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Solution-Final-W07 - Solution of the final exam COMM 217...

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Solution of the final exam COMM 217 – Winter 2007 Question 1 (21 marks; 1.5 mark each) 1. D 2. B 3. A 4. D 5. A 6. B 7. D 8. C 9. C 10. A 11. B 12. A 13 A 14. A 15 A 16. C
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Question 2 (20 marks) 1. Calculations of proceeds. Use N = 8; I = 4%. ($40,000,000 x .7307) + ($40,000,000   x .10 x 1/2   x 6.7327) = $29,228,000 + $13,465,400 = $42,693,400. 2. JE, January 1, 2005: Cash 42,693,400 Premium on bonds payable 2,693,400 Bonds payable 40,000,000 3. JE, June 30, 2005: Bond interest expense 1,707,736 Premium on bonds payable 292,264 Cash 2,000,000 $42,693,400 x 8% x ½ = $1,707,736 $40,000,000 x 10% x ½ = $2,000,000 JE, Dec. 31, 2005: Bond interest expense 1,696,045 Premium on bonds payable 303,955 Cash 2,000,000 ($42,693,400 - $292,264) x 8% x ½ = $1,696,045 4. Excerpt from Jessie’s balance sheet, December 31, 2006 Long-term debt Bonds payable, 10%, due Dec. 31, 2009 $40,000,000 plus premium on bonds payable 2,097,181 Book value $42,097,181 Unamortized bond premium = $2,693,400 – $292,264 – $303,955 = $2,097,181
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Question 3 (20 marks) Part A – 10 marks (a) July 6 Purchases $1,700 Accounts payable $1,700 8 Accounts payable 200 Purchase returns and all. 200 9 Freight-in 90 Cash 90 19 Accounts receivable 3,400 Sales 3,400 22 Sales returns and allowances 200 Accounts receivable 200 28 Cash 3,168 Sales discounts 32 Accounts receivable 3,200 31 Accounts payable 1,500 Cash 1,500 (b) $200 + ($1,700 -$200 + $90) - $190 = $1,600
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