Accounting HW
kevin
quiz_8_-_chapter_10.docx
1. USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (3) QUESTIONS:
|
March 31 |
$260,000 |
|
June 1 |
$750,000 |
|
July 1 |
$1,300,000 |
|
Nov 1 |
$1,200,000 |
The building was completed on December 31, 2012. Additional information is provided below:
1. Other Debt consisted of a $4,000,000, 10-year, 12% bond with interest payable annually; and a $1,600,000,
6-year, 9% note with interest due annually. Both the Bond and Note were outstanding for all of 2012. (Note: When determining your average interest rate, round to two decimal places.
If your average interest is .14374, use 14.37%.)
Required:
a. Determine the original cost of the building (round your answer up to the nearest whole dollar): $[BLANK_1]
Answer
0.6667 points
Question 2
1.
Use the information presented in #1 above to answer the next question:
b. Determine Interest Expense for 2012 (round your answer to the nearest whole dollar): $[Blank_2]
Answer
0.6667 points
Question 3
1.
Using the information presented in #1 above, answer the following question:
c. If instead, ABC had only $200,000 of other debt outstanding inclurring interest at 12% APR, determine how much interest can be capitalized: $[Blank_3]
Answer
0.6666 points
Question 4
1.
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (3) QUESTIONS:
Lambert Co. acquired a machine on June 30, 2013 and gave the seller $20,000 cash down and a two year non-interest bearing note calling for four semi-annual payments of $25,000 each, with the first payment beginning on December 31, 2013. The prevailing rate of interest was 12% APR. Lambert recorded the purchase as follows:
|
Account Title |
Debit |
Credit |
|
Machine |
120,000 |
|
|
Note Payable |
|
100,000 |
|
Cash |
|
20,000 |
Lambert uses the straight-line method to depreciate its equipment with a 5-year life and no salvage. For the year ended December 31, 2013, the company reported Depreciation Expense of $12,000; Interest Expense of $0; and the balance in the note payable was $75,000. (The first cash payment was made as required on Dec. 31, 2013. The bookkeeper recorded the entire payment as principal reduction to the note.)
Required: Use the following information to help determine the errors, if any, on Lambert's financial statements for the year-ended December 31, 2013. State O for overstated; U for understated; or NE for No Effect. If there is an effect, state the O/U first, then the dollar amount. Do not space between the O/U and the dollar amount.
|
|
3% |
6% |
12% |
|
Present Value of Ordinary Annuity of $1 for 4 periods |
3.7171 |
3.4650 |
3.0373 |
|
Present Value of Ordinary Annuity of $1 for 8 periods |
7.0197 |
6.2098 |
4.9676 |
Complete the following: (Round your answers up to the nearest whole dollar)
|
As of December 31, 2013 |
||
|
Book Value of Machine |
Net Income |
Carrying Value of Note |
|
$____________________ |
$________________ |
$___________________ |
a. Determine the effect of this error on the Book Value of the Machine as reported on the December 31, 2013 Balance Sheet for Lambert Company. $[Blank_1]
Answer
1 points
Question 5
1.
Using the information presented in #4 above, answer the following:
b) Determine the effect of these errors on Net Income for the year ended December 31, 2013: $[Blank_2]
Answer
1 points
Question 6
1.
Using the information presented in #4 above, determine the following:
c) Determine the effect of the error on the Carrying Value of the Note Payable as of December 31, 2013: $[Blank_3]
Answer
1 points
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