WGU D103 EXAM -INTERMEDIATE ACCOUNTING I |ACTUAL QUESTIONS AND VERIFIED ANSWERS |BRAND NEW UPDATE|GRADED A+

D103 WGU OA 2 -INTERMEDIATE ACCOUNTING I
|ACTUAL QUESTIONS AND VERIFIED ANSWERS
|BRAND NEW 2026-2027 UPDATE|GRADED A+


Question 1

A company issues a five-year zero-interest-bearing note for a new lathe it purchased for
$25,000. The market rate of interest at the time the note was issued is 4%. Assuming an
annual interest rate of 4% for five years is appropriate, the present value of the principal is
$25,000 × 0.82193 =

$20,548. Assuming an annual interest rate of 5% for 4 years is appropriate, the present value
of the principal is $25,000 × 0.82270 =

$20,568.



What amount should be recorded for the cost of the lathe?

CORRECT ANSWER

The lathe is recorded at its present value of $20,548. No calculation is required.



Accounting Rule: An asset acquired in exchange for a noninterest-bearing note is valued
at the present value of the note.




Question 2

Equipment is exchanged for a noninterest-bearing note. Payment of $20,000 on the note is
to be made in one year. The market rate for notes of similar risk is 5%. Assuming an annual
interest rate of 5% is appropriate, the present value of the principal is $20,000 × 0.95238 =
$19,048. Assuming that a semiannual interest rate of 2.5% is appropriate, the present value
of the principal is ($20,000/2) × 1.92742 = $19,274.



What amount should be recorded for the purchase of this equipment?
CORRECT ANSWER


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, The equipment is recorded at its present value of $19,048. No calculation is required.



Accounting Rule: An asset acquired in exchange for a noninterest-bearing note is valued
at the present value of the note.




Question 3

Company A sells land to Company B for $100,000. Company A takes a note from Company B
that is due in two years. Assuming an annual interest rate of 5% is appropriate, the implied
annual interest is $100,000

× 0.05 = $5,000, and the present value of the note is $100,000 × 0.90703

= $90,703.



What amount should Company A record for the sale?

CORRECT ANSWER

The note is recorded at its present value of $90,703. No calculation is required.



Accounting Rule: A note received in exchange for property is valued at its present value.




Question 4

Company A sells a parcel of land to Company B in exchange for a note receivable. The terms
of the note require Company B to make a single payment of $600,000 in two years. Using a
10% interest rate, the implied annual interest is $600,000 × 0.10 = $60,000, and the present
value of the note is $600,000 × 0.82645 = $495,870.



What amount must Company A consider as proceeds from the sale of the land in order to
calculate gross profit or gain/loss on the sale, and be in accordance with generally accepted
accounting principles (GAAP)?
CORRECT ANSWER


2

, The note is recorded at its present value of $495,870. No calculation is required.



Accounting Rule: A note received in exchange for property is valued at its present value.




Question 5

A company performs services for a customer in exchange for a noninterest-bearing note. The
customer agrees to make a payment of$100,000 in three years. Using a 5% interest rate, the
implied annual interest is $100,000 × 0.05 = $5,000, and the present value of the note is
$100,000 × 0.86384 = $86,384.



What amount should the company record as service revenue from this transaction to be in
accordance with generally accepted accounting principles (GAAP)?

CORRECT ANSWER

The note is recorded at its present value of $86,384. No calculation is required.



Accounting Rule: A note received in exchange for service is valued at its present value.




Question 6

A customer signs a noninterest-bearing note, promising to pay the company

$11,664 in two years. The payment amount is based on an annual interest rate of 8%, which
the company believes is appropriate, resulting in the present value of the note of $11,664 ×
0.85734 = $10,000.



Which amount should the company record as sales revenue from this transaction to be in
accordance with generally accepted accounting principles (GAAP)?

CORRECT ANSWER

The note is recorded at its present value of $10,000. No calculation is required.



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, Accounting Rule: A note received in exchange for goods is valued at its present value.




Question 7

A company requires $8,000 cash in a savings account earning 2% interest at the end of the
year. Assuming an annual interest rate of 2% is appropriate, the implied annual interest is
$8,000 × 0.02 = $160, and the present value of the savings is $8,000 × 0.98039 = $7,843.



What amount should be deposited into the savings account at the beginning of the year?

CORRECT ANSWER

The present value of $8,000 at the beginning of the year is $7,843. No calculation is
required.



This is a single-sum problem that requires determining the unknown present value of a
known single sum of money in the future that is discounted for a certain number of
periods at a certain interest rate.



Accounting Rule: Present value is the amount that must be invested now to produce a
known future value. It is always a smaller amount than the given future value.




Question 8

A company collects $1,500 of rent from a tenant at the end of the year. The company invests
the rent money in an investment earning 4% interest per year. Assuming a 4% annual
interest rate is appropriate, the implied annual interest is $1,500 × 0.04 = $60, and the
present value of the rent is $1,500 × 0.96154 = $1,442.



What is the discounted value of this rent at the beginning of Year 1?

CORRECT ANSWER

Discounting is the process of reducing the face/principal amount to a present value. The
present value of $1,500 at the beginning of the year is $1,442. No calculation is required.

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