1) Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for
August. The direct materials requirement per unit is 2 ounces. The company has
determined that it wants to have safety stock of direct materials on hand at the end of
each month to complete 20% of the units budgeted in the following month. There was
3,160 ounces of direct material in inventory at the start of July. The total amount direct
materials in ounces to be purchased in July is.
A.15,800.
B.16,200.
C.19,040.
D.15,880.
E.15,720.
2) A company pays its employees $4,000 each Friday, which amounts to $800 per day
for the five-day workweek that begins on Monday. If the monthly accounting period
ends on Thursday and the employees worked through Thursday, the amount of salaries
earned but unpaid at the end of the accounting period is:
A.$4,000.
B.$800.
C.$1,600.
D.$2,400.
E.$3,200.
3) On January 1, Year 1 Cleaver Company borrowed $85,000 cash by signing a 7%
installment note that is to be repaid with 4 annual year-end payments of $25,094, the
first of which is due on December 31, Year 1.
(a) Prepare the company’s journal entry to record the note’s issuance.
(b) Prepare the journal entries to record the first installment payment.
4) A short-term note payable:
A.Is a written promise to pay a specified amount on a definite future date within one
year or the company’s operating cycle, whichever is longer.
B.Is a contingent liability.
C.Is an estimated liability.
D.Is not a liability until the due date.
E.Cannot be used to extend the payment period for an account payable.
5) When using the indirect method to calculate and report the net cash provided or used
by operating activities, net income is adjusted for all but which of the following?
A.Gains and losses from nonoperating items.
B.Revenues and expenses that did not provide or use cash.
C.Changes in noncurrent assets and noncurrent liabilities.
D.Changes in current liabilities related to operating activities.
E.Depreciation and amortization expense.
6) Brinker accepts all major bank credit cards, including First Savings Bank’s, which
assesses a 2.5% charge on sales for using its card. On May 26, Brinker had $4,800 in
First Savings Bank Card credit sales. What entry should Brinker make on May 26 to
record the deposit?
A.Debit Accounts Receivable $4,800; credit Sales $4,800.
B.Debit Cash $4,680; debit Credit Card Expense $120; credit Sales $4,800.
C.Debit Cash $4,800; credit Sales $4,800.
D.Debit Cash $4,920; credit Credit Card Expense $120; credit Sales $4,800.
E.Debit Accounts Receivable $4,680; debit Credit Card Expense $120; credit Sales
$4,800.
7) Use the following data to find the direct labor efficiency variance if the company
produced 3,500 units during the period.
A.$6,125 unfavorable.
B.$7,000 unfavorable.
C.$7,000 favorable.
D.$12,250 favorable.
E.$6,125 favorable.
8) Which of the following statements is most accurate?
A.In process costing, estimating the degree of completion of units is usually more
accurate for conversion costs than for direct materials.
B.The FIFO method includes the cost of the beginning Work in Process inventory
account in calculating cost per equivalent units.
C.The FIFO method computes equivalent units based only on production activity in the
current period, ignoring the percentage of completion in beginning Work in Process
inventory.
D.The FIFO method of calculating equivalent units of production merges the work and
the costs of the beginning inventory with the work and the costs done during the current
period.
E.It is not possible for there to be a significant difference between the cost of completed
units between the weighted average and the FIFO methods.
9) KL Company uses a job order costing system. During the month of July, the
following events occurred:
(a) Purchased raw materials on credit, $32,000.
(b) Raw materials requisitioned: $25,800 as direct materials and $10,500 indirect
materials.
(c) Assigned the factory payroll totaling $37,700, which includes $8,200 indirect labor,
to jobs and overhead.
Make the necessary journal entries to record the above transactions and events.
10) In comparison to a general accounting system, a cost accounting system for a
manufacturing company places an emphasis on:
A.Periodic inventory counts.
B.Total costs.
C.Continually updating costs of materials, work in process, and finished goods
inventories.
D.Products and average costs.
E.Large volume operations involving standardized products.
11) Using the information below, compute the manufacturing cycle time:
A.7.5 hours.
B.6.5 hours.
C.8.0 hours.
D.80.0 hours.
E.7.1 hours.
12) A company paid cash dividends on its preferred stock of $40,000 in the current year
when its net income was $120,000 and its average common stockholders’ equity was
$640,000. What is the company’s return on common stockholders’ equity?
13) Bonds payable to whoever holds them are called _________________ bonds.
14) Match each of the following terms with the appropriate definitions.
15) The adjusted trial balance of the Waterstone Company follows:
Prepare the closing entries for Waterstone Company.
16) Gardener Company had the following transactions during January:
Using the net method of recording purchases, prepare the journal entries to record these
January transactions.
