Final-Solutions

Final-Solutions - NAME: STUDENT No.: RECITATION SECTION:...

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1 NAME: STUDENT No.: RECITATION SECTION: ACCOUNTING 101, FINAL EXAMINATION Fall Semester, 2004 INSTRUCTIONS: 1. There are 11 numbered pages in this booklet. There is one additional booklet. This booklet has financial information for Amazon.Com, Inc. (14 pages). 2. Please print your name and student number in the space provided on top of this page AND on all subsequent pages . 3. This is a 96 point exam. You have 120 minutes to complete it. Budget your time to achieve maximum points. 4. Answer the problems in the space provided within this booklet . Present your work in an orderly fashion to facilitate the awarding of partial credit. For partial credit, you must show your work. Partial credit can only be given for work that is presented in a clear, legible and logical manner. 5. In the interest of fairness to all students, NO questions will be answered during the exam. If you think a question is ambiguous, state an appropriate assumption explicitly and continue. 6. The exam is closed book. You are allowed only ONE 8.5 x 11 inch double-sided sheet of paper for notes. 7. Use the assumptions given in each question for the solution of that question only. Ignore the assumptions provided in the other questions. Part Points Allocated Points Scored I 21 II 19 III 19 IV 18 V 19 Total 96
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2 Part I – 21 points Please refer to Amazon.Com, Inc.’s financial statemens for this question and the following addional information. A. No new capital leases are entered into in 2003. B. There are no FCTAs or business acquisitions/divestitures that affect Amazon for 2003. C. The amortization of property under capital leases in 2004 is $23,700 (in thousands). D. Ignore any income tax effects. E. Provide your answers in thousands of dollars. F. Obligations are paid off with cash. 1. Record the journal entry that Amazon will make in 2004 for operating leases. (3 points) Account title Debit Credit Dr Rental Expense 51,498 Cr Cash 51,498 Look at the footnote for leases and commitments to find the future cash flows that relate to operating leases. Note 7-LEASES AND OTHER COMMITMENTS AND CONTINGENCIES We currently lease office and fulfillment center facilities and fixed assets under non-cancelable operating and capital leases. Rental expense under operating lease agreements for 2003, 2002, and 2001 was $52 million, $56 million, and $81 million. The following summarizes our principal contractual commitments, excluding open orders for inventory purchases to support normal operations as of December 31, 2003 (in thousands): 2004 2005 2006 2007 2008 Thereafter Total --------- --------- --------- --------- --------- ----------- ----------- Debt principal and 3,013 74 - - 246 1,931,160 1,934,493 other Debt interest 109,656 109,656 109,656 109,656 109,656 144,517 692,797 Capital leases 1,678 868 341 - - - 2,887 Operating leases (1) 51,498 43,323 42,391 39,100 38,181 131,040 345,533 - ------- - ------- - ------- - ------- - ------- - --------- - --------- Total commitments 165,845 153,921 152,388 148,756 148,083 2,206,717 2,975,710 - ------- - ------- - ------- - ------- - ------- - --------- - --------- 2. Record the journal entry that Amazon will make in 2004 for capital leases. (6 points) Account title Debit Credit Dr Current Portion of Capital Leases 1,558 Dr Interest Expense 120 Cr Cash 1,678 Dr Amortization Expense 23,700 Cr Accumulated Amortization 23,700
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This note was uploaded on 05/20/2010 for the course ACCT 101 taught by Professor Briancadman during the Spring '10 term at Penn College.

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Final-Solutions - NAME: STUDENT No.: RECITATION SECTION:...

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