Solution-Final-W07

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
Question 3 (20 marks) Part A – 10 marks (a) July 6

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

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