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In a journal entry, the Post. Ref. column is left blank until the entry has been posted.
In a job order costing system, when overhead costs are applied, they decrease the Work
in Process Inventory account.
Which of the following statements is TRUE of financial and managerial accounting?
A.Both use historical costs as their primary unit of measurement.
B.Both depend on the double-entry system of accounting.
C.Both require adherence to generally accepted accounting principles.
D.Both assist managers in decision making.
If the incremental revenues are greater than the incremental costs, the product should be
processed further.
In applying the matching rule, revenue recognition should come before the matching
(assignment) of expense.
Under the periodic inventory system, the return of goods to the supplier is recorded
with a debit to Purchases Returns and Allowances.
When a new partner is admitted, the old partnership agreement is still in effect.
The amount of unamortized discount at the end of an interest period is equal to the
amount of the unamortized discount at the beginning of the period minus the amount of
discount that was amortized during the period.
Current liabilities are classified as either definitely determinable liabilities or contingent
liabilities.
Classified balance sheets list accounts in alphabetical order.
The qualitative characteristic of faithful representation includes
A.materiality
B.confirmative value.
C.timeliness.
D.neutral information.
Using the following information, calculate for 20x5 (a) net sales, (b) cost of goods sold,
(c) gross margin, and (d) net income.
Prepare year-end adjusting entries for each of the following situations:
a. The Supplies account showed a beginning debit balance of $400 and purchases of
$2,800. The ending debit balance was $800.
b. Depreciation on buildings is estimated to be $7,300.
c. A one-year insurance policy was purchased for $2,400. Nine months have passed
since the purchase.
d. Accrued interest on notes payable amounted to $200.
e. The company received a $9,600 advance payment during the year on services to be
performed. By the end of the year, one-third of the services had been performed.
f. Payroll for the five-day workweek, to be paid on Friday, is $10,000. The last day of
the period is a Tuesday.
g. Services totaling $920 had been performed but not yet billed or recorded.
According to the long-term debt note in its annual report, the Modern Journal Company,
publisher of the West End Times, Technotes, and other publications, engaged in the
following long-term debt transactions in 20x5:
1> On April 1, 20x5, the company issued $50,000,000 of ten-year, 8 1/4 percent notes
with semi-annual interest payments on April 1 and October 1 at face value.
2> On October 15, 20x5, the company redeemed, prior to maturity dates, all of its
outstanding 10 percent notes that had been issued in connection with the acquisition of
E-Reporter Newspapers, Inc. The redemption price was $32,500,000 plus accrued
interest. The carrying value of the notes on October 15 was $32,500,000 less an
unamortized discount of $3,611,500. The semi-annual interest dates were June 15 and
December 15.
3> On December 8, 20x5, the company issued $50,000,000 of 8 percent notes due on
December 15, ten years later, with semi-annual interest payments on June 15 and
December 15. The notes were issued at face value plus accrued interest.
(Note: Long-term notes are accounted for in a manner similar to that for bonds. Round
answers to nearest dollar)
a. Prepare entries in journal form to record the three transactions described above.
b. Prepare the entries on the interest payment dates of October 1 and December 15,
20x5, and the year-end adjustment on December 31, 20x5.
c. What was the total interest expense during 20x5 for the three long-term notes issued,
assuming that the balance in Unamortized Discount was $3,746,500 at the beginning of
the year? Assume the balance of the outstanding notes in transaction 2 above was
$32,500,000 at the beginning of the year.
Using the percentage of net sales method, uncollectible accounts expense for the year is
estimated to be $44,000. If the balance of the Allowance for Uncollectible Accounts is a
$9,000 credit before adjustment, what is the balance after adjustment?
A.$9,000
B.$35,000
C.$44,000
D.$53,000
According to the just-in-time philosophy,
A.maintaining inventories wastes resources and frequently covers up poor work or
other problems.
B.push-through manufacturing flows are the most efficient.
C.inventories of finished goods should always be available to meet customer demand.
D.long production runs and large production lot sizes take advantage of economies of
scale.
Use this information to answer the following question.
In addition, beginning merchandise inventory was $11,000 and ending merchandise
inventory was $7,000.
If beginning and ending merchandise inventories were ignored in computing net
income, then net income would be
A.understated by $11,000.
B.overstated by $4,000.
C.understated by $7,000.
D.understated by $4,000.
Cost of goods sold equals $250,000, and average inventory equals $100,000. Days'
inventory on hand equals
A.91.3 days.
B.146.0 days.
C.821.9 days.
D.912.5 days.
The payables turnover is measured
A.in days.
B.as a percentage.
C.in dollars.
D.in times.
Which type of budgeting considers inputs from employees at all levels of a company?
A.Top-down budgeting
B.Selective budgeting
C.Target budgeting
D.Participative budgeting
Which of the four levels of the cost hierarchy would be used by a dress manufacturer
using an activity-based management to design a pattern for a new dress style?
A.Unit-level activity
B.Batch-level activity
C.Product-level activity
D.Facility-level activity
Dixie Corporation has 2,000,000 authorized shares of $10 par value common stock. As
of June 30, 20x5, there were 1,000,000 shares issued and outstanding. On June 30,
20x5, the board of directors declared a $0.40 per share cash dividend to be paid on
August 1, 20x5, to shareholders of record on July 15, 20x5. Prepare the necessary
entries in journal form to be recorded on (a) the date of declaration, (b) the date of
record, and (c) the date of payment. (Omit explanations.)
A company with $75,000 in current assets, $37,500 in quick assets, and $45,000 in
current liabilities makes a payment of a $3,000 oncurrent debt. As a result of this
transaction, the current ratio and quick ratio will
A.both decrease.
B.increase and decrease, respectively.
C.both increase.
D.remain the same and decrease, respectively.
Using the indirect method, calculate the amount of net cash flows from operating
activities from the following data. Show your work.
a. Provide two different ways of computing breakeven units: one with the contribution
margin in the computation and one without the contribution margin.
b. Compare and contrast the two different methods of computing breakeven units. Does
the use of the contribution margin alter the resulting number of breakeven units? Why
or why not?
c. Comment on how the contribution margin affects the computation of breakeven units.
Would an increase in the contribution margin increase or decrease the number of
breakeven units required?
Quality of earnings is affected by all of the following except
A.executive compensation.
B.accounting methods.
C.accounting estimates.
D.one-time items.
Which of the following is legally a separate entity from its owner(s)?
A.Sole proprietorship only
B.Sole proprietorship and partnership only
C.Corporation only
D.Partnership only
If the receivables turnover is 3.1 times, what is the days' sales uncollected?
A.10 days
B.85 days
C.118 days
D.cannot be determined with information given
The total interest cost on forty-six (46), ten-year, 6 percent, $1,000 bonds that are issued
at 98 is
A.$28,520.
B.$26,680.
C.$28,060.
D.$27,600.
In a common-size financial statement, a designation of 25 percent could not be given to
A.total stockholders' equity.
B.cost of goods sold.
C.net earnings.
D.total assets.
Baylor Enterprises has bonds outstanding with a face value of $200,000 and a carrying
value of $206,000 on December 31, 20x5. If the company calls in and retires these
bonds on December 31, 20x5, for $210,000, the entry to record the retirement will
include a
A.debit to Bonds Payable for $206,000.
B.credit to Cash for $206,000.
C.debit to Loss on Retirement of Bonds for $6,000.
D.debit to Loss on Retirement of Bonds for $4,000.
Why are equivalent units of production used in process costing?
A.To determine the total of overhead costs
B.To determine the number of units in work in process and finished goods inventories
C.To determine the costs per unit and costs of inventories in each process
D.To determine the length of the process
Fred, Kristina, and Nick each receive a $14,000 salary, as well as 15 percent interest on
their respective average investments of $40,000, $20,000, and $80,000. If they share
remaining income and losses in a 4:3:2 ratio, respectively, by how much would Nick's
account increase or decrease (indicate a decrease by placing parentheses around the
amount), assuming (a) net income of $81,000, (b) net income of $54,000, and (c) net
loss of $63,000.
