The following account appears in the ledger after only part of the postings have been
completed for July, the first month of the current fiscal year:
Factory overhead is applied to jobs at the rate of 60% of direct labor cost. The actual
factory overhead incurred for July was $75,000. Jobs completed during the month
totaled $301,200.
(a) Prepare the journal entries to record (1) the application of factory overhead to
production during July and (2) the jobs completed duringJuly.
(b) What is the balance of the factory overhead account on July 31?
(c) Was factory overhead overapplied or underapplied on July 31?
(d) Determine the cost of the unfinished jobs on July 31.
Answer:
Allowance for Doubtful Accounts has a debit balance of $2,300 at the end of the year
(before adjustment). The company prepares an analysis of customers’ accounts and
estimates the amount of uncollectible accounts to be $31,900. Which of the following
adjusting entries is needed to record the Bad Debt Expense for the year?
A.debit Bad Debt Expense, $34,200; credit Allowance for Doubtful Accounts, $34,200
B.debit Allowance for Doubtful Accounts, $34,200; credit Bad Debt Expense, $34,200
C.debit Allowance for Doubtful Accounts, $29,600; credit Bad Debt Expense, $29,600
D.debit Bad Debt Expense, $29,600; credit Allowance for Doubtful Accounts, $29,600
Answer:
Dotterel Corporation uses the variable cost concept of product pricing. Below is cost
information for the production and sale of 35,000 units of its sole product. Dotterel
desires a profit equal to a 11.2% rate of return on invested assets of $350,000.
The markup percentage for the sale of the company’s product is:
A.14%
B.5.6%
C.45.71%
D.11.2%
Answer:
Which of the following is considered a part of factory overhead cost?
A.Sales commissions
B.Depreciation of factory buildings
C.Depreciation of office equipment
D.Direct materials used
Answer:
Par value
A.is the monetary value assigned per share in the corporate charter.
B.represents what a share of stock is worth.
C.represents the original selling price for a share of stock.
D.is established for a share of stock after it is issued.
Answer:
Jay Company uses the total cost concept of applying the cost-plus approach to product
pricing. The costs and expenses of producing and selling 38,400 units of Product E are
as follows:
Jay desires a profit equal to a 14% rate of return on invested assets of $640,000.
(a) Determine the amount of desired profit from the production and sale of Product E.
(b) Determine the total costs and the cost amount per unit for the production and sale of
38,400 units of Product E.
(c) Determine the markup percentage for Product E.
(d) Determine the selling price of Product E.
Answer:
The journal entry for recording an operating lease payment would
A.be a memo entry only
B.debit the fixed asset and credit Cash
C.debit an expense and credit Cash
D.debit a liability and credit Cash
Answer:
Henry Jones contributed equipment, inventory, and $44,000 cash to the partnership. The
equipment had a book value of $35,000 and market value of $28,000. The inventory has
a book value of $25,000, but only had a market value of $12,000. due to obsolescence.
The partnership also assumed a $15,000 note payable owed by Henry that was
originally used to purchase the equipment.
What amount should Henry’s capital account be recorded?
A.$104,000
B.$89,000
C.$69,000
D.$84,000
Answer:
In a common size balance sheet, the 100% figure is:
A.total property, plant and equipment.
B.total current assets.
C.total liabilities.
D.total assets.
Answer:
Financial reports are used by
A.management
B.creditors
C.investors
D.all are correct
Answer:
Which of the following is always recorded in the general journal?
A.rendering services for cash
B.purchases of supplies on account
C.rendering services on account
D.closing entries
Answer:
Accounts are classified in the ledger
A.chronologically
B.alphabetically
C.in accordance with their appearance in the financial statements
D.so that accounts used most often are listed first
Answer:
Materials purchased on account during the month amounted to $180,000. Materials
requisitioned and placed in production totaled $165,000. From the following, select the
entry to record the transaction on the day the materials were bought.
A.Materials165,000
Accounts Payable165,000
B.Materials180,000
Accounts Payable180,000
C.Materials180,000
Cash 180,000
D.Accounts Payable180,000
Materials180,000
Answer:
The first budget customarily prepared as part of an entity’s master budget is the:
A.production budget
B.cash budget
C.sales budget
D.direct materials purchases
Answer:
Total dollar amount of the debits equal the total dollar amount of the credits in the
ledger can be verified through:
A.ledger
B.trial balance
C.account
D.balance sheet
Answer:
A withdrawal of cash made by the owner will be found in the
A.cash receipts journal
B.cash payments journal
C.revenue journal
D.purchases journal
Answer:
Long-term investments are held for all of the listed reasons below except
A.to earn the interest or dividend income
B.for its long-term gain potential
C.to influence over another business entity
D.to meet current cash needs
Answer:
Which statement(s) concerning cash is (are) true?
A.cash will always have more debits than credits
B.cash will never have a credit balance
C.cash is increased by debiting
D.all of the above
Answer:
On March 1, a company collects revenue in advance for the next twelve months and
credits a liability account. The adjusting entry at year end on the work sheet would
A.increase a liability account
B.decrease an asset account
C.decrease a revenue account
D.decrease a liability account
Answer:
The following data relate to direct labor costs for the current period:
What is the direct labor time variance?
A.$36,000 unfavorable
B.$35,000 unfavorable
C.$23,000 favorable
D.$22,000 favorable
Answer:
The Marx Company issued $100,000 of 12% bonds on April 1, 2010 at face value. The
bonds pay interest semiannually on January 1 and July 1. The bonds are dated January
1, 2010, and mature on January 1, 2014. The total interest expense related to these
bonds for the year ended December 31, 2010 is
A.$1,000
B.$3,000
C.$9,000
D.12,000
Answer:
The capital accounts of Hawk and Martin have balances of $160,000 and $140,000,
respectively, on January 1, 2010, the beginning of the current fiscal year. On April 10,
Hawk invested an additional $10,000. During the year, Hawk and Martin withdrew
$86,000 and $68,000, respectively, and net income for the year was $258,000. The
articles of partnership make no reference to the division of net income.
Based on this information, the statement of partners’ equity for 2010 would show what
amount as total capital for the partnership on December 31, 2010?
A.$384,600
B.$412,600
C.$404,000
D.$414,000
Answer:
Tara Company’s budget includes the following credit sales for the current year:
September, $25,000; October, $36,000; November, $30,000; December, $32,000.
Experience has shown that payment for the credit sales is received as follows: 15% in
the month of sale, 60% in the first month after sale, 20% in the second month after sale,
and 5% is uncollectible. How much cash can Tara Company expect to collect in
November as a result of current and past credit sales?
A.$19,700
B.$28,400
C.$30,000
D.$31,100
Answer:
Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital
balances are $80,000 and $120,000 respectively. Income Summary has a credit balance
of $30,000. What is Tomas’ capital balance after closing Income Summary to Capital?
A.$102,500
B.$22,500
C.$57,500
D.$127,500
Answer:
Which of the following is an example of a variable component of a payroll system?
A.hours worked
B.medicare tax rate
C.rate of pay
D.social security number
Answer:
The method of determining depreciation that yields successive reductions in the
periodic depreciation charge over the estimated life of the asset is
A.units-of-production
B.declining-balance
C.straight-line
D.time-valuation
Answer:
Williams Company reports production costs for 2015 as follows:
Williams Company’s period costs for 2015 amount to:
A.$345,000
B.$250,000
C.$400,000
D.$175,000
Answer:
The liability for a dividend is recorded on which of the following dates?
A.the date of record
B.the date of payment
C.the last day of the fiscal year
D.the date of declaration
Answer:
The production department is proposing the purchase of an automatic insertion
machine. They have identified 3 machines and have asked the accountant to analyze
them to determine which of the proposals (if any) meet or exceed the company’s policy
of a minimum desired rate of return of 10% using the net present value method. Each of
the assets has a estimated useful life of 10 years.
A.A & C
B.B & C
C.B
D.A only
Answer:
Research Company sells merchandise with a one year warranty. In 2012, sales consisted
of 2,500 units. It is estimated that warranty repairs will average $10 per unit sold, and
30% of the repairs will be made in 2012 and 70% in 2013. In the 2012 income
statement, Research should show warranty expense of
A.$25,000
B.$7,500
C.$17,500
D.$0
Answer: