FACULTY OF ECONOMIC AND ADMINISTRATIVE SCIENCES
DEPARTMENT OF MANAGEMENT & DEPARTMENT OF ECONOMICS
MAN 202 PRINCIPLES OF ACCOUNTING II
MIDTERM EXAM II
Instructor: Ali
COSKUN
Duration: 90 Minutes May 11, 2004
Question 1. On April 30,
2004, Sunset Company incurred a 3-year $125,787 mortgage liability in conjunction
with the purchase of an office. This mortgage is payable in monthly
installments of $4,000, which include interest computed at the rate of % 9 per
year (% 0.75 per month). The first monthly payment will be made on May 31,
2004. This mortgage is fully amortizing over 36 months.
Required
a) Prepare a partial amortization table
showing the original balance of this loan, and the allocation of the first two
monthly payments between interest expense and reduction in the unpaid balance.
b) Prepare the journal entry to record the
second monthly payment.
Question 2. Turan Corporation
is a merchandising company that sells furniture. The company uses a perpetual
inventory system. The following are some of the transactions held by the
company during September 2003. (figures are in millions)
Sep. 1. Purchased inventory on account for a total cost of 5,900
TL. % 18 V.A.T. was included in the price.
Sep. 10. Sold inventory for cash.
Sales price was 3,000 TL plus %18 V.A.T. These inventory’s
original cost was 2,000 TL.
Required
Question 3. An
employee of HAS Corporation had a gross salary of 1,400,000,000 TL for January
2004. Use the flowing rates in
preparation of payroll:
Social Security Insurance
Premium Employer’s Share is 19.5 % of gross salary
Unemployment Insurance
Premium Employer’s Share is 2 % of gross salary
Social Security Insurance
Premium Employee’s Share is 14 % of gross salary
Unemployment Insurance
Premium Employee’s Share is 1 % of gross salary
Stamp Duty is 0.6 % of gross
salary
Income Tax Rate is 15 % of
tax base (for less than 6 billion TL in 2004)
Required
a) Prepare
payroll table of the employee for January 2004.
b) Make end of
the month adjusting entry to recognize the payroll liabilities related to
employee.
Question 4. Early in 2002, Starbox,
Inc. was organized with authorization to issue 20,000 shares of $40 par value
preferred stock and 150,000 shares of $2 par value common stock. Ten thousand shares of the preferred stock
were issued at par, and 80,000 shares of common stock were sold of $15 per
share. The preferred stock pays a 7%
cumulative dividend.
During
the first two years of operations (2002 and 2003), the corporation earned a
total of $ 700,000 and paid dividends of 50 cents per share in each year on its
outstanding common stock.
Required
Question
5. Prepare the
Journal entries for the following transactions in June 2004:
June 10. Windy Transportation traded – in an old truck
for a new one. The old truck had cost $80,000, and accumulated depreciation
amounted to $45,000. The list price of the new truck was 120,000; Windy
received a $25,000 trade – in allowance for the old truck and paid the $95,000
balance in cash.
June 30. Windy Transportation sold a truck that
originally cost $100,000 for $25,000 cash. The machine was placed in service on
January 1, 1996. It has been depreciated
using the straight-line method with an estimated salvage value of $10,000 and
an estimated useful life of 10 years.
Question
6. On September 1,
2000, Jared Associates borrowed $300,000 from Hometown Credit Union and signed
a 14%, one-year note payable, all due at maturity.
(a) How much is the amount Jared must pay on September 1, 2001, when the
note matures?
(b) How much Jared Associates' liability to the credit union at
December 31, 2000?