2002 Fall Accounting_011_final_exam_Fall_2002_Answers

2002 Fall Accounting_011_final_exam_Fall_2002_Answers -...

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Temple University Fox School of Business and Management Dr. Steven Balsam Accounting 011 Final Exam-Answers December 18, 2002 Instructions: You have 120 minutes. Answer the questions on the pages provided and please remember to show all work so that you may receive partial credit. Also please put your name on each page in case the pages get separated. Good luck!
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Problem 1 (20 points) Beta Alpha Psi purchases a new computer from CompUSA on January 1, 2003, with no money down and no payments (interest or otherwise) for two years. To avoid interest charges, at a rate of 10% per year, they must pay the purchase price of $2,500 by January 1, 2005. Record the purchase on January 1, 2003, the payment on January 1, 2005, and any adjusting entries required on December 31, 2003 and December 31, 2004. Present value of $2,500 for 2 years at 10% = 2,500 * .8264 = 2,066 January 1, 2003 Computer 2,066 Discount on Notes Payable 434 Notes Payable 2,500 December 31, 2003 Interest Expense 207 Discount on Notes Payable 207 Face value of 2,500 less unamortized discount of 434 gives us a book value of 2,066 2,066 * .1 = 207 December 31, 2004 Interest Expense 227 Discount on Notes Payable 227 Face value of 2,500 less unamortized discount of 227 (434-207) gives us a book value of 2,273 2,273 *.1 =227 January 1, 2005 Notes Payable 2,500 Cash 2,500 2
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2002 Fall Accounting_011_final_exam_Fall_2002_Answers -...

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