1) A company pays an employee $3,000 for a five day work week, Monday – Friday.
The adjusting entry on December 31, which is a Wednesday, is debit Wages Expense,
$1,800 and credit Wages Payable, $1,800.
2) A firm selling food should have higher inventory turnover rate than a firm selling
office furniture.
3) Service companies can effectively use activity-based costing to compute product
(service) costs.
4) If the costs for direct materials, direct labor, and factory overhead were $277,300,
$52,600, and $61,000, respectively, for 14,000 equivalent units of production, the total
conversion cost was $390,900.
5) Federal unemployment compensation tax becomes an employer’s liability at the time
the employee is paid.
6) The cost of production report summarizes (1) the units for which the department is
accountable and the units to be assigned costs and (2) the costs charged to the
department and the allocation of those costs.
7) Job order cost accounting systems may be used to evaluate a company’s efficiency.
8) The right hand side of a T account is known as a debit and the left hand side is
known as a credit.
9) If the proceeds from the sale of bond investments exceeds the carrying amount of the
bonds, a gain is realized.
10) Once an account has been closed for the period, inserting a line in the balance
columns zeros out the account, making it ready for the following period.
11) In a just-in-time (JIT) environment, the journal entry to record raw materials
purchases would include a debit to the raw and in process inventory account.
12) If a firm has a quick ratio of 1, the subsequent payment of an account payable will
cause the ratio to increase.
13) The amount of income that would result from an alternative use of cash is called
opportunity cost.
14) A process cost accounting system records all actual factory overhead costs directly
in the Work in Process account.
15) At the end of the fiscal period, prepaid expenses are reported on the income
statement as expenses.
16) The cumulative effects of other comprehensive income items is included in retained
earnings, on the balance sheet.
17) Unusual items affecting the prior periods income statement consist of errors and
change in accounting principles.
18) During 2012, its first year of operations, Makala Company purchased two
available-for-sale investments as follows:
Assume that as of December 31, 2012, the Oceanna Company stock had a market value
of $49 per share and Rockledge, Inc. stock had a market value of $20 per share.
Makala had 10,000 shares of no par stock outstanding that was issued for $150,000. For
the year ending December 31, 2012, Makala had a net income of $105,000. No
dividends were paid.
Required:
19) Journalize the following selected transactions completed during the current fiscal
year:
20) The inventory at April 1, 2012, and the costs charged to Work in
Process–Department B during April for Zarley Company are as follows:
During April, all direct materials are transferred from Department A, the units in
process at April 1 were completed, and of the 26,000 units entering the department, all
were completed except 1,000 units which were 70% completed as to conversion costs.
Inventories are costed by the first-in, first-out method.
Prepare a cost of production report for April.
21) Using the following data taken from Martinez Inc., determine the gross profit to be
reported on the income statement for the year ended May 31, 2011.
22) On January 1st, Great Designs Company had a debit balance of $1,450 in the Office
Supplies account. During the month, Great Designs purchased $115 and $160 of office
supplies and journalized them to the Office Supplies asset account upon purchasing. On
January 31st, an inspection of the office supplies cabinet shows that only $350 of Office
Supplies remains in the locker. Prepare the January 31st adjusting entry for Office
Supplies.
23) On January 31, the cash account balance was $96,750. During January, cash
receipts totaled $305,000 and cash payments totaled was $375,880. Determine the cash
balance on January 1.
24) Selected ledger accounts appear below for Fulton Surveying Services for 2014.
Prepare a retained earnings statement.
25) The cash flows from operating activities are reported by the direct method on the
statement of cash flows. Determine the following:
26) The balance sheet for Borglum Company at the end of the current fiscal year
indicated the following:
Income before income tax was $1,500,000 and income taxes were $200,000, for the
current year. Cash dividends paid on common stock during the current year totaled
$150,000. The common stock was selling for $70 per share at the end of the year.
Required:
Determine each of the following:
Round to one decimal place except earnings per share and dividends per share, which
should be rounded to two decimal places.
