NORTHERN VIRGINIA COMMUNITY COLLEGE
Business and Social Science Division
Woodbridge
Campus
Campus
Principles of Accounting II
Exam 2 (Chapters 14, 15, and 16)
Professor Kymberly
Polser NAME:
Polser NAME:
1. West, Inc. issued $2,000,000 par value, 8%, 5 year bonds on January 1, 2012. Interest is to be paid semiannually on June
30 and December 31. The market value at
the time the bonds were sold was 10% annual return. The company uses the interest method of
amortization. (25 pts.)
30 and December 31. The market value at
the time the bonds were sold was 10% annual return. The company uses the interest method of
amortization. (25 pts.)
a. Calculate the issue price of the bonds using the
following Present Value factors, you can round your answer to the nearest whole
dollar. (Hint: Calculate the present value of the bond par value and the present
value of the interest payments to get the total present value – the amount the
bonds can be issued for!):
b. Using the issue price from
(a), prepare an amortization schedule for the first three payment periods using the format shown below. Round all amounts to the nearest whole
dollar.
(a), prepare an amortization schedule for the first three payment periods using the format shown below. Round all amounts to the nearest whole
dollar.
c. Prepare the journal entry
necessary when the first interest payment is made on June 30, 2012.
necessary when the first interest payment is made on June 30, 2012.
1. Haladam Company had the following transactions relating to
investments during the year. Prepare the
required general journal entries for these transactions. (20 points)
investments during the year. Prepare the
required general journal entries for these transactions. (20 points)
2. Wiffery Company had the following available-for-sale
securities in its portfolio at December 31.
The Fair Value Adjustment – Available-for-Sale account had a balance of
zero prior to year-end adjustment. Prepare the appropriate adjusting journal
entry. (10 points)
securities in its portfolio at December 31.
The Fair Value Adjustment – Available-for-Sale account had a balance of
zero prior to year-end adjustment. Prepare the appropriate adjusting journal
entry. (10 points)
6. The following information is available for
the Ehrens Corporation (45 points
the Ehrens Corporation (45 points
Additional
information:
information:
(1) Investments
were sold for $500 cash.
were sold for $500 cash.
(2) Bonds were
retired at a cost of $17,250.
retired at a cost of $17,250.
(3) Old
equipment with an original cost of $37,550 was sold for $2,100 cash.
equipment with an original cost of $37,550 was sold for $2,100 cash.
(4) New
equipment was purchased for $67,550 cash.
equipment was purchased for $67,550 cash.
(5) Cash dividends
of $33,600 were paid.
of $33,600 were paid.
(6) Additional
shares of stock were issued for $25,000 cash.
shares of stock were issued for $25,000 cash.
Prepare a complete
statement of cash flows for calendar-year 2009 using the indirect method.
statement of cash flows for calendar-year 2009 using the indirect method.
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