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ACCT 301B Fall 2008 Midterm A Answers

# ACCT 301B Fall 2008 Midterm A Answers - ACCT 301B Fall 2008...

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ACCT 301B Fall 2008 Midterm A Answers 1 Given: Retail sales tax % 6% Retailer keeps % of sales taxes collected 3% Sales (including sales taxes) 148,400 Find: sales tax payable to nearest dollar Answer: Sales (before sales taxes) \$140,000.00 Sales taxes \$8,400.00 Sales tax payable \$8,148.00 2 Given: Redemption cost 2007 \$2,500,000.00 Percentage will be redeemed 90% Liability for redemptions 2005 \$7,500,000.00 Redemption cost 2006 \$3,400,000.00 Find: Liability for stamp redemption Answer: \$6,350,000.00 3 Given: Face value of bonds \$600,000.00 Stated annual interest rate 8% Bonds sold for \$553,600 Effective annual interest rate 10% Times per year interest paid 2.00 Find: interest expense, effective-interest method Answer: First six months \$27,680.00 Second six months \$27,864.00 \$55,544.00 4 Given: Face value of bonds \$10,000,000.00 Stated annual interest rate 8.00% Times per year interest paid 2 Bonds issued at 96.00 Bonds called \$7,000,000.00 Bonds called at 102.00 Percentage of time to maturity at call 0.37 Find: gain or loss Answer: Original carrying value of bonds \$9,600,000.00 Original discount \$400,000.00 Percentage of bonds called 70.00% Carrying value of bonds \$6,822,666.67 Amount paid for bonds \$7,140,000.00 Loss on call of bonds -\$317,333.33
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