Final 2

Question 1

A company had a beginning balance in retained earnings of $43,600. It had net income of $6,600 and paid out cash dividends of $5,775 in the current period. The ending balance in retained earnings equals:

Answer 1

44,425

Question 2

A corporation sold 17,500 shares of its $10 par value common stock at a cash price of $15 per share. The entry to record this transaction would include:

Answer 2

A credit to Common Stock for $175,000

Question 3

A corporation issued 6,700 shares of $10 par value common stock in exchange for some land with a market value of $104,000. The entry to record this exchange is:

Answer 3

Debit Land $104,000; credit Common Stock $67,000; credit Paid-In Capital in Excess of Par Value, Common Stock $37,000

Question 4

Morgan Company issues 10%, 20-year bonds with a par value of $690,000 that pay interest semi-annually. The current market rate is 9%. The amount of interest owed to the bondholders for each semiannual interest payment is:

Answer 4

$ 34,500

Question 5

A company borrowed $55,000 cash from the bank and signed a 7-year note at 5% annual interest. The present value of an annuity factor for 7 years at 5% is 5.7864. The annual annuity payments equal:

Answer 5

$ 9,505.05

Question 6

A company has an investment in 11% bonds with a par value of $168,000 that pay interest on October 1 and April 1. The amount of interest accrued on December 31 (the company’s year-end) would be

Answer 6

$ 4,620

Question 7

Six months ago, a company purchased an investment in stock for $66,000. The investment is classified as available-for-sale securities. The current fair value of the stock is $69,150. The company should record a:

Answer 7

Credit to Unrealized Gain-Equity to $3,150

Question 8

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

  Net income	$ 86,200  
  Depreciation expense	12,900  
  Gain on sale of land	7,400  
  Increase in merchandise inventory	2,950  
  Increase in accounts payable	7,050

Answer 8

$ 95,800

Question 9

A classification of costs that determines whether a cost is expensed to the income statement or capitalized to inventory is

Answer 9

Product versus Indirect

Question 10

A direct cost is a cost that is:

Answer 10

Traceable to a single cost object

Question 11

Jones Corp. reported current assets of $197,000 and current liabilities of $139,000 on its most recent balance sheet. The current assets consisted of $60,800 Cash; $41,800 Accounts Receivable; and $94,400 of Inventory. The acid-test (quick) ratio is

Answer 11

0.74:1

Question 12

Zhang Company reported Cost of goods sold of $842,000, beginning Inventory of $38,600 and ending Inventory of $47,000. The average Inventory amount is

Answer 12

$ 42,800

Question 13

Classifying costs by behavior with changes in volume of activity involves:

Answer 13

Identifying fixed costs and variable cost

Question 14

Refer to the following selected financial information from Shakley’s Incorporated. Compute the company’s debt-to-equity ratio for Year 2.

 	Year 2	Year 1
  Net sales	$ 487,500  	$ 428,050  
  Cost of goods sold	278,100  	251,920  
  Interest expense	11,500  	12,500  
  Net income before tax	69,050  	54,480  
  Net income after tax	47,850  	41,700  
  Total assets	320,700  	298,800  
  Total liabilities	172,400  	169,100  
  Total equity	148,300  	129,700

Answer 14

1.16

Question 15

Using the information below, calculate gross profit for the period.

Beginning Raw Materials Inventory $26,000
Ending Direct Materials Inventory $31,000
Beginning Work in Process Inventory $57,000
Ending Work in Process Inventory $66,000
Beginning Finished Goods Inventory $82,000
Ending Finished Goods Inventory $69,000
Cost of Goods Sold for the period $550,000
Sales revenues for the period $1,274,000
Operating expenses for the period $242,000

Answer 15

$724,000

Question 16

Comet Company accumulated the following account information for the year:

Beginning raw materials inventory $ 5,500
Indirect materials cost 1,500
Indirect labor cost 4,500
Maintenance of factory equipment 2,300
Direct labor cost 6,500

Using the above information, total factory overhead costs would be:

Answer 16

$8,300

Question 17

The three major cost components of manufacturing a product are:

Answer 17

Direct materials, direct labor, and factory overhead

Question 18

Factory overhead costs may include all of the following except:

Answer 18

Selling costs

Question 19

Oxford Company uses a job order costing system. In the last month, the system accumulated labor time tickets total $24,600 for direct labor and $4,300 for indirect labor. These costs were accumulated in Factory Payroll as they were paid. Which entry should Oxford make to record the indirect labor used?

Answer 19

Debit Factory Overhead $ 4,300; Credit Factory Wages Payable $28,900

Question 20

A source document that an employee uses to report how much time was spent working on a job or on overhead activities and that is used to determine the amount of direct labor to charge to the job or to determine the amount of indirect labor to charge to factory overhead is called a:

Answer 20

Time Ticket

Question 21

A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $20,000?

Answer 21

$ 25,000

Question 22

Portside Watercraft uses a job order costing system. During one month Portside purchased $153,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll of $95,000, paid in cash, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the issuance of materials to production is:

Answer 22

Debit Work in Process Inventory $140,000; debit Factory Overhead $24,000; credit Raw Materials Inventory $164,000

Question 23

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the amount of under- or over applied overhead for the year.

Answer 23

$ 10,000 under applied

Question 24

A company uses the weighted-average method for inventory costing. At the end of the period, 22,000 units were in the ending Work in Process inventory and are 100% complete for materials and 65% complete for conversion. The equivalent costs per unit are; materials, $2.55, and conversion $2.20. Compute the cost that would be assigned to the ending Work in Process inventory for the period.

Answer 24

$87,560.

Question 25

Which of the following characteristics applies to process costing but not to job order cost accounting?

Answer 25

Equivalent units of production

Question 26

Andrews Corporation uses a process costing system for manufacturing. The following information is available for the February in its Polishing Department:

Equivalent units of production—direct materials 110,000 EUP
Equivalent units of production—conversion 95,000 EUP
Costs in beginning Work in Process—direct materials $49,000
Costs in beginning Work in Process—conversion $36,000
Costs incurred in February—direct materials $414,000
Costs incurred in February—conversion 520,000

The cost per equivalent unit of production for conversion is:

Answer 26

$5.85

Question 27

Gladstone Co. has expected sales of $366,000 for the upcoming month and its monthly break even sales are $350,000. What is the margin of safety as a percent of sales, round your percentage answer to two decimal places?

Answer 27

$ 4.37%

Question 28

A company has fixed costs of $75,250. Its contribution margin ratio is 35% and the product sells for $71 per unit. What is the company’s break-even point in dollar sales?

Answer 28

$ 215,000

Question 29

A cost that changes as volume changes, but at a nonconstant rate, is called a:

Answer 29

Curvilinear cost

Question 30

Zhang Industries budgets production of 280 units in June and 290 units in July. Each unit requires 1.5 hours of direct labor. The direct labor rate if $13.60 per hour. The indirect labor rate is $20.60 per hour. Compute the budgeted direct labor cost for July

Answer 30

$ 5,916

Question 31

The master budget of a merchandising company includes a:

Answer 31

Purchases budget

Question 32

A sporting goods manufacturer budgets production of 45,000 pairs of ski boots in the first quarter and 30,000 pairs in the second quarter of the upcoming year. Each pair of boots require 2 kg of a key raw material. The company aims to end each quarter with ending raw materials inventory equal to 20% of the following quarter’s material needs. Beginning inventory for this material is 18,000 kg and the cost per kg is $8. What is the budgeted materials purchases cost for the first quarter?

Answer 32

$672,000