1) Karley Company sold equipment on July 1, 2014 for $75,000. The equipment had
cost $210,000 and had $120,000 of accumulated depreciation as of January 1, 2014 .
Depreciation for the first 6 months of 2014 was $12,000.
Instructions
Prepare the journal entry to record the sale of the equipment.
2) In developing a standard cost for direct materials used in making a product,
consideration should be given to two factors: (1) __________________ per unit of
direct materials and (2) the __________________ of direct materials to produce one
unit of product.
3) For each of the following, determine the missing amounts.
Beginning Goods AvailableCost ofEnding
InventoryPurchases for Sale Goods SoldInventory
1>$10,000________$ 45,000$25,000_______
2> ______$220,000$265,000_______$40,000
4) Dunlin Development Company had the following transactions involving notes
payable.
Nov. 1, 2014Borrows $120,000 from Merchants and Marine Bank by signing a
3-month, 10% note.
Dec. 31, 2014Prepares the adjusting entry.
Feb. 1, 2015Pays principal and interest to Merchants and Marine Bank.
Instructions
Prepare journal entries for each of the transactions.
5) At December 31, 2014, the trading securities for Wolfe Company are as follows:
Security Cost Fair Value
X$25,000$27,000
Y 45,000 38,000
$70,000$65,000
Instructions
Prepare the adjusting entry at December 31, 2014, to report the securities at fair value.
6) Why do some companies need a cost accounting system while others do not? What
are the determining characteristics or factors that influence the type of cost accounting
system that is appropriate for a company?
7) Two limitations of systems of internal control are the concept of ______________
and the ______________.
8) Moyer Instruments is a rapidly growing manufacturer of medical devices. As a result
of its growth, the company’s management recently modified several of its procedures
and practices to improve internal control. Some employees are upset with the changes.
They have complained that all these changes just show that the company no longer
trusts them.
Required:
“Internal controls exist because most people can’t be trusted.” Is this true? Explain.
9) Weston Company’s manufacturing overhead budget for the first quarter of 2014
contained the following data:
Variable Costs
Indirect materials$39,000
Indirect labor24,000
Utilities20,000
Maintenance12,000
Fixed Costs
Supervisor’s salary$80,000
Depreciation16,000
Property taxes8,000
Actual variable costs for the first quarter were:
Indirect materials$37,200
Indirect labor26,400
Utilities21,000
Maintenance10,600
Actual fixed costs were as expected except for property taxes which were $9,000. All
costs are considered controllable by the department manager except for the supervisor’s
salary.
Instructions
Prepare a manufacturing overhead responsibility performance report for the first
quarter.