AFM 101 Final Prof
University of Waterloo
Final Examination
Term: Fall
Student Name
Year: 2005
Solution
UW Student ID Number
Course Abbreviation and Number
AFM 101
Course Title
Core Concepts of Accounting Information
Section(s)
001, 002, 003, 004
Instructor
Duane Kennedy
Date of Exam
Wednesday, December 14, 2005
Time Period
Start time:
Duration of Exam
2.5 hours
Number of Exam Pages
(including this cover sheet)
25
Exam Type
Special Materials
Additional Materials Allowed
Cordless calculators may be used. The calculator must be standalone with no communication or data storage features.
4:00 pm
End time: 6:30 pm
Both the examination paper and multiple choice card must submitted.
Marking Scheme:
Question
1 (14 marks)
2 (10 marks)
3 (8 marks)
4 (4 marks)
5 (8 marks)
Score
Question
6 (8 marks)
7 (8 marks)
8 (12 marks)
9 (8 marks)
10 (35 marks)
Total score: 115 marks
Score
Question 1 (14 Marks)
Required:
Answer the following independent questions.
A)
King Limited issued $1,000,000, 10 percent, 10 year bonds dated July 1, 2005. Interest is paid semi-annually on June 30 and December 31. The issue price was $1,135,903 based on a market interest rate of 8 percent. The company uses the effective interest rate method of amortization. Complete the following table:
Date
July 1, 2005
Dec. 31, 2005
Interest
Payment
--$50,000
Interest
Expense
--$45,436.12
Amortization of
Discount or
Premium
--$4,563.88
Book Value
$1,135,903
$1,131,339.12
Interest Payment = $1,000,000 * 10% / 2 = $50,000
Interest Expense = $1,135,903 * 4% = $45,436.12
Amortization of Premium = $50,000 -45,436.12 = $4,563.88
Book Value = $1,135,903 - 4,563.88 = $1,131,339.12
B)
Columbia Corporation issued 3,000, 10 year bonds at 103 on November 1, 2005, which results in an effective interest rate of 8%. The bonds have a $1,000 face value and a 9% stated interest rate. Interest is payable annually on October 31. The company uses the straight-line amortization method. Record the payment of
Final Examination
Term: Fall
Student Name
Year: 2005
Solution
UW Student ID Number
Course Abbreviation and Number
AFM 101
Course Title
Core Concepts of Accounting Information
Section(s)
001, 002, 003, 004
Instructor
Duane Kennedy
Date of Exam
Wednesday, December 14, 2005
Time Period
Start time:
Duration of Exam
2.5 hours
Number of Exam Pages
(including this cover sheet)
25
Exam Type
Special Materials
Additional Materials Allowed
Cordless calculators may be used. The calculator must be standalone with no communication or data storage features.
4:00 pm
End time: 6:30 pm
Both the examination paper and multiple choice card must submitted.
Marking Scheme:
Question
1 (14 marks)
2 (10 marks)
3 (8 marks)
4 (4 marks)
5 (8 marks)
Score
Question
6 (8 marks)
7 (8 marks)
8 (12 marks)
9 (8 marks)
10 (35 marks)
Total score: 115 marks
Score
Question 1 (14 Marks)
Required:
Answer the following independent questions.
A)
King Limited issued $1,000,000, 10 percent, 10 year bonds dated July 1, 2005. Interest is paid semi-annually on June 30 and December 31. The issue price was $1,135,903 based on a market interest rate of 8 percent. The company uses the effective interest rate method of amortization. Complete the following table:
Date
July 1, 2005
Dec. 31, 2005
Interest
Payment
--$50,000
Interest
Expense
--$45,436.12
Amortization of
Discount or
Premium
--$4,563.88
Book Value
$1,135,903
$1,131,339.12
Interest Payment = $1,000,000 * 10% / 2 = $50,000
Interest Expense = $1,135,903 * 4% = $45,436.12
Amortization of Premium = $50,000 -45,436.12 = $4,563.88
Book Value = $1,135,903 - 4,563.88 = $1,131,339.12
B)
Columbia Corporation issued 3,000, 10 year bonds at 103 on November 1, 2005, which results in an effective interest rate of 8%. The bonds have a $1,000 face value and a 9% stated interest rate. Interest is payable annually on October 31. The company uses the straight-line amortization method. Record the payment of