1) Malay Corporation issued $2 million, 10-year, 6% bonds on January 1, 2014 .
Instructions
Prepare the entry to record the sale of these bonds, assuming they were issued at
(a)98
(b)103
2) Niles Manufacturing estimates its sales at 220,000 units in the first quarter and that
sales will increase by 20,000 units each quarter over the year. They have, and desire, a
25% ending inventory of finished goods. Each unit sells for $35. 40% of the sales are
for cash. 70% of the credit customers pay within the quarter. The remainder is received
in the quarter following sale.
Production in units for the third quarter should be budgeted at
a.275,000
b.265,000
c.330,000
d.260,000
3) Casey Company has a materials price standard of $2.10 per pound. Six thousand
pounds of materials were purchased at $2.20 a pound. The actual quantity of materials
used was 6,000 pounds, although the standard quantity allowed for the output was
5,400 pounds.
Casey Company’s materials quantity variance is
a.$1,260 F
b.$1,260 U
c.$1,320 F
d.$1,320 U
4) Bonds that are secured by real estate are termed
a.mortgage bonds
b.serial bonds
c.debentures
d.bearer bonds
5) Revenue recognition under IFRS is
a.substantially different from revenue recognition under GAAP
b.generally the same as revenue recognition under GAAP, but with more detailed
guidance
c.generally the same as revenue recognition under GAAP, but with less detailed
guidance
d.exactly the same as revenue recognition under GAAP
6) Thomas Company recorded operating data for its shoe division for the year.
Sales revenue$1,500,000
Contribution margin300,000
Controllable fixed costs160,000
Average total operating assets600,000
How much is controllable margin for the year?
a.20%
b.50%
c.$140,000
d.$300,000
7) Misra Company compiled the following financial information as of December 31,
2014:
Revenues$340,000
Owners Capital (1/1/14)140,000
Equipment80,000
Expenses250,000
Cash90,000
Owners Drawings20,000
Supplies10,000
Accounts payable40,000
Accounts receivable70,000
Misras assets on December 31, 2014 are
a.$180,000
b.$250,000
c.$360,000
d$490,000
8) A time ticket does not indicate the
a.employee’s name
b.account to be charged
c.number of personal exemptions claimed by the employee
d.job number
9) Knoe Company applies overhead on the basis of 125% of direct labor cost. Job No.
176 is charged with $120,000 of direct materials costs and $130,000 of manufacturing
overhead. The total manufacturing costs for Job No. 176 is
a.$250,000
b.$412,500
c.$282,500
d.$354,000
10) On October 1, 2014, Holt Company places a new asset into service. The cost of the
asset is $120,000 with an estimated 5-year life and $30,000 salvage value at the end of
its useful life. What is the book value of the plant asset on the December 31, 2014,
balance sheet assuming that Holt Company uses the double-declining-balance method
of depreciation?
a.$78,000
b.$90,000
c.$108,000
d.$114,000
11) The following transactions represent part of the activities of Bloc Party Company
for the first month of its existence. Indicate the effect of each transaction upon the total
assets of the business by one of the following phrases: increased total assets, decreased
total assets, or no change in total assets.
(a)The owner invested cash to start the business.
(b)Purchased a computer for cash.
(c)Purchased office equipment with money borrowed from the bank.
(d)Paid the first month’s utility bill.
(e)Collected an accounts receivable.
(f)Owner withdrew cash from the business.
12) The major reporting standard for presenting managerial accounting information is
a.relevance
b.generally accepted accounting principles
c.the cost principle
d.the current tax law
13) The comparison of differences between actual and planned results
a.is done by the external auditors
b.appears on the company’s external financial statements
c.is usually done orally in departmental meetings
d.appears on periodic budget reports
14) Bonita Company reported the following amounts for 2014:
Raw materials purchased$83,000
Beginning raw materials inventory5,900
Ending raw materials inventory4,200
Beginning finished goods inventory7,600
Ending finished goods inventory8,000
Direct labor used24,000
Manufacturing overhead costs applied38,000
Beginning work in process inventory6,100
Ending work in process inventory6,300
Instructions
Calculate (a) the cost of materials used in production and (b) total manufacturing costs.
15) Expenses sometimes make their contribution to revenue in a different period than
when they are paid. When salaries and wages are incurred in one period and paid in the
next period, this often leads to which account appearing on the balance sheet at the end
of the time period?
a.Due from Employees
b.Due to Employer
c.Salaries and Wages Payable
d.Salaries and Wages Expense
16) Sam Hammonel is considering opening a Kwik Oil Change Center. He estimates
that the following costs will be incurred during his first year of operations: Rent $8,200,
Depreciation on equipment $8,000, Wages $16,400, Motor oil $2.00 per quart. He
estimates that each oil change will require 5 quarts of oil. Oil filters will cost $2.00
each. He must also pay The Kwik Corporation a franchise fee of $2.10 per oil change,
since he will operate the business as a franchise. In addition, utility costs are expected
to behave in relation to the number of oil changes as follows:
Number of Oil ChangesUtility Costs
4,000$ 6,000
6,000$ 7,300
9,000$ 9,600
12,000$12,600
14,000$15,000
Mr. Hammonel anticipates that he can provide the oil change service with a filter at
$25.00 each.
Instructions
(a)Using the high-low method for utility costs, determine total variable costs per unit
and total fixed costs.
(b)Determine the break-even point in number of oil changes and sales dollars.
(c)Without regard to your answers in parts (a) and (b), determine the oil changes
required to earn net income of $20,000, assuming fixed costs are $32,000 and the
contribution margin per unit is $8.
17) All of the following are relevant in deciding whether to eliminate an unprofitable
segment except the segment’s
a.sales
b.variable expenses
c.contribution margin
d.fixed expenses
18) Which of the following is not a condition which would require the recording of a
lease contract as a capital lease?
a.The lease transfers ownership of the property to the lessee
b.The lease contains a bargain purchase option
c.The lease term is less than 75% of the economic life of the leased property
d.The present value of the lease payments equals or exceeds 90% of the fair value of the
leased property
19) A petty cash fund should be replenished
a.every day
b.at the end of every accounting period
c.once a year
d.as soon as an expense is paid from the fund
20) Haven Company uses the percentage of sales method for recording bad debts
expense. For the year, cash sales are $600,000 and credit sales are $2,700,000.
Management estimates that 1% is the sales percentage to use. What adjusting entry will
Haven Company make to record the bad debts expense?
a.Bad Debt Expense 33,000
Allowance for Doubtful Accounts 33,000
b.Bad Debt Expense 27,000
Allowance for Doubtful Accounts 27,000
c.Bad Debt Expense 27,000
Accounts Receivable 27,000
d.Bad Debt Expense 33,000
Accounts Receivable 33,000
21) In determining total manufacturing costs on the cost of goods manufactured
schedule,
a.beginning work in process inventory should have a zero balance
b.actual manufacturing overhead costs appear as a deduction
c.manufacturing overhead applied is added to direct materials and direct labor
d.ending work in process inventory is deducted from beginning work in process
inventory
22) If prepaid expenses are initially recorded in expense accounts and have not all been
used at the end of the accounting period, then failure to make an adjusting entry will
cause
a.assets to be understated
b.assets to be overstated
c.expenses to be understated
d.contra-expenses to be overstated
23) On July 1, 2014, Hale Kennels sells equipment for $220,000. The equipment
originally cost $600,000, had an estimated 5-year life and an expected salvage value of
$100,000. The accumulated depreciation account had a balance of $350,000 on January
1, 2014, using the straight-line method. The gain or loss on disposal is
a.$30,000 gain
b.$20,000 loss
c.$30,000 loss
d.$20,000 gain
24) Both IFRS and GAAP require disclosure about
a.accounting policies followed
b.judgements that management has made in the process of applying the entity’s
accounting policies
c.the key assumptions and estimation uncertainty
d.All of these answer choices are correct
25) Walt Bach Company has accumulated the following budget data for the year 2013.
1>Sales: 40,000 units, unit selling price $50.
2>Cost of one unit of finished goods: Direct materials 2 pounds at $5 per pound, direct
labor 1.5 hours at $12 per hour, and manufacturing overhead $6 per direct labor hour.
3>Inventories (raw materials only): Beginning, 10,000 pounds; ending, 15,000 pounds.
4>Raw materials cost: $5 per pound.
5>Selling and administrative expenses: $200,000.
6>Income taxes: 30% of income before income taxes.
Instructions
(a)Prepare a schedule showing the computation of cost of goods sold for 2013 .
(b)Prepare a budgeted income statement for 2013 .
26) The range over which a company expects to operate is referred to as the
_____________ range.
27) Identify the internal control procedures applicable to cash disbursements followed
by Downey Company in each of the following cases.
1>Company checks are prenumbered.
2>Only the treasurer is authorized to sign checks.
3>All employees are required to take vacations.
4>Blank checks are stored in a locked safe.
5>The bookkeeper, not the treasurer, records cash disbursements.
28) With an interest-bearing note, a borrower must pay the ________________ of the
note plus _________________ at maturity.
29) Wayne Company reported net income of $265,000 for 2014 . Wayne also reported
depreciation expense of $45,000 and a loss of $8,000 on the sale of equipment. The
comparative balance sheet shows a decrease in accounts receivable of $15,000 for the
year, a $17,000 increase in accounts payable, and a $6,000 decrease in prepaid
expenses.
Instructions
Prepare the operating activities section of the statement of cash flows for 2014 . Use the
indirect method.
30) A manufacturing company computes cost of goods sold by adding cost of goods
manufactured to the ___________________ and subtracting the __________________.
31) In September 2013, the budget committee of Jason Company assembles the
following data:
1>Expected Sales
October$1,800,000
November1,700,000
December1,600,000
2>Cost of goods sold is expected to be 60% of sales.
3>Desired ending merchandise inventory is 20% of the next month’s cost of goods sold.
4>The beginning inventory at October 1 will be the desired amount.
Instructions
Prepare the budgeted income statement for October through gross profit on sales,
including a cost of goods sold schedule.
32) The following information is available for Redcands Company:
Receipts from customers$215,000
Dividends from stock investments3,000
Proceeds from sale of equipment18,000
Proceeds from issuance of stock90,000
Payments for inventory100,000
Payments for operating expenses78,000
Interest paid6,000
Taxes paid4,000
Dividends paid20,000
Instructions
Based on the preceding information, compute the net cash provided by operating
activities.
33) On January 1, Oetry Corporation purchased a 35% equity in Selig Company for
$190,000. At December 31, Selig declared and paid a $50,000 cash dividend and
reported net income of $80,000.
Instructions
Prepare the necessary journal entries for Oetry Corporation.
34) Presented below are incomplete 2014 manufacturing cost data for Latte
Corporation.
Instructions
Determine the missing amounts.
35) Obligations in written form are called ______________ and usually require the
borrower to pay interest.