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Unformatted text preview: ACCT 320 Exam II: Additional Review Problems Notes Receivable Using the Effective Interest Method On January 1, 2008, Jet Company made a loan to Smith Company. The face value of the three-year loan was $100,000 and it had a 12% stated rate of interest. The loan was issued at $104,974 to yield 10%. Interest is received annually on December 31. 1. How much cash interest will be received at the end of the first year? 2. What is the carrying value of the loan at 12/31/09? 3. How much interest income will be earned in 2010? 4. How much interest income will be recognized over the life of the bond? Inventory Errors Determine the 2010 financial statement impacts of the following inventory errors made by Dwight Company. Assume Dwight uses a periodic inventory system: 1. Goods purchased costing $22,000 were shipped f.o.b. shipping point by a supplier on December 28. Dwight received and recorded the invoice on December 29, 2010, but the goods were not included in Dwight's physical count of inventory because they were not received until January 4,...
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This note was uploaded on 11/22/2010 for the course ACCT 320 taught by Professor Alee during the Spring '10 term at Kansas State University.
- Spring '10