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38 Cards in this Set
- Front
- Back
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Future Value of a Single Sum |
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Present Value of a Single Sum |
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Future Value of an Annuity |
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Present Value of an Annuity |
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Present Value of a Perpetuity |
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Company borrows $400,000 on 12/31/2010 with a 10% annual interest rate, a 10 year term payed semiannually. What is the original entry? |
DR. Cash $400,000 CR. Loan Payable $400,000 |
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Company borrows $400,000 on 12/31/2010 with a 10% annual interest rate, a 10 year term payed semiannually. What is the payment that must be made every six months? |
PVA = $400,000 N= 10(2)= 20 I= 10%/2= 5% PMT = ? = $32,097 |
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Company borrows $400,000 on 12/31/2010 with a 10% annual interest rate, a 10 year term payed semiannually. What is the entry made on 6/30/2011? |
DR. Interest Expense $20,000 DR. Loan Payable $12,097 Cr. Cash $32,097 |
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Company borrows $400,000 on 12/31/2010 with 10% annual interest rate, a 10 year term payed semiannually. What is the entry made on 12/31/2011? |
DR. Interest Expense $19,395 DR. Loan Payable $12,702 CR. Cash $32,097 |
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Company borrows $400,000 on 12/31/2010 with 10% annual interest rate, a 10 year term payed semiannually. What is the entry made on 06/30/2012? |
DR. Interest Expense $18,760 DR. Loan Payable $13,337 CR. Cash $32,097 |
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$20 million par; 8% coupon rate; 8% market rate; 8 year to maturity; semiannually payed. What is the entry made when bonds are issued? |
DR. Cash $20,000,000 CR. Bonds Payable $20,000,000 |
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$20 million par; 8% coupon rate; 8% market rate; 8 year to maturity; semiannually payed. What is entry made for each interest payment after issuance? |
DR. Interest Expense $800,000 CR. Cash $800,000 |
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$20 million par; 8% coupon rate; 8% market rate; 8 year to maturity; semiannually payed. What is entry made when bonds reach the maturity date? |
DR. Bonds Payable $20,000,000 CR. Cash $20,000,000 |
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$20 million par; 8% coupon; 10% market rate; 8 year to maturity; semiannually payed. What is entry made when bonds are issued? |
DR. Cash $17,832,446 CR. Bonds Payable $17,832,446 |
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$20 million par; 8% coupon; 10% market rate; 8 year to maturity; semiannually payed. What is entry made at first interest payment? |
DR. Interest Expense $891,622 (17,832,446 x 5%) CR. Cash $800,000 (par value x 0.04) CR. Bonds Payable $91,622 (difference) Balance Sheet--> Bonds Payable = $17,924,068 ($17,832,446 + 91,622) |
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$20 million par; 8% coupon; 10% market rate; 8 year to maturity; semiannually payed. What is entry made at second interest payment? |
DR. Interest Expense $896,203 (17,924,068 x 5%) CR. Cash $800,000 CR. Bonds Payable $96,203 Balance Sheet--> Bonds Payable $18,020,271 ($17,924,068 +96,203) |
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If coupon rate < market rate, then proceeds are ________ than par |
less than |
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When the bond is issued at a discount, interest expense and bonds payable _____________ over time so that the amount repaid on the maturity date is $20,000,000 |
increase |
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$20 million par; 10% coupon; 8% market rate; 8 years to maturity; semiannually payed. What is the entry made when the bonds are issued? |
DR. Cash $22,330,459 CR. Bonds Payable $22,330,459 |
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$20 million par; 10% coupon; 8% market rate; 8 years to maturity; semiannually payed. What is the entry made at first interest payment? |
DR. Interest Expense $893,218 (22,330,459 x 4%) CR. Cash $1,000,000 (par value x 0.05) DR. Bonds Payable $106,782 (difference Balance Sheet--> Bonds Payable = $22,223,677 (22,330,459 - 106,782)
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$20 million par; 10% coupon; 8% market rate; 8 years to maturity; semiannually payed. What is the entry made at second interest payment? |
DR. Interest Expense $888,947 CR. Cash $1,000,000 DR. Bonds Payable $111,053 Balance Sheet--> Bonds Payable $22,112,624 (22,223,677 - 111,053) |
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If coupon rate > market rate, then proceeds are ___________ than par |
greater than |
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When the bond is issued at a premium, interest expense and bonds payable _______________ over time so that amount repaid on the maturity date is $20,000,000 |
decrease |
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At the beginning of 2012, a company entered into lease agreement. Semiannual lease payment is $85,000 to be paid for 9 years. Company recently borrowed money from a bank for the same period of time at an annual rate of 10%. What entry would be made at inception of lease if it was an operating lease? capital lease? |
Operating Lease: no entry required Capital Lease: DR. Leased PPE 993,615 CR. Liability for Leased PPE 993,615
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Entry made on June 30th, 2012 for lease agreement. Operating Lease? Capital Lease? |
Operating Lease: DR. Rent Expense $85,000 CR. Cash $85,000 Capital Lease: DR. Interest Expense $49,681 DR. Liability for Leased PPE $35,319 CR. Cash $85,000
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Assume company records all depreciation expense at end of year using straight line depreciation with zero salvage value. What are all the entries required on December 31, 2012 if lease is Operating lease? Capital Lease? |
Operating Lease: DR. Rent Expense $85,000 CR. Cash $85,000 Capital Lease: DR. Interest Expense $47,915 DR. Liability for Leased PPE $37,085 CR. Cash $85,000 DR. Depreciation Expense $110,402 CR. Accumulated Deprec Leased PPE 110,402 |
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Statement of Cash Flows Based on Accounting Equation |
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Direct Method of Cash Flow from Operating Activities |
Cash received from customers - cash paid to suppliers-cash paid for wages- cash paid for advertising- cash paid for insurance, etc. |
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Indirect Method of Cash Flow from Operating Activities |
Net Income + non cash deductions (depreciation, amortization, losses) - non-cash additions (gains) +/- change in current assets or liabilities |
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Cash Flow from Investing Activities |
Cash received from sale of tangible/intangible long term assets - Cash paid to purchase tangible/intangible long term assets |
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Cash Flow from Financing Activities |
Cash received from issuance of debt + Cash received from issuance of common stock - cash paid to retire debt - cash paid to acquire treasury stock - cash paid as dividends |
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Cash received from customers |
Sales - change in non cash assets + change in liabilities - bad debt expense |
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Cash paid to suppliers |
cost of goods sold - change in non cash assets + change in liabilities |
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Cash paid to employers |
Wage expense + change in liabilities |
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True or False: Depreciation (and/or amortization) expense is ignored when the direct methods used; gains and losses are also ignored when direct method is used. |
TRUE |
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For indirect method, an increase in assets = a __________ in cash flow |
decrease |
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For indirect method, an increase in liabilities = a __________ in cash flow |
increase |
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Differences between USGAAP and IFRS for Dividends Received, Interest Received, Interest Paid, and Dividends Paid. |
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