1) The four steps necessary to determine the cost of goods completed and the ending inventory valuation in a process cost system are:
|
1> |
allocate costs to transferred and partially completed units |
|
2> |
determine the units to be assigned costs |
|
3> |
determine the cost per equivalent unit |
|
4> |
calculate equivalent units of production |
The correct ordering of the steps is:
A2, 4, 3, 1
B4, 2, 3, 1
C2, 3, 4, 1
D2, 3, 1, 4
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2) If the articles of partnership provide for annual salary allowances of $36,000 and $18,000 to X and Y respectively and net income is $30,000, X’s share of net income is $20,000.
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3) The buyer will include the sales tax as part of the cost of items purchased for use.
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4) Any difference between the fair market values of the securities and their cost is a realized gain or loss.
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5) Inventory turnover measures the length of time is takes to acquire, sell and replace the inventory.
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6) There is no difference in the Investing and Financing sections of the statement of cash flows using the indirect and direct method.
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7) The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31:
|
RailsDivision |
LocomotiveDivision |
CorporateTotal |
|
|
Cost of goods sold |
$47,200 |
$30,720 |
|
|
Direct operating expenses |
27,200 |
20,040 |
|
|
Net sales |
108,000 |
78,000 |
|
|
Interest expense |
$2,040 |
||
|
General overhead |
18,160 |
||
|
Income tax |
4,700 |
||
The income from operations for the Rails Division is:
A.$60,800
B.$33,600
C.$8,700
D.$21,150
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8) If the standard to produce a given amount of product is 600 direct labor hours at $15 and the actual was 500 hours at $17, the time variance was $1,700 unfavorable.
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9) Purchased goods in transit, shipped FOB destination, should be excluded from ending inventory of the buyer.
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10) Capital expenditures are costs that are charged to Stockholders’ Equity accounts.
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11) Adjusting entries are made at the end of an accounting period to adjust accounts on the balance sheet.
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12) Warmfeet manufactures comforters. Assume the estimated inventories on January 1, 2012, for finished goods, work in process, and materials were $51,000, $28,000 and $33,000 respectively. Also assume the desired inventories on December 31, 2012, for finished goods, work in process, and materials were $48,000, $35,000 and $29,000 respectively. Direct material purchases were $555,000. Direct labor was $252,000 for the year. Factory overhead was $176,000. Prepare a cost of goods sold budget for Warmfeet, Inc.
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13) Department G had 3,600 units, 40% completed at the beginning of the period, 12,000 units were completed during the period, 2,000 units were one-fifth completed at the end of the period, and the following manufacturing costs were debited to the departmental work in process account during the period:
|
Work in process, beginning of period |
$60,000 |
|
Costs added during period: |
|
|
Direct materials (10,400 at $9.8365) |
102,300 |
|
Direct labor |
79,800 |
|
Factory overhead |
25,200 |
Assuming that all direct materials are placed in process at the beginning of production and that the first-in, first-out method of inventory costing is used, what is the material and conversion cost per unit (to the nearest penny), respectively.
A$5.94 and $5.86
B$5.94 and $6.38
C$8.00 and $8.68
D$9.84 and $9.58
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14) The cost of production report summarizes (1) the units for which the department is accountable and the units to be assigned costs and (2) the costs charged to the department and the allocation of those costs.
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15) The balanced scorecard is a set of financial and nonfinancial measures that reflect the performance of the business.
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16) Standard costs serve as a device for measuring efficiency.
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17) Accumulated Depreciation is a permanent account.
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18) In using the variable cost concept of applying the cost-plus approach to product pricing, fixed manufacturing costs and both fixed and variable selling and administrative expenses must be covered by the markup.
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19) Everett, Miguel, and Ramona are partners, sharing income 1:2:3 . After selling all of the assets for cash, dividing losses on realization, and paying liabilities, the balances in the capital accounts are as follows: Everett, $50,000 Cr.; Miguel, $40,000 Dr.; and Ramona, $30,000 Cr. How much cash is available for distribution to the partners?
A.$120,000
B.$30,000
C.$40,000
D.$90,000
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20) Use the following worksheet to answer the following questions.
| Finley Company Worksheet For the Year Ended December 31, 2014 | ||||||
| Adjusted Trial Balance | Income Statement | Balance Sheet | ||||
| Account Title | Debit | Credit | Debit | Credit | Debit | Credit |
| Cash | 48,000 | 48,000 | ||||
| Accounts Receivable | 18,000 | 18,000 | ||||
| Supplies | 6,000 | 6,000 | ||||
| Equipment | 57,000 | 57,000 | ||||
| Accumulated Depr-Equip | 18,000 | 18,000 | ||||
| Accounts Payable | 25,000 | 25,000 | ||||
| Wages Payable | 6,000 | 6,000 | ||||
| C. Finley, Capital | 33,000 | 33,000 | ||||
| C. Finley, Drawing | 3,000 | 3,000 | ||||
| Fees Earned | 155,000 | 155,000 | ||||
| Wages Expense | 63,000 | 63,000 | ||||
| Rent Expense | 27,000 | 27,000 | ||||
| Depreciation Expense | 15,000 | 15,000 | ||||
| Totals | 237,000 | 237,000 | 105,000 | 155,000 | 132,000 | 82,000 |
| Net Income (Loss) | 50,000 | 50,000 | ||||
| 155,000 | 155,000 | 132,000 | 132,000 | |||
Based on the preceding trial balance, the entry to close expenses would be:
A.Wages Expense 63,000
Rent Expense 27,000
Depreciation Expense 15,000
Income Summary 105,000
B.Expenses 105,000
Income Summary 105,000
C.Wages Expense 63,000
Rent Expense 27,000
Depreciation Expense 15,000
C. Finley, Drawing 105,000
D.Income Summary 105,000
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21) Bonds Payable has a balance of $900,000 and Premium on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption?
A.$1,200 loss
B.$1,200 gain
C.$17,000 loss
D.$17,000 gain
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22) If the market rate of interest is greater than the contractual rate of interest, bonds will sell
A.at a premium
B.at face value
C.at a discount
D.only after the stated rate of interest is increased
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23) A company sells goods for $150,000 that cost $60,000 to manufacture. Which statement(s) are true?
A.The company will recognize sales on the balance sheet of $150,000
B.The company will recognize $90,000 gross profit on the balance sheet
C.The company will decrease finished goods by $60,000
D.All of these are true
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24) Mia Enterprises sells a product for $90 per unit. The variable cost is $40 per unit, while fixed costs are $75,000. Determine the (a) break-even point in sales units, and (b) break-even point in sales units if the selling price increased to $100 per unit.
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25) Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000.
The journal entry to record the flow of costs into Department 1 during the period for direct labor is:
A.Work in Process–Department 165,000
Wages Payable65,000
B.Wages Payable125,000
Work in Process–Department 1125,000
C.Work in Process–Department 1125,000
Wages Payable125,000
D.Wages Payable65,000
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26) Which of the following below is not one of the four major forms of business entities that are discussed in this chapter?
A.Sole proprietorship
B.Corporation
C.Partnership
D.Subchapter S corporation
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27) A negative fixed overhead volume variance can be caused due to the following except:
A.Sales orders at a low level
B.Machine breakdowns
C.Employee inexperience
D.Increase in utility costs
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28) On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. Present entries to record the following transactions for the current fiscal year:
Lisbon Co.
(a) Issuance of the bonds.
(b) Second semiannual interest payment.
(c) Amortization of bond premium for the year, using the straight-line method of amortization.
Orange Inc.
(d) Purchase of the bonds.
(e) Receipt of second semiannual interest payment.
(f) Amortization of bond premium for the year, using the straight-line method of amortization.
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29) A debit balance in which of the following accounts would indicate a likely error?
A.Salaries Expense
B.Notes Payable
C.Edgar Martin, Drawing
D.Supplies
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30) Allowance for Doubtful Accounts has a credit balance of $2,100 at the end of the year (before adjustment), and an analysis of customers’ accounts indicates uncollectible receivables of $19,700. Which of the following entries records the proper adjustment for Bad Debt Expense?
A.debit Allowance for Doubtful Accounts, $17,600; credit Bad Debt Expense, $17,600
B.debit Allowance for Doubtful Accounts, $21,800; credit Bad Debt Expense, $21,800
C.debit Bad Debt Expense $21,800; credit Allowance for Doubtful Accounts, $21,800
D.debit Bad Debt Expense, $17,600; credit Allowance for Doubtful Accounts, $17,600
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31) Blanton Corporation purchased 35% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record the dividends it receives from Worton Corporation?
A.debit Investment in Worton Corporation; credit Cash
B.debit Cash; credit Dividend Revenue
C.debit Investment in Worton Corporation; credit Income of Worton Corporation
D.debit Cash; credit Investment in Worton Corporation
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32) The management of California Corporation is considering the purchase of a new machine costing $400,000. The company’s desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:
|
Year |
Income fromOperations |
Net CashFlow |
|
1 |
$100,000 |
$180,000 |
|
2 |
40,000 |
120,000 |
|
3 |
20,000 |
100,000 |
|
4 |
10,000 |
90,000 |
|
5 |
10,000 |
90,000 |
|
|
|
|
The present value index for this investment is:
A..88
B.1.45
C.1.14
D..70
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33) The balanced scorecard measures
A.only financial information
B.only nonfinancial information
C.both financial and nonfinancial information
D.external and internal information
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34) Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is
A.$55,000
B.$50,000
C.$65,000
D.$60,000
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35) The Brass Works is in the process of determining manufacturing overhead. Journalize events (a) – (d) to Factory Overhead, Miscellaneous Expense, or allocated between the two as appropriate. All items were paid in cash at the time of acquisition. Next calculate the overhead application rate and apply overhead to Work-in-Process.
(a) Brass Works purchases an insurance policy for $4,000. It is computed that 80% of the value of the policy protects production, the balance protects the administrative offices.
(b) The electric bill is received showing an amount due of $1,200. This meter is utilized only by production as the office spaces have their own meter.
(c) Payroll reports that the sales managers salary for the period is $3,500 and that production supervisors wages for the period are $5,500.
(d) The stockroom reports that $2,575 in materials were purchased for the production maintenance department.
(e) If the driver for the application of overhead is drop-forge strokes and there are expected to be 1,000 strokes in this period, what is the rate per stroke? Do not round your answer.
(f) Assuming that there are 1,150 drop-forge strokes in this period, apply factory overhead to Work In Process. Round your answers to nearest dollar.
Round overhead rate to four decimal places and total cost to nearest dollar.
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36) A corporation issues for cash $2,000,000 of 8%, 15-year bonds, interest payable annually, at a time when the market rate of interest is 7%. The straight-line method is adopted for the amortization of bond discount or premium. Which of the following statements is true?
A.The carrying amount increases from its amount at issuance date to $2,000,000 at maturity
B.The carrying amount decreases from its amount at issuance date to $2,000,000 at maturity
C.The amount of annual interest paid to bondholders increases over the 15-year life of the bonds
D.The amount of annual interest expense decreases as the bonds approach maturity
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37) Periodic comparisons between planned objectives and actual performance are reported in:
A.zero-base reports
B.budget performance reports
C.master budgets
D.budgets
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38) Variances from standard costs are usually reported to:
A.suppliers
B.stockholders
C.management
D.creditors
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39) The unit of measure concept:
A.is only used in the financial statements of manufacturing companies
B.is not important when applying the cost concept
C.requires that different units be used for assets and liabilities
D.requires that economic data be reported in yen in Japan or dollars in the U.S
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40) Quail Co. can further process Product B to produce Product C. Product B is currently selling for $60 per pound and costs $42 per pound to produce. Product C would sell for $92 per pound and would require an additional cost of $13 per pound to produce. What is the differential revenue of producing and selling Product C?
A.$32 per pound
B.$42 per pound
C.$50 per pound
D.$18 per pound
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41) Under the allowance method, when a year-end adjustment is made for estimated uncollectible accounts
A.Liabilities decrease
B.Net Income is unchanged
C.Total Assets are unchanged
D.Total Assets decrease
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42) A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?
A.$3,200
B.$6,400
C.$4,800
D.$8,800
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43) If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry?
A.increases the balance of a contra asset account
B.increases the balance of an asset account
C.decreases the balance of an owner’s equity account
D.increases the balance of an expense account
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44) Cash was paid by Aris Alarm Service to creditors on account. Which of the following entries for Aris Alarm Service records this transaction?
A.Cash, debit; Ari Fleish, Capital, credit
B.Accounts Payable, debit; Cash, credit
C.Accounts Receivable, debit; Cash, credit
D.Accounts Payable, debit; Account Receivable, credit
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45) As of January 1 of the current year, the Grackle Company had accounts receivables of $50,000. The sales for January, February, and March of 2012 were as follows: $120,000, $140,000 and $150,000. 20% of each months sales are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with remaining 40% collected in the following month. What is the accounts receivable balance as of March 31?
A.$72,000
B.$48,000
C.$58,720
D.$$60,000
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46) Solare Company acquired mineral rights for $60,000,000. The diamond deposit is estimated at 6,000,000 tons. During the current year, 2,300,000 tons were mined and sold.
a. Determine the depletion rate.
b. Determine the amount of depletion expense for the current year.
c. Journalize the adjusting entry to recognize the depletion expense.
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47) If the cost of an item of inventory is $60 and the current replacement cost is $75, the amount included in inventory according to the lower of cost or market is
A.$15
B.$60
C.$75
D.$135
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48) The St. Augustine Corporation originally budgeted for $360,000 of fixed overhead at 100% production capacity. Production was budgeted to be 12,000 units. The standard hours for production were 5 hours per unit. The variable overhead rate was $3 per hour. Actual fixed overhead was $360,000 and actual variable overhead was $170,000. Actual production was 11,700 units.
Compute the factory overhead volume variance.
A.$9,000F
B.$9,000U
C.$5,500F
D.$5,500U
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49) The following is a measure of a managers performance working in an investment center.
A.rate of return on investment
B.residual income
C.divisional income statements
D.all of the responses
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50) Allowance for Doubtful Accounts has a debit balance of $2,500 at the end of the year (before adjustment), and bad debt expense is estimated at 4% of net credit sales. If net credit sales are $800,000, the amount of the adjusting entry to record the estimate of the uncollectible accounts is
A.$29,500
B.$34,500
C.$32,000
D.cannot be determined
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51) Which of the following would not be considered a good managerial tool in making a decision for determining a capital investment?
A.Further evaluate assets that are dissimilar in nature or have different useful lives
B.Using only quantitative measures to purchase an asset
C.Analyzing the lease vs purchase option
D.Considering income tax ramifications
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52) Indicate whether the following actions would (+) increase, (-) decrease, or (0) not affect a company’s total assets, liabilities, and stockholders’ equity.
| Stockholders’ | ||||
| Assets | Liabilities | Equity | ||
| (1) | Declaring a cash dividend | _______ | _______ | _______ |
| (2) | Paying the cash dividend declared in (1) | _______ | _______ | _______ |
| (3) | Declaring a stock dividend | _______ | _______ | _______ |
| (4) | Issuing stock certificates for the stock | |||
| dividend declared in (3) | _______ | _______ | _______ | |
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53) A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year. Calculate the current year’s sales.
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54) Using the following table, what is the present value of $25,000 to be received 5 years, if the market rate is 7% compounded annually?
| Periods | 5% | 6% | 7% | 10% |
| 1 | .95238 | .94340 | .93458 | .90909 |
| 2 | .90703 | .89000 | .87344 | .82645 |
| 3 | .86384 | .83962 | .81630 | .75132 |
| 4 | .82270 | .79209 | .76290 | .68301 |
| 5 | .78353 | .74726 | .71299 | .62092 |
| 6 | .74622 | .70496 | .66634 | .56447 |
| 7 | .71068 | .66506 | .62275 | .51316 |
| 8 | .67684 | .62741 | .58201 | .46651 |
| 9 | .64461 | .59190 | .54393 | .42410 |
| 10 | .61391 | .55840 | .50835 | .38554 |
Answer:View Answer
55) Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common stock. The following amounts were distributed as dividends:
| Year 1: | $10,000 |
| Year 2: | 45,000 |
| Year 3: | 90,000 |
Determine the dividends per share for preferred and common stock for each year.
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56) Cost of merchandise sold reported on the income statement was $155,000. The accounts payable balance increased $5,000, and the inventory balance increased by $11,000 over the year. Determine the amount of cash paid for merchandise.
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57) Prepare an amortization schedule for the 1st 2 years (straight line method) using the following data:
1> On January 1, 2010 XYZ Co. issued $3,000,000, 6%, 10 year bonds, interest payable on June 30th and December 31st to yield 5%. Use the following format and round to the nearest dollar (may have small rounding error). The bonds were issued for $3,233,834.
Date Cash paid Interest expense Amortization Bond Carry Value
2> Show how this bond would be reported on the balance sheet on 12/31/11 .
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58) The following two problems are independent of one another.
|
(1) |
An analysis of the general ledger accounts indicates that office equipment was sold for $39,600 during the year. The equipment originally cost $68,000 and had accumulated depreciation of $22,500 on the date of sale. Indicate how the elements of this transaction would be reported on the statement of cash flows using the indirect method. |
|
(2) |
An analysis of the general ledger accounts indicates that delivery equipment, which cost $97,000 and on which accumulated depreciation totaled $42,100 on the date of sale, was sold for $57,500 during the year. Using this information, indicate the items to be reported on the statement of cash flows. |
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59) What is the present value of $8,000 to be received at the end of six years, if the required rate of return is 15%?
Below is a table for the present value of $1 at compound interest.
|
Year |
15% |
Year |
15% |
|
1 |
0.87 |
6 |
0.432 |
|
2 |
0.756 |
7 |
0.376 |
|
3 |
0.658 |
8 |
0.327 |
|
4 |
0.572 |
9 |
0.284 |
|
5 |
0.497 |
10 |
0.247 |
|
|
|
|
|
Below is a table for the present value of an annuity of $1 at compound interest.
|
Year |
15% |
Year |
15% |
|
1 |
0.87 |
6 |
3.785 |
|
2 |
1.626 |
7 |
4.16 |
|
3 |
2.283 |
8 |
4.487 |
|
4 |
2.855 |
9 |
4.772 |
|
5 |
3.353 |
10 |
5.019 |
|
|
|
|
|
Answer:View Answer