(ACCT101)[2009](f)quiz~cswongab^_10005

# (ACCT101)[2009](f)quiz~cswongab^_10005 - C Dr Cash \$5,000...

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Version B Part I: Question answer Question answer Question answer Question answer 1 C 6 D 11 B 16 D 2 C 7 A 12 A 17 B 3 D 8 D 13 A 18 B 4 A 9 C 14 C 19 * 5 A 10 B 15 A 20 B *There is a typo in question 19. The question should be “Which of the following statements is true”. Only choice A is a correct statement. Because of the typo, you all get the 2 points for the question. Part II: 21. Recording depletion and depreciation. A. Computation of acquisition cost of the deposit in 2009: Purchase of mineral deposit \$ 1,400,000 Preparation costs 130,000 Total acquisition cost in \$ 1,530,000 Computation of depletion for 2009: \$1,530,000 cost 1,800,000 cubic yards = \$0.85 per cubic yard depletion rate 120,000 cubic yards in 2009 x \$0.85 = \$102,000 Journal entry: Dr. Inventory 102,000 Cr. Mineral deposit 102,000 B. YEAR Depreciation expense 2009 \$17,000 2010 \$ 8,500 2011 \$ 4,250 2012 \$ 250 Calculation: 2009 ¼ x 200% x \$34,000 = \$17,000 2010 ¼ x 200% x (\$34,000 - \$17,000) = \$8,500 2011 ¼ x 200% x (\$34,000 - \$25,500) = \$4,250 2012 Book value \$4,250 - \$4,000 target book value = \$250

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Unformatted text preview: C. Dr. Cash \$5,000 Accumulated depreciation 30,000 Cr. Gain on disposal \$1,000 Truck \$34,000 Problem 22: Lease liability and long-term bond A. This lease is a (an) Capital lease Supporting arguments: (1) PV of lease payments = \$1,120,000 * PV A F (10%, 6) = 1,120,000*4.3553 =\$4,877,936>\$5,4000,000*0.90=\$4,860,000 Or, (2) Since the purchase price of truck at the end of lease \$600,000 is significantly lower than the market value \$1,000,000, this represents a bargain purchase option and virtually guarantees that the leased asset will pass to the company at the end of the lease. B. Bond principal=6,000,000; Stated rate of 8%, so interest payment=6,000,000*0.04=240,000; Issue price =6,000,000*PVs(5%,20)+240,000*PVa(5%,20) = 6,000,000*0.3769+240,000*12.4622=2,261,400+2,990,928=5,252,328 Or 6,000,000*0.376889483+240,000*12.46221034=2,261,336.9+2,990,930.48=5,252,267.3 8, Journal entry: Dr. Cash \$5,252,328 Discount in bond issuance 747,672 Cr. Bond payable 6,000,000...
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## This note was uploaded on 03/01/2012 for the course ACCT 101 taught by Professor Acbsadf during the Spring '12 term at Minnesota.

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(ACCT101)[2009](f)quiz~cswongab^_10005 - C Dr Cash \$5,000...

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