 Utility Expense 3,100
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