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Intermed%20B%20MidTerm%20Practice%20Set - UCSD Management...

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UCSD Management 131B Intermediate Accounting Spring 2010 Quarter Mid-Term Practice Set Exam Covers Chapters 13-17 Note to Students: The purpose of this document is to provide examples of the types of problems/questions that will be on the mid-term May 3 rd . This is a practice set only – not timed to fit the 80 minute length of the class. Solutions to these will be posted 4/26 or 4/27 1. Glaus Corp. signed a three-month, zero-interest-bearing note on November 1, 2010 for the purchase of $150,000 of inventory. The face value of the note was $152,205. Assuming Glaus used a “Discount on Note Payable” account to initially record the note and that the discount will be amortized equally over the 3-month period, the adjusting entry made at December 31, 2010 will include a a. debit to Discount on Note Payable for $735. b. debit to Interest Expense for $1,470. c. credit to Discount on Note Payable for $735. d. credit to Interest Expense for $1,470. 2. A company gives each of its 50 employees (assume they were all employed continuously through 2010 and 2011) 12 days of vacation a year if they are employed at the end of the year. The vacation accumulates and may be taken starting January 1 of the next year. The employees work 8 hours per day. In 2010, they made $17.50 per hour and in 2011 they made $20 per hour. During 2011, they took an average of 9 days of vacation each. The company’s policy is to record the liability existing at the end of each year at the wage rate for that year. What amount of vacation liability would be reflected on the 2010 and 2011 balance sheets, respectively?
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3. Miley Equipment Company sells computers for $1,500 each and also gives each customer a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2010, the company sold 700 computers. Based on past experience, the company has estimated the total 2-year warranty costs as $30 for parts and $60 for labor. (Assume sales all occur at December 31, 2010.) In 2011, Miley incurred actual warranty costs relative to 2010 computer sales of $10,000 for parts and $18,000 for labor.
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