讲解 Principles of Accounting II 2023-24 Semester 2 Assignment 2 – Question Paper讲解 R语言

2023-24 Semester 2

Principles of Accounting II

Assignment 2 – Question Paper

All students are expected to observe UIC’s academic honesty policy. Specifically, you are expected to complete this assignment on your own without copying the work from other student(s) and without allowing other student(s) to copy your work. Plagiarized work will receive zero mark (Please refer to “Guidelines for Handling Academic Dishonesty” for details).

AI-assisted Tools are generally prohibited. Using ChatGPT or other AI tools for CA (if detected through AI Detection Tool) will lead to partial deduction of the mark and work resubmission.

To complete the assignment, students are required to have textbook readings or self-study. Students should not just rely on the PPT.

Due Date: 4:00pm on Friday, 12 April 2024.

Late submission will not be accepted, and therefore will not be marked.

Please follow the instructions below:

1.   You must use Word file format to complete the assignment answers which are allowed for Turnitin and AI-assisted detection checks.

Submission in a format other than the above mentioned will NOT be accepted.

2.   Answers should be supported by workings/ detailed calculations where appropriate.

3.   Please submit a soft copy of your completed assignment to the drop-box on iSpace, AND hand in a hard copy of the completed assignment to the assistant instructor.

4.   File naming rule: Please name your file in the format as “your section number + your name + your student number”.

5.   Answer all TWO (2) questions. (Explanation/Description is not required for the journal entries)

6.   Show the question number and sub-question number clearly.

Question 1 (20 marks)

Part A

On January 1, 2022, East Pacific Enterprises issued 9%, 10-year bonds with a face amount of $1,350,000 for cash $1,265,880.  Interest is payable semiannually on June 30 and December 31.

The bonds were issued for an effective interest rate of 10%.

Required:

a.   Prepare an amortization table for the first 3 payment periods using the effective interest method in the following format (rounded to the nearest two decimal place):   (4 marks)

b.   Prepare the journal entry (without explanation) to record the issuance of the bonds on

January 1, 2022.                                                                                                      (3 marks)

c.   Prepare the journal entry (without explanation) to record the third interest payment on June

30, 2023.                                                                                                                 (3 marks)

d.   Describe four characteristics of the effective-interest method of accounting for bonds. (4 marks)

PART B (6 marks)

On January 1, a company borrowed $105,000 cash by signing a 9% installment note that is to be repaid with 4  annual year-end payments  of $32,410.50. While the  amount borrowed  equals $105,000, the total payments on this note amount to $129,642.

Required:

a)  What constitutes the difference between the amount borrowed and the total payments on the note amount?  How much for the difference?                      (3 marks)

b)  Describe how we record the difference throughout the life of installment note? (3 marks)

Question 2 (20 marks)

Rogers AG company had the following transactions and investments in securities during 2022.

a.    Jan. 1, 2022 Purchased  6%  $50,000 bonds  (face value)  of Driver Ltd.  for $51,500 with effective interest rate at 4.4%. The bonds were issued on Jan. 1, 2018, interest payable annually on Dec 31, and mature on Dec 31, 2023. The contractual cash flows of the bonds are solely payments of principal and interest, and the bonds are managed within a “business model” to collect contractual cash flows and to sell before maturity from time to time.

b.   Feb. 1, 2022 Purchased Jordy SA ordinary shares, $100 par value, 200 shares (1% of total Jordy SA shares) at $37,400. Rogers AG has no control or significant influence over Jordy SA and Rogers AG expects to sell these shares within the year.

c.    April 1, 2022 Purchased $100,000 5% Government bonds at $100,000 issued on April 1, 2022, interest payable on April 1 and October 1, and due on April 1, 2032. The contractual cash flows of the bonds are solely payments of principal and interest. The bonds are managed within a “business model” to collect contractual cash flows and intended to hold until maturity.

Required：

1. Classify each of the above a, b, and c investments into short-term or long-term, and also states it is under which type of the six investment types (i.e. Debt investments-AC, Debt investments-FVOCI, Debt investments-FVTPL,  Equity investments-FVTPL,  Equity investments-FVOCI, and Equity investments-equity method).     (3 marks)

2. Prepare the journal entry to record the purchases of Jordy SA ordinary shares assuming that the purchase was paid by cash.       (2 marks)

3. The fair values of the securities on December 31, 2022, were:

Prepare necessary fair value adjustment entries for the company’s investments at the year end? (6 marks)

Hint: For some debt securities investment, you may need working out year end carrying amount (amortized cost) before making fair value adjustment entry.

4.   What is the major difference in the accounting for portfolio ofFVOCI securities and portfolio of FVTPL securities？ (3 marks)

5.   Assuming Rogers has an equity investment in ABC Inc. representing 30% of ABC total issued shares since 1 Jan 2021. ABC Inc. reported net income of $30,000 for the year 2021. On March 31, 2022, ABC declared and paid dividends of $9,000.

Prepare relevant journal entries to account for the events/transactions reflecting Roger’s investment in ABC Inc. for the years of 2021 and 2022. (6 marks)