ADMS 3595 Study Guide - Interest Expense, Net Income

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Published on 14 Apr 2013
School
York University
Department
Course
Professor
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
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2011 2012
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)
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
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)
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Document Summary

Exam i (key) white version: 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) B=. 12(,000 b) b=36,000 - . 12b 1. 12b = 36,000 b=32,143 b. 10. a c expensed in 2011 when sale occurred to match revenue and expense. ,000: c (,000 x 1. 05) + (,000 x 0. 10 x 2/12) = 525,000 + 8,333 = 533,333, b ,500 x 0. 10 x 6/12 = 26925 versus 500,000 x 0. 12 x 6/12 or ,000 premium amort 3,075. ,000 . 06 = ,500: d (80,000 + 40,000 + 10,000) / 10,000 = 13, d ,000 + (20,000 15,000) = ,000, c ,000 + 5,000 6,000 = 59,000 current it payable equals expense. Opening ,000 + 59,000 expense tax paid = ,000 ending balance. 30. d ,000/ 30% = timing diff of ,000 asset; ,000 deprec + 140,000 = cca.