1) The difference between actual hours times the actual pay rate and actual hours times
the standard pay rate is the labor _________________ variance.
2) On September 1, Reid Supply had an inventory of 15 backpacks at a cost of $20
each. The company uses a perpetual inventory system. During September, the following
transactions and events occurred.
Sept.4Purchased 70 backpacks at $20 each from Hunter, terms 2/10, n/30.
Sept.6Received credit of $100 for the return of 5 backpacks purchased on Sept. 4 that
were defective.
Sept.9Sold 40 backpacks for $35 each to Oliver Books, terms 2/10, n/30.
Sept.13Sold 15 backpacks for $35 each to Heller Office Supply, terms n/30.
Sept.14Paid Hunter in full, less discount.
Instructions
Journalize the September transactions for Reid Supply.
3) In a service company, revenue is recognized when the service is ______________.
4) Salt Company is preparing its direct labor budget for 2014 from the following
production budget based on a calendar year:
Quarter Units
180,000
240,000
360,000
4100,000
Each unit requires 1.5 hours of direct labor. The union contract provides for a 20%
increase in wage rate to $12 per hour on October 1 .
Instructions
Prepare a direct labor budget for 2014 .
5) The four major classifications of assets in a classified balance sheet are:
________________, ________________, ________________ and ________________.
6) At December 31, 2014, the trading securities for Eddy Company are as follows:
Security Cost Fair Value
A$16,000$20,000
B 34,000 32,000
$50,000$52,000
Prepare the adjusting entry at December 31, 2014, to report the securities at fair value.
7) On October 1, Benjis Bicycle Store had an inventory of 20 ten speed bicycles at a
cost of $200 each. During the month of October, the following transactions occurred.
Oct.4Purchased 40 bicycles at a cost of $200 each from Monrue Bicycle Company,
terms 1/10, n/30.
6 Sold 25 bicycles to Team Wisconsin for $330 each, terms 2/10, n/30.
7Received credit from Monrue Bicycle Company for the return of 2 defective bicycles.
13Issued a credit memo to Team Wisconsin for the return of a defective bicycle.
14Paid Monroe Bicycle Company in full, less discount.
Instructions
Prepare the journal entries to record the transactions assuming the company uses a
perpetual inventory system.
8) Greyhound Stables, Inc. operates several dog racing tracks throughout the United
States. Since most facilities are outdoor tracks only, most of the cash receipts for
Greyhound are received from April through October. These funds are usually invested
in short-term, very liquid investments, such as stocks and bonds. Among the stocks
purchased last year, was Servitronics, a company specializing in automatic vending
equipment.
The company decided not to sell its Servitronics stock at the end of last year, and has
purchased more of the stock this year. The company intends to continue to purchase
stock until it holds enough to make a takeover bid for the company. The accountants
have been instructed to continue to classify the investment as short-term until the
takeover is accomplished, so that less attention will be directed to it. (Presently,
Greyhound has no long-term investment in stock at all.)
Required:
1>Is it ethical for Greyhound to attempt to take over another company? Explain.
2>Is it ethical for Greyhound to leave its investment in the short-term investment
category? Explain.