Choose the best answer for each of the following questions by writing the identifying letter on your response next to the question number.

Show all calculations for full marks.

1. The Merchandise Inventory for Year 1 was $50,000 and for Year 2 was $47,000. The Accounts Payable account for Year 1 was $20,000 and for Year 2 was $21.000. Cost Of goods sold for Year 2 was $180,000. What was the total amount for cash payments for merchandise for Year 2?

a. $176,000 b. $178,000 c. $182.000 d. $184,000

2. SJ Corporation, a Canadian corporation has a December 31 year-end. On January 1, Year 3, it borrowed US $2,000,000 from an American bank. The loan is scheduled to be repaid on December 31, Year 7. Interest of 10% is paid annually on December 31. The following exchange rates were observed during Year 3 and Year 4:

January 1 , Year 3 : US $1= C$ 1.39

Average Year 3 : US $1= C$ 1.37

December 31, Year 3 : US $1= C$ 1.36

Average Year 4 : US $1= C$ 1.38

Decernber 31 , Year 4 : US $1= C$ 1.40

How much foreign exchange gain or loss would be recognized on the Income Statement at December 31, Year 4?

a. $0

b. $80,000 loss

c. $4,000 loss

d. $84,000 loss

3. Presented below is information related to Kiwi Ltd. for calendar Year 7, The corporation uses IFRS.

Denned benefit obligation, Jan 1 = $720,000

The fair value of plan assets, Jan 1 = 700,000

Current service cost = 90,000

Contribution to plan = 125,000

Expected return on plan assets = 56,000

Actual return on plan assets = 66,000

Past service costs (effective Jan, 2, Year 7) = 10,000

Benefits paid to retirees = 96,000

Actuary loss (change in assumptions) = 15,000

Interest (discount) rate for DBO = 9%

The balance of the defined benefit obligation at December 31, Year 7 is:

a. $778,800

b. $779,700

c. $789,700

d. $804,700

4. King's College, a not-for-profit organization, received $100,000 cash from an alumnus. The donor specified that the money was to be invested in guaranteed investment certificates and that only the interest on the money could be used for scholarships for accounting students. How should the interest on the contribution be accounted for under the following revenue recognition methods?

Deferral Method------------ Restricted Fund Method

a. Revenue --------------------Revenue of the scholarship fund

b. Deferred revenue ---------Revenue of the endowment fund

c. Revenue--------------------- Revenue of the endowment fund

d. Deferred revenue ----------Revenue of the scholarship fund

5. Easton, Ltd. is a calendar-year corporation whose financial statements for Years 5 and 6 included errors as follows:

Year 5 ----------------------------------------------Year 6

Ending inventory $36,000 ---------------overstated $12,000 understated

Depreciation expense $30.000 ---------overstated $10,000 understated

Assume that purchases were recorded correctly and that no correcting entries were made at December 31, Year 5, Or at December 31, Year 6, Ignoring income taxes, by how much should Easton's retained earnings be retroactively adjusted at January 1, Year 7?

a. $2,000 increase

b. $4,000 decrease

c. $8,000 increase

d. $32,000 increase