1) Kline Company accrued wages of $7,350 that were earned by employees unpaid at
the end of 2014. Assuming Kline uses reversing entries, which of the following entries
is appropriate for reversing the accrued wages at the beginning of 2015?
A.Debit Wages Expense $7,350; credit Cash $7,350.
B.Debit Wages Expense $7,350; credit Wages Payable $7,350.
C.Debit Wages Payable $7,350; credit Cash $7,350.
D.Debit Cash $7,350; credit Wages Expense $7,350.
E.Debit Wages Payable $7,350; credit Wages Expense $7,350.
2) An analytical technique used by management to focus attention on the most
significant variances and give less attention to the areas where performance is
reasonably close to standard is known as:
A.Controllable management.
B.Management by variance.
C.Performance management.
D.Management by objectives.
E.Management by exception.
3) The following is taken from Clausen Company’s internal records of its factory with
two operating departments. The cost driver for indirect labor is direct labor hours, and
the cost driver for the remaining items is number of hours of machine use. Compute the
total amount of indirect labor allocated to Dept. 1 using activity-based costing.
A.$5,505.
B.$54,371.
C.$16,864.
D.$10,471.
E.$8,073.
4) On January 2, 2010, a company purchased a delivery truck for $45,000 cash. The
truck had an estimated useful life of seven years and an estimated salvage value of
$3,000. The straight-line method of depreciation was used. Prepare the journal entries
to record depreciation expense and the disposition of the truck on September 1, 2014,
under each of the following assumptions:
a. The truck and $45,000 cash were given in exchange for a new delivery truck that had
a cash price of $60,000. This transaction has commercial substance.
b. The truck and $40,000 cash were exchanged for a new delivery truck that had a cash
price of $60,000. This transaction lacks commercial substance.
5) A company uses the periodic inventory system and had the following activity during
the current monthly period.
Using the weighted-average inventory method, the company’s ending inventory would
be:
A.$2,000
B.$2,200
C.$2,250
D.$2,400
E.$4,400
6) Zhang Industries budgets production of 300 units in June and 310 units in July. Each
unit requires 1.5 hours of direct labor. The direct labor rate if $14 per hour. The indirect
labor rate is $21.00 per hour. Compute the budgeted direct labor cost for July.
A.$6,300.
B.$6,510.
C.$9,450.
D.$9,765.
E.$16,275.
7) Comparative financial statements in which each individual financial statement
amount is expressed as a percentage of a base amount are called:
A.Asset comparative statements.
B.Percentage comparative statements.
C.Common-size comparative statements.
D.Sales comparative statements.
E.General-purpose financial statements.
8) On September 1, Ziegler Corporation had 50,000 shares of $5 par value common
stock, and $1,500,000 of retained earnings. On that date, when the market price of the
stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal
entry to record this transaction is:
A.Debit Retained Earnings $750,000; credit Common Stock Split Distributable
$750,000.
B.Debit Retained Earnings $750,000; credit Common Stock $750,000.
C.Debit Retained Earnings $250,000; credit Common Stock $250,000.
D.Debit Retained Earnings $250,000; credit Stock Split Payable $250,000.
E.No entry is made for this transaction.
9) Job A3B was ordered by a customer on September 25. During the month of
September, Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000
of direct labor. The job was not finished by the end of the month, but needed an
additional $3,000 of direct materials in October and additional direct labor of $6,500 to
finish the job. The company applies overhead at the end of each month at a rate of
200% of the direct labor cost. What is the amount of job costs added to Work in Process
Inventory during October?
A.$16,000
B.$22,500
C.$37,000
D.$26,500
E.$32,000
10) An example of a transaction that must be disclosed as a noncash investing and
financing activity includes all but which of the following?
A.The retirement of debt by issuing equity stock.
B.A transaction exchanging cash equivalents for cash.
C.The leasing of assets in a transaction that qualifies as a capital lease.
D.The purchase of noncash assets in exchange for equity or debt securities.
E.The purchase of long-term assets financed by a cash down payment and a note
payable to the seller for the balance.
11) An employee earns $5,500 per month working for an employer. The FICA tax rate
for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The current
FUTA tax rate is 0.6%, and the SUTA tax rate is 4.4%. Both unemployment taxes are
applied to the first $7,000 of an employee’s pay. The employee has $182 in federal
income taxes withheld. The employee has voluntary deductions for health insurance of
$150 and contributes $75 to a retirement plan each month. What is the amount the
employer should record as payroll taxes expense for the employee for the month of
January?
A.$420.75
B.$464.75
C.$602.75
D.$841.50
E.$695.75
12) On December 1, Simpson Marketing Company received $3,600 from a customer
for a marketing plan to be completed January 31 of the following year. The cash receipt
was recorded as unearned fees. The adjusting entry for the year ended December 31
would include:
A.a debit to Earned Fees for $3,600.
B.a debit to Unearned Fees for $1,800.
C.a credit to Unearned Fees for $1,800.
D.a debit to Earned Fees for $1,800.
E.a credit Earned Fees for $3,600.
13) A credit sale of $5,275 to a customer would result in which of the following?
A.A debit to the Accounts Receivable account in the general ledger and a debit to the
customer’s account in the accounts receivable subsidiary ledger.
B.A credit to the Accounts Receivable account in the general ledger and a credit to the
customer’s account in the accounts receivable subsidiary ledger.
C.A debit to the Accounts Receivable account in the general ledger and a credit to the
customer’s account in the accounts receivable subsidiary ledger.
D.A credit to the Accounts Receivable account in the general ledger and a debit to the
customer’s account in the accounts receivable subsidiary ledger.
E.A credit to Sales and a credit to the customer’s account in the accounts receivable
subsidiary ledger.
14) An employee earned $4,600 in February working for an employer. The FICA tax
rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The
employee has $644 in federal income taxes withheld and has voluntary deductions for
health insurance of $50 and contributes 10% of gross pay to a retirement plan each
month. The employer pays the $200 remainder of the health insurance premium and an
equal amount of contribution to the retirement fund. What is the amount of net pay for
the employee for the month of February?
A.$3,094.10
B.$3,496.00
C.$3,604.10
D.$3,446.00
E.$2,634.10
15) Refer to the following selected financial information from Shakley’s Incorporated.
Compute the company’s times interest earned for Year 2.
A.6.9.
B.4.8.
C.5.8.
D.14.0.
E.7.9.
16) The purchase of raw materials on account in a process costing system is recorded
with a:
A.Debit to Purchases and credit to Cash.
B.Debit to Purchases and a credit to Accounts Payable.
C.Debit to Raw Materials Inventory and a credit to Accounts Payable.
D.Debit to Accounts Payable and a credit to Raw Materials Inventory.
E.Debit to Work in Process Inventory and a credit to Accounts Payable.
17) Calgary Industries is preparing a budgeted income statement for 2015 and has
accumulated the following information. Predicted sales for the year are $730,000 and
cost of goods sold is 40% of sales. The expected selling expenses are $81,000 and the
expected general and administrative expenses are $90,000, which includes $23,000 of
depreciation. The companies income tax rate is 30%. The budgeted net income for 2015
is:
A.$438,000.
B.$186,900.
C.$267,000.
D.$84,700.
E.$80,100.
18) Marlow Company purchased a point of sale system on January 1 for $3,400. This
system has a useful life of 10 years and a salvage value of $400. What would be the
depreciation expense for the second year of its useful life using the
double-declining-balance method?
A.$680.
B.$480.
C.$544.
D.$600.
E.$300.
19) The date the directors vote to declare and pay a dividend is called the:
A.Date of stockholders’ meeting.
B.Date of declaration.
C.Date of record.
D.Date of payment.
E.Liquidating date.
20) A company issued 10-year, 9% bonds with a par value of $500,000 when the market
rate was 9.5%. The company received $484,087 in cash proceeds. Using the effective
interest method, prepare the issuer’s journal entry to record the first semiannual interest
payment and the amortization of any bond discount or premium.
21) Identify and explain the types of employer payroll taxes.
22) ____________________ inventory consists of completed products ready for sale by
a manufacturer.
23) The use of electronic communication to transfer cash from one party to another is
called __________________________________.
24) If a partner withdraws from a partnership and the recorded value of his or her equity
is overstated, then a bonus goes to _________________________; if the recorded value
of the withdrawing partner’s equity is understated, then a bonus goes to
____________________.
25) When the completed goods are sold, the cost of the completed goods are transferred
to ____________________.
26) On September 20, Fletcher Corporation issued 25,000 shares of no-par common
stock for equipment having a market value of $85,000. Prepare the general journal entry
to record this transaction.