The Tarrago Company issues $517,000 of 11%, 10-year bonds at 104 on March 31,
2017. The bond pays interest on March 31 and September 30. Assume that the company
uses the straight-line method for amortization. Calculate the net balance that will be
reported for the bonds on the September 30, 2017 balance sheet.
A) $517,000
B) $537,680
C) $536,646
D) $538,714
Which of the following statements is true of a bond that is issued at a premium?
A) The bond will be issued at an amount above face value.
B) The stated interest rate is lower than the prevailing market interest rate.
C) At maturity, the bond will repay an amount that is greater than the face value.
D) The bond will be issued at par.
Under the first-in, first-out (FIFO) method, the cost of equivalent units of production is
calculated by ________.
A) summing up only the transferred in costs of each department
B) combining beginning inventory costs with current period costs
C) considering only the transferred out costs of each department
D) accounting for beginning inventory costs separately from current period costs
The following information is from the 2017 records of Armand Music Shop:
Bad debts expense is estimated by the percent-of-sales method. Management estimates that
6% of net credit sales will be uncollectible. Calculate the amount of bad debts expense for
2017.
A) $10,500
B) $8,040
C) $12,300
D) $9,200
Which of the following depreciation methods allocates a varying amount of
depreciation each year based on an asset’s usage?
A) the straight-line method
B) the annuity method
C) the units-of-production method
D) the double-declining-balance method
The cost of an asset is $1,110,000, and its residual value is $300,000. Estimated useful
life of the asset is five years. Calculate depreciation for the second year using the
double-declining-balance method of depreciation.
A) $222,000
B) $162,000
C) $324,000
D) $266,400
Venus Manufacturing uses a predetermined overhead allocation rate based on a
percentage of direct labor cost. At the beginning of the year, it estimated the
manufacturing overhead rate to be 20% of the direct labor cost. In the month of June,
Venus completed Job 13C and its details are as follows:
What is the total cost incurred for Job 13C?
A) $27,632
B) $24,000
C) $10,360
D) $30,360
In a networked system, the server stores the program and the data.
A company has a petty cash fund amount of $300. When replenished, it has petty cash
receipts of $33 for gas expense, $31 for postage expense, $11 for supplies expense, and
$12 for miscellaneous expenses. Assume the cash balance is not over or short. In the
journal entry, Cash would be credited for ________.
A) $87
B) $76
C) $64
D) $75
When a business records accrued interest expense on a note payable ________.
A) Interest Expense is credited
B) Note Payable is credited
C) Cash is debited
D) Interest Payable is credited
D&I Supplies, Inc. selected cost data for the year are shown below:
Assuming manufacturing overhead costs of $27,800, what is the amount of direct labor
incurred by D&I Supplies, Inc. during the year?
A) $64,300
B) $190,040
C) $61,240
D) $128,800
When 1,000 shares of $3 stated value common stock is issued at $18 per share,
________.
A) Common Stock — $3 Stated is credited for $18,000
B) the account titled Paid-In Capital in Excess of Stated is used to record the issue price
of the stock
C) the difference between the issue price and the stated value is credited to Paid-In
Capital in Excess of Stated
D) the accounting is exactly the same as the accounting for par value stock
The only part that differs in a statement of cash flows prepared by the direct method
from one prepared by the indirect method is the ________.
A) financing activities section
B) investing activities section
C) operating activities section
D) non-cash investing and financing activities section
Midtown, Inc. uses a predetermined overhead allocation rate of $67 per direct labor
hour. In January, the company completed Job A23 which utilized 18 direct labor hours.
Which of the following correctly describes the journal entry to allocate overhead to the
job?
A) debit Finished Goods Inventory $1,206 and credit Manufacturing Overhead $1,206
B) debit Manufacturing Overhead $67 and credit Work-in-Process Inventory $67
C) debit Work-in-Process Inventory $1,206 and credit Manufacturing Overhead $1,206
D) debit Cost of Goods Sold $67 and credit Finished Goods Inventory $67
Owens Jewelers uses the perpetual inventory system. On April 2, Owens sold
merchandise with a cost of $2,500 for $7,000 to a customer on account with terms of
2/15, n/30. Which of the following journal entries correctly records the sales revenue?
A)
B)
C)
D)
When preparing the budgeted balance sheet of a merchandising company, the amount of
Merchandise Inventory can be obtained from the ________.
A) merchandise inventory account
B) inventory, purchases, and cost of goods sold budget
C) production budget
D) capital expenditure budget and cash budget
Federal unemployment compensation tax (FUTA) is not withheld from employees’
gross earnings.
Landon Jewelers uses the perpetual inventory system. On April 2, Landon sold
merchandise with a cost of $3,500 for $8,000 to a customer on account with terms of
1/15, n/30. The journal entry to record the cost of goods sold would be:
A)
B)
C)
D)
Which of the following is a characteristic of a corporation?
A) A corporation is owned by stockholders.
B) Lenders of a corporation do not have the right to claim the corporation’s assets to
satisfy their obligations.
C) All shares of a corporation must be held by a single individual.
D) Each stockholder has the authority to commit the corporation to a binding contract
through his/her actions.
Best Deals, Inc. has 13 units in ending merchandise inventory on December 31. The
units were purchased in November for $155 each. The price lists from suppliers indicate
the current replacement cost of the item to be $161 each. What would be the amount
reported as Merchandise Inventory on the balance sheet?
A) $2,015
B) $4,108
C) $316
D) $2,093
When a company is preparing a budgeted statement of cash flows, the payments for
selling and administrative expenses can be obtained from the ________.
A) budgeted payments for direct materials purchases
B) sales budget
C) cash budget
D) budgeted balance sheet
An intentional understatement of expected revenues or overstatement of expected
expenses by managers in order to have a favorable performance evaluation is known as
________.
A) benchmarking
B) appropriation
C) budgetary slack
D) variance analysis
June sales were $27,000, while projected sales for July and August were $51,000 and
$69,000, respectively. Sales are 60% cash and 40% credit. All credit sales are collected
in the month following the sale. Calculate expected collections for July.
A) $36,600
B) $41,400
C) $10,800
D) $30,600
The Sales Discounts account is a contra account to the ________ account.
A) Purchases
B) Sales Revenue
C) Merchandise Inventory
D) Sales Returns and Allowances
A company’s production department was experiencing a high defect rate on the
assembly line, which was slowing down production and causing wastage of valuable
direct materials. The production manager decided to purchase a higher grade of
materials that would be more reliable, but he was worried that the cost of the new
materials might negatively affect operating income. This would produce a(n) ________.
A) unfavorable direct materials cost variance
B) favorable direct labor cost variance
C) favorable direct labor efficiency variance
D) unfavorable direct materials efficiency variance
You did not understand what the term accrual meant and failed to accrue the interest
due at the end of the year on the company’s bonds. Which of the IMA standards appears
to have been violated here?
A) integrity
B) confidentiality
C) competence
D) objectivity
Which of the following is an example of exercising internal control over receivables?
A) separating cash collection and credit approval duties
B) extending credit to all customers who apply for credit
C) combining the duties of the credit and accounting departments
D) allowing credit department employees to collect cash from customers
Lakeside, Inc. estimated manufacturing overhead costs for the year at $371,000, based
on 181,000 estimated direct labor hours. Actual direct labor hours for the year totaled
196,000. The manufacturing overhead account contains debit entries totaling $392,000.
The Manufacturing Overhead for the year was ________. (Round any intermediate
calculations to two decimal places, and your final answer to the nearest dollar.)
A) $49,393 underallocated
B) $49,393 overallocated
C) $9,800 underallocated
D) $9,800 overallocated
The Assembly Department of One Roof, Inc., manufacturer of computers, incurred
$280,000 in direct material costs and $70,000 in conversion costs. The equivalent units
of production for direct materials and conversion costs are 1,500 and 600, respectively.
The cost per equivalent unit of production (EUP) for conversion costs is ________.
(Round your answer to the nearest cent.)
A) $116.67 per EUP
B) $46.67 per EUP
C) $466.67 per EUP
D) $186.67 per EUP
A company purchased 300 units for $30 each on January 31. It purchased 360 units for
$36 each on February 28. It sold a total of 460 units for $40 each from March 1 through
December 31. What is the amount of ending inventory on December 31 if the company
uses the first-in, first-out (FIFO) inventory costing method? (Assume that the company
uses a perpetual inventory system.)
A) $7,200
B) $5,360
C) $6,000
D) $640
Which of the following statements regarding capital expenditures is incorrect?
A) Capital expenditures are purchases of long-term assets.
B) The decision to purchase long-term assets is part of a strategic plan.
C) Capital expenditures include delivery trucks, computer systems, and manufacturing
equipment.
D) Installment payments related to the purchase of long-term assets are included in the
capital expenditures budget.
Lerner, Inc. had the following transactions in 2017, its first year of operations:
• Issued 22,000 shares of common stock. The stock has a par value of $3.00 per share
and was issued at $16.00 per share.
• Issued 1,800 shares of $160 par value preferred stock at par.
• Earned net income of $37,000.
• Paid no dividends.
At the end of 2017, what is total stockholders’ equity?
A) $677,000
B) $354,000
C) $286,000
D) $640,000