101 Final exams master - These are former final exams collected into one document for easier access Writing space reduced for more efficient

101 Final exams master - These are former final exams...

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These are former final exams collected into one document for easier access. Writing space reduced for more efficient reviewing……Merle O13FinalversionA FALL 2001 FINAL BUAD 250a version A Accounting for Property, Plant and Equipment : [1a]The Stephen Company purchased a new telephone system on February 28 in Year 1. The telephone system was delivered on March 1 in Year 1 and was installed on May 1. The firm had accepted the extended payment terms offered by the manufacturer and Stephen was obligated to pay $400,000 on March 1 in Year 2. Stephen could have elected to pay $380,000 for the printing press on March 1 in Year 1. Installation costs for the telephone system were $20,000 for special wiring required for the telephone system and $10,000 for the training of the firm’s employees to use the new equipment. The firm began to use the new telephone system on June 1 in Year 1. The estimated life and estimated salvage value of the telephone system were 4 years and $100,000, respectively. The cost recovery period for MACRS depreciation method is three (3) years.Required: Determine the proper values for the following : THIS TOPIC IS NO LONGER TESTED ON THE FINAL EXAM…MERLE 1.Tax accounting Depreciation Expense for Year 1 using Double-Declining Balance [MACRS] $______________2.Tax accounting Depreciation Expense for Year 2 using Double-Declining Balance [MACRS] $______________Accounting for Property, Plant and Equipment (continued):[1a]3.Financial accounting Depreciation Expense for Year 1 using Double-Declining Balance $______________4.Financial accounting Depreciation Expense for Year 2 using Double-Declining Balance $______________Accounting for Liabilities:[2a] O13FinalThe Edith Company needs to borrow about $1,850,000 on December 31, 2001. The firm is considering two options: issuing bonds and signing a long-term note payable. The firm will pursue only one of the options. Selected data are presented below related to each of the options under consideration.Bonds: The firm would issue 2,000 bonds [face value of $1,000 each] with a coupon rate of 9%. The market rate of interest for these bonds would be 10% and the bonds would be due on December 31, 2016. The bonds would pay interest semi-annually on June 30 and December 31.Note Payable:The firm would sign a Note Payable on December 31, 2001 when borrowing $1,850,000. The note would require equal semi-annual payments for ten years
at which time the entire amount of the loan would be repaid [principal and interest]. The payments would occur semi-annually on June 30 and December 31. The interest rate on the loan would be 8%.Required:1.Determine the Interest Expense for 2002 for each of the options under consideration.$____________ Interest Expense for 2002 [from issuing bonds on December 31, 2001]$____________ Interest Expense for 2002 [from signing a Note Payable on December 31, 2001]Accounting for Liabilities (continued):[2a] O13Final2.Determine the Cash that would need to be paid out in 2003 under both options.$____________ Cash payments in 2003 from issuing Bonds Payable on December 31, 2001.$____________ Cash payments in 2003 from signing the Note Payable on December 31, 2001.3.Determine the carrying value on June 30, 2007 [after the proper payment had been

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