1) The following facts are known:
The total pounds needed for production are 2 times the units to be produced.
The desired ending direct materials inventory is 20% of the total pounds needed for
production.
The beginning direct materials inventory is equal in number to 10% of the units to be
produced.
Cost per pound is $10.
Total cost of the direct materials purchases is $1,610,000.
Instructions
Prepare a direct materials budget for the period.
2) For each transaction given, enter in the tabulation given below a “D” for debit and a
“C” for credit to reflect the increases and decreases of the assets, liabilities, and owner’s
equity accounts. In some cases there may be a “D” and a “C” in the same box.
Transactions:
1>Owner invests cash in the business.
2>Pays insurance in advance for six months.
3>Pays secretary’s salary.
4>Purchases office supplies on account.
5>Pays electricity bill.
6>Borrows money from local bank.
7>Makes payment on account.
8>Receives cash due from customers.
9>Provides services on account.
10>Owner withdraws assets from the business.
3) Corporations sometimes segregate retained earnings into two categories:
(1)________________ retained earnings and (2)________________ retained earnings.
4) If a processing department has 27,000 units in process at the beginning of the period,
completes and transfers out 90,000 and has 18,000 units in process at the end of the
period, then the number of units started into production during the period was
______________ units.
5) The capital accounts indicate each partner’s ______________ investment, while the
partner’s drawing accounts are ______________ owner’s equity accounts.
6) The Sales Returns and Allowances account
is used by a merchandising company, but not a service enterprise
normally has a credit balance
c.should not be closed at the end of the period
d.is a contra account to Accounts Receivable