acct 331 study guide

ALL INFORMATION RELEVANT TO ANSWERING THE PROBLEMS IS FOUND ON THE LAST PAGE OF THE SAMPLE EXAM.

PROBLEM 1 (20 POINTS)
1. Compute the issue price of the bonds on January 1, 2010. (3 points)

2. Complete the amortization schedule below for the dates indicated. (3 points)

DATE
CASH INTEREST
EXPENSE
AMORTIZATION
BOOK VALUE
1/1/10
12/31/10

3. Prepare all necessary journal entries, from issuance through the January 1, 2011 bond retirement. (14 points)
Date Account Debit Credit

PROBLEM 2 (10 POINTS)
Prepare a schedule (i.e. a logical, well organized and labeled arrangement of the data) computing the gain and/or loss to be recorded by Indiana News and by Second City Bank (be sure to indicate whether each of your answers is a gain or a loss).

PROBLEM 3 (25 POINTS)
1. Prepare journal entries for the 2010 owners’ equity transactions. (15 points)
2. Prepare the 2010 owners’ equity section of the balance sheet IN GOOD FORM (including appropriate description where necessary. (10 points)
DATE ACCOUNT DEBIT CREDIT

Owner’s Equity
As of December 31, 2010

PROBLEM 4 (20 POINTS)

1. Compute Basic EPS (show computations): (5 points)

2. Identify whether either (or both) the preferred stock and bonds are potentially dilutive. Support your answer with computations. (10 points)

3. Compute Diluted EPS. (5 points)

PROBLEM 5 (25 POINTS)
1. Prepare all 2010 entries for each of the securities (provide calculations). (20 points)
Smith Date Account Debit Credit
Bonds

Wang Date Account Debit Credit