MAKEUP ASSIGNMENT

ADDITIONAL ASSIGNMENT - 10 QUESTIONS 1 . On November 1, 2020, France Corp. signed a three-month, zero-interest-bearing note for the purchase of $ 60,000 of inventory. The maturity value of the note was $ 60,600, based on the bank’s discount rate of 4%. The adjusting entry prepared on December 31, 2020 in connection with this note will include a a) debit to Note Payable for $ 400. b) credit to Note Payable for $ 400. c) debit to Interest Expense for $ 600. d) credit to Interest Expense for $ 200 2 On December 1, 2020, Ruby Ltd. borrowed $ 180,000 from their bank, by signing a four-month, 5% interest-bearing note. Assuming Ruby has a December 31 year end and does NOT use reversing entries, the journal entry to record payment of this note on April 1, 2021 will include a a) credit to Note Payable of $ 180,000. b) debit to Interest Expense of $ 3,000. c) debit to Interest Payable of $ 2,250. d) debit to Interest Payable of $ 750 3 On September 1, 2020, Coffee Ltd. issued a $ 1,800,000, 12% note to Humungous Bank, payable in three equal annual principal payments of $ 600,000. On this date, the bank's prime rate was 11%. The first payment for interest and principal was made on September 1, 2021. At December 31, 2021, Coffee should record accrued interest payable of a)$ 72,000. b)$ 66,000. c) $ 48,000. d)$ 44,000 4 On April 30, 2020, Canuck Oil Corp. purchased an oil tanker depot for $ 1,200,000 cash. The company expects to operate this depot for eight years, at which time they will be legally required to dismantle the structure and remove the underground storage tanks. Canuck Oil estimates this asset retirement obligation (ARO) will cost $ 200,000. Assuming a 5% discount rate, to the nearest dollar, the amount to be recorded as the ARO is a) $ 25,000. b) $ 135,368. c) $ 150,000. d) $ 295,491.

5 Robertson Corp. uses the revenue approach to account for warranties. During 2020, the company sold $ 750,000 worth of products, all of which carried a two-year warranty (included in the price). It was estimated that 2% of the selling price represented the warranty portion, and that 40% of this related to 2020, and 60% to 2021. Assuming that Robertson incurred costs of $ 5.500 to service the warranties in 2021, what is the net warranty revenue (revenue minus warranty costs) for 2021? a) $ 3,500 b) $ 9,500 c) $ 5,500 d) $ 9,000 6 Lee Kim Inc.'s most recent statement of financial position includes Cash .................................................. $ 7,500 Accounts receivable ........................... 10,000 Inventory ........................................... 13,300 Plant and equipment (net) ................. 73,700 Accounts payable .............................. 14,000 Long-term bonds payable .................. 50,000 Common shares ................................. 20,000 Retained earnings .............................. 20,500 To two decimals, Lee Kim Inc. has a current ratio of a).27. b).48. c) 1.63. d) 2.20 7 Mishin Corp. issues a $ 250,000, three-month zero-interest-bearing note payable to Hanson Bank on May 1, 2020. The note has a present value of $ 246,305 based on the bank’s discount rate of 6%. Instructions Prepare the journal entry to record the cash received by Mishin on May 1, the entry to record interest expense at the company’s July 31 year-end and the entry at maturity of the note Date DR CR May 1 2020 250,000 250,000 July 31 2020 3,750 3,750 Description Cash Interest Payable (Record Cash received by Mishni) Interest Expense Notes Payable

10 a) 38,772 b) 30,000 c) 32,218 d) 32,310 On January 1, 2017, Foley Co. sold 12% bonds with a face value of $300,000. The bonds mature in interest is paid semiannually on June 30 and December 31. The bonds were sold for $323,100 to y effective-interest method of amortization, interest expense for 2017 is approximately:

n five years, and yield 10%. Using the