Intermediate Accounting 2 Quiz 1

Only available on StudyMode
  • Download(s) : 118
  • Published : February 27, 2013
Open Document
Text Preview
ACCT 2410 QUIZ 1 Chapters 11 - 14 MASTER – V1 & V2

Name: __________________________ Student #:_________________ PLEASE PRINT

When you are finished please hand in your quiz at the front and QUIETLY leave the room.

Class will resume at 2:00//8:00 at which time we will review the solutions to the quiz and spend the balance of the time on a student directed review session.

Materials allowed–normal writing materials and approved non–programmable calculators that do not have "translator" capabilities.

Your work must be your own. Penalties for academic dishonesty are set out in Douglas College’s Educational Policy Academic Dishonesty

MARKS WILL BE DEDUCTED IF YOU:
* OPEN THIS QUIZ BEFORE YOU ARE TOLD TO BEGIN
* DO NOT STOP WHEN ASKED

Question| 1| 2| 3| 4| Total|
Marks available| 8| 7| 7| 8| 30|
Your score| | | | | |

1] Issuing bonds at a discount - V1

Really Really Cheap Vacations Ltd. issues $2,000,000 of five year, 5% bonds dated January 1, 20X5 on the issue date. Interest is payable on January 1 and July 1 each year. The proceeds realized from the issue were the $1,900,000 sales price less the $10,000 fee charged by Really's investment banker. Really's year end is December 31.

Required:

Prepare journal entries to record:

a. The issuance of the bonds

b. Payment of interest and related amortization on July 1, 20X5

c. Accrual of interest and related amortization on December 31, 20X5

COMPUTATIONS|

JOURNAL ENTRIES|
Date| Account| DR| CR|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |

1] Issuing bonds at a discount - V2

Really Really Cheap Vacations Ltd. issues $2,000,000 of five year, 5% bonds dated January 1, 20X5 on the issue date. Interest is payable on January 1 and July 1 each year. The proceeds realized from the issue were the $1,900,000 sales price less the $20,000 fee charged by Really's investment banker. Really's year end is December 31.

Required:

Prepare journal entries to record:

a. The issuance of the bonds

b. Payment of interest and related amortization on July 1, 20X5

c. Accrual of interest and related amortization on December 31, 20X5

COMPUTATIONS|

JOURNAL ENTRIES|
Date| Account| DR| CR|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |

2] Accounting for contingencies - A number of independent situations are set out below – V1

1. A former employee of Moncton Minimarket Inc. sued the company for $500,000 alleging that the company owner sexually harassed her. Moncton's lawyers suggest that the lawsuit has a 20 - 30% probability of success, and if successful that the plaintiff will be awarded between $100,000 and $200,000.

2. Humboldt Syringes Co. sued a competitor for $300,000 alleging corporate espionage. Humboldt's legal counsel believes that the company will be successful and will be awarded somewhere in the range of $250,000 - $300,000.

3. A customer sued Cache Creek Tractors Corp. for $100,000 for breach of contract. Cache Creek's solicitors advise that they will almost certainly be found liable. Based on previous results, council estimates that there is a 50% probability that the courts will award the $100,000 being sought; a 30% probability that $90,000 will be conferred; and a 20% probability that the judgement will be $80,000.

Required:

For each of the situations described how the event should be dealt with in the financial statements of the underlined company and explain why. Be succinct - no account will be taken of explanations that are not within the allotted space. Prepare all required...
tracking img