midterm_f2009_solution

Midterm_f2009_soluti - UNIVERSITY OF WATERLOO School of Accounting and Finance AFM 101 Professor Duane Kennedy Professor Mindy Wolfe Professor

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UNIVERSITY OF WATERLOO School of Accounting and Finance AFM 101 Professor Duane Kennedy Professor Mindy Wolfe Professor Catherine Wong Mid-Term Examination Fall 2009 Date and Time: October 22, 2009, 7:15 – 8:45pm Pages: 16, including cover Name: __ Solution ___________ Student Number: ___________ Tutorial Number and Time: ___________________ Instructions: 1) Cordless calculators may be used. The calculator must be standalone with no other communication or data storage features. 2) Answers for the multiple-choice questions must be recorded on the UW answer card. All other questions must be answered in the space provided on the examination paper. Answers written outside of the provided space will not be graded. You must submit both this examination paper and the UW answer card. 3) Show details of all calculations. 4) The final page of the examination contains a list of ratios. For your convenience, this page may be detached from the examination paper. 5) Please verify that this examination paper has the appropriate number of pages. Question Maximum Marks Mark Awarded 1 12 2 14 3 14 4 8 5 27 Total 75
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Question 1 (12 Marks) Wier Corporation provides catering services for small businesses. The following alphabetical listing shows all of the account balances taken from the unadjusted trial balance at the end of the fiscal year. All account balances have the usual sign. Wier Corporation Unadjusted Trial Balance December 31, 2009 Accounts Payable $ 4,600 Accounts Receivable 7,800 Accumulated Amortization, Building 24,000 Accumulated Amortization, Equipment 16,700 Advertising Expense 22,200 Building 180,000 Capital Stock 110,000 Cash 15,100 Equipment 56,500 Interest Expense 8,250 Inventory 42,700 Land 198,900 Mortgage Payable 150,000 Operating Expenses 57,700 Retained Earnings (as at Dec 31, 2008) 130,150 Revenue 260,500 Salaries Expense 121,900 Unearned Revenue 15,100 Required: Provide the adjusting entries required at December 31, 2009. You do not need to include explanations. Answers must appear in the space provided. A) The mortgage payable was borrowed on September 1, 2005 and must be repaid in ten years. The note has an 8% interest rate and interest is paid in equal amounts on February 28 and August 31. Interest Expense $4,000 Interest Payable $4,000 $150,000 * 8% * 4/12 2
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B) The equipment has an estimated life of 10 years with an expected salvage value of $5,000. The company uses straight-line amortization. Amortization Expense $5,150 Accumulated Amortization $5,150 ($56,500 – 5,000) / 10 years C) Wier Corporation provided catering services during the last week of December to customers who had paid in advance. The customers payments had been recorded as Unearned Revenue. These catering services had an invoice price of $1,500. Unearned Revenue
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This note was uploaded on 12/02/2010 for the course AFM 20220098 taught by Professor Sproule during the Fall '09 term at Waterloo.

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Midterm_f2009_soluti - UNIVERSITY OF WATERLOO School of Accounting and Finance AFM 101 Professor Duane Kennedy Professor Mindy Wolfe Professor

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