ADMS 3595, Intermediate Accounting II
Winter 2012
EXAM I (KEY) – White Version
I. MC Answer (30 @ 2 = 60 points)
1 .(c) 2.(a) 3.(b) 4.(d) 5.(c) 6.(a) 7.(d) 8.(b) 9.(a) 10.(C)
11.( a) 12.(c)13.(b)14.(c)15.(b)16.(a)17.(a)18.(b)19.(d) 20.(b)
21.(d) 22.(c)23.(a)24.(d)25.(d)26.(b)27.(a)28.(c)29.(b) 30.(d )
8. b B=.12($300,000 – B) B=36,000 - .12B 1.12B = 36,000 B=32,143
9. a expensed in 2011 when sale occurred to match revenue and expense.
$4,000 + $75,000 + $61,000
10. c ————————————— = 1.75
$80,000
14. c ($500,000 x 1.05) + ($500,000 x 0.10 x 2/12) = 525,000 + 8,333 = 533,333
15. b $538,500 X 0.10 X 6/12 = 26925 versus 500,000 x 0.12 x 6/12 or $30,000
premium amort 3,075. 538,500 less 3,075= 535,425.
535,425 x 0.10 x 6/12 = 26,771. 26,925 + 26,771 = 53,696
18. b $435,000 – ($720,000 – $345,000) = $60,000.
19. d ($900,000 + $90,000) – ($435,000 + $375,000) = $180,000.
20. b $375,000 × .06 = $22,500.
21. d (80,000 + 40,000 + 10,000) / 10,000 = 13
25. d $85,000 + (20,000 – 15,000) = $90,000
28. c $60,000 + 5,000 – 6,000 = 59,000 current IT payable equals expense
Opening $21,000 + 59,000 expense – tax paid = $23,000 ending balance
Tax paid = $57,000
30. d $42,000/ 30% = timing diff of $140,000 asset; $700,000 deprec + 140,000 = CCA II. Customer Premiums (11 Points)
2011 2012
Premium Expense *8,250 1,575**
Estimated Liability for Premiums 8,250 1,575
*[(1,050,000 x .80) – 510,000] ÷ 100 × $2.50
(4 marks- 2 marks for each year)
Estimated Liability for Premiums 8,250
Premium Expense [(510,000 ÷ 100) x ($7.50 – $5)] 12,750 23,625*
Cash (510,000 ÷ 100) × $5 25,500 63,750**
Inventory of Premium Posters and DVDs 38,250 95,625
——*[(1,275,000 ÷ 100) x (7.50 - $5)] – 8,250
**(1,275,000 ÷ 100) x $5
(7 marks – 1 mark for each account for each year)
OR:
2011 2012
Premium Expense 21,000* 25,200**
Estimated Liability for Premiums 21,000 25,200
*[(1,050,000 x .80)] /100 × $2.50
**[(1,260,000 x .80)] /100 x $2.50
(4 marks- 2 marks for each year)
Estimated Liability for Premiums (510,000/100x2.50) 12,750 31,875*
Cash [(510,000 ÷ 100) × $5] 25,500 63,750**
Inventory of Premium Posters and DVDs 38,250* 95,625***
[(510,000 ÷ 100) × $7.50]
____
*[(1,275,000/100) x $2.50]
**[(1,275,000/100) x $5]
***[(1,275,000/100) x $7.50]
(7 marks – 1 mark for each account for each year except for the “estimated liability for
premiums” account in 2012 that is worth 2 points) III. Bonds Payable (14 points)
Interest Interest
Payment expense Premium Carrying
Year (5%) (4%) Amortization Value
Jul 1/11 454,361
Jan 1/12 20,000 18,174 1,826 452,535
Jul 1/12 20,000 18,101 1,899 450,636
Jan 1/13 20,000 18,025 1,975 448,661
(a) Cash…………………………………………………… 454,361
Bonds Payable.........................................................454,361
(b) Interest Expense..............................................18,174...........
Bonds Payable.....................
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