Mgmt_200_Fall_2007_Exam_Final(4,17)

Mgmt_200_Fall_2007_Exam_Final(4,17) - Name: _ PUID: _...

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Name: ________________________ PUID: ________________________ Purdue University Krannert School of Management MGMT 200 – Introductory Financial Accounting Fall 2007 Final Exam – December 11, 2007 This exam consists of 4 questions on 11 pages (excluding this cover page and the present value table page) for a total of 100 points. Time allowed: 90 minutes. Answer all questions. To ensure full credit and to maximize partial credit, clearly show all supporting calculations. The exam is closed book. A calculator is permitted. Present value tables are provided on the last page. GOOD LUCK . Question 1 (25 points) ________ Question 2 (25 points) ________ Question 3 (25 points) ________ Question 4 (25 points) ________ TOTAL (100 points) ________
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Question 1. Bonds Payable (25 points) Jim Corporation borrowed the majority of the funds needed for the purchase of new factory equipment that cost $440,000. Jim Corporation raised the funds with the issuance of the following loan on January 1, 2006: $600,000 face value, 4% coupon (interest payable annually on December 31), twenty-year bonds. The market rate of interest on January 1, 2006 was 7%. Required: a. At what price (where par = 100) would these bonds be issued? b. Prepare the journal entry to record the sale of the 4% coupon bonds on January 1, 2006. c. Prepare the journal entry to record interest expense and the interest payment on the 4% coupon bonds on December 31, 2006, assuming the straight-line amortization method is used. Question 1 continued over . . . Mgmt 200 – Final Exam – Fall 2007 – page 1
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Question 1 continued. d.
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Mgmt_200_Fall_2007_Exam_Final(4,17) - Name: _ PUID: _...

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