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Accounting Practice Exam Ch. 13-15

Accounting Practice Exam Ch. 13-15 - Practice Exam Chapters...

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Practice Exam, Chapters 13-15 Practice Exam, Chapters 13-15 Shea Industries, a dental supplies facilitator, borrowed $480,000 cash on October 1, 2013. West Bank made the loan in accordance with a short-term revolving credit agreement. Shea issued a 7-month, 12% promissory note with interest payable at maturity. Shea’s fiscal period is the calendar year. Required: 1. Prepare the journal entry for the issuance of the note by Shea Industries. Show calculations. 2. Prepare the appropriate adjusting entry for the note by Shea Industries on December 31, 2013. Show calculations. 3. Prepare the journal entry for the payment of the note by Shea at maturity. Show calculations. Kelly Industries issued 11% bonds, dated January 1, with a face value of $100 million on January 1, 2013. The bonds mature in 2018 (10 years). Interest is paid semiannually on June 30 and December 31. For bonds of similar risk and maturity the market yield is 12%. On December 31, 2013, the fair value of the bonds was $95,000,000 as determined by their market value in the over-the-counter market. Required: 1. Determine the price of the bonds at January 1, 2013. Show calculations. Problem I Problem II
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2. Prepare the journal entry to record their issuance by Kelly Industries on January 1, 2013. 3. Prepare the journal entry to record interest on June 30, 2013 (at the effective rate). [You are not required to prepare an amortization schedule.] Show calculations. 4. Prepare the journal entry to record interest on December 31, 2013 (at the effective rate). [You are not required to prepare an amortization schedule.] Show calculations. 5. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2013, balance sheet. Show calculations . Gold Plate Electronics sells and leases business equipment to customers. On January 1, 2013, Gold Plate leased a computer to a local merchandiser. The lease agreement required quarterly payments of $800
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