1) A $30,000, 8%, 9-month note payable requires an interest payment of $1,800 at
maturity.
2) On July 1, 2014, Fogg Corporation issued $600,000, 8%, 10-year bonds at face
value. Interest is payable semiannually on January 1 and July 1. Fogg Corporation has a
calendar year end.
Instructions
Prepare all entries related to the bond issue for 2014 .
3) Wellington Company reported net income of $60,000 in 2014 and $80,000 in 2015 .
However, ending inventory was overstated by $7,000 in 2014 .
Instructions
Compute the correct net income for Wellington Company for 2014 and 2015.
4) On January 2, 2014, Olathe Company purchased a patent for $240,000. The patent
has an 8-year estimated useful life and a legal life of 20 years.
Instructions
Prepare the journal entry to record patent amortization.
5) Welch Company sold a three-year $300,000, zero interest-bearing note receivable to
After Company. After Company wishes to earn 10% over the remaining 2 years of the
note. How much cash will Welch Company receive upon sale of the note?
6) Data for the Motor Division of Hudson Manufacturing which is operated as an
investment center follows:
Sales Revenue$12,000,000
Contribution Margin1,600,000
Controllable Fixed Costs1,000,000
Return on Investment10%
Instructions
Calculate controllable margin and average operating assets.
7) Hanson Company developed the following standard costs for its product for 2014:
Standard Cost Card
Unit Standard Cost
Direct materials(5 pounds @ $4 per pound)$20
Direct labor(4 hours @ $8 per hour)32
Manufacturing overhead
Variable(4 hours @ $4 per hour)16
Fixed(4 hours @ $3 per hour) 12
$80
The company planned to work 100,000 direct labor hours and produce 25,000 units of
product in 2014 .
Actual results for 2014 are as follows:
24,000 units of product were produced.
Actual direct materials purchased and used during the year amounted to 122,000
pounds at a cost of $475,800.
Actual direct labor costs were $779,000 for 95,000 direct labor hours worked.
Total actual manufacturing overhead incurred amounted to $685,000.
Instructions: Calculate the following variances showing all computations supporting
your answers. Indicate if the variances are favorable (F) or unfavorable (U).
1>Direct materials price and direct material quantity variances.
2>Direct labor price and direct labor quantity variances.
3>Overhead controllable and overhead volume variances.
8) In analyzing and interpreting financial statement information, three major
characteristics are generally evaluated: (1)____________, (2)_____________, and
(3)_____________.
9) Earnings per share is calculated by dividing _______________ available for
common stockholders by the ________________ number of common shares
outstanding.
10) Unit production costs are expressed in terms of _____________ units of production.