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Principles of Accounting lI Course number: ACCT 221 Semester: Spring 2014, OL1 final exam




Question;1. Jackson Company is a publicly held corporation whose $1;par value stock is actively;traded at $64 per share. The company issued 3,000 shares of;stock to acquire land;recently advertised at $200,000. When recording this;transaction, Barton Company;will;A) debit Land for $200,000.;B) credit Common Stock for $192,000.;C) debit Land for $192,000.;D) credit Paid-In Capital in Excess of Par for $196,000.;2. Victory Corporation sold 400 shares of treasury stock for;$45 per share. The cost for;the shares was $35. The entry to record the sale will;include a;A) credit to Gain on Sale of Treasury Stock for $14,000.;B) credit to Paid-in Capital from Treasury Stock for $4,000.;C) debit to Paid-in Capital in Excess of Par for $4,000.;D) credit to Treasury Stock for $18,000.;3. Which of the following show the proper effect of a stock;split and a stock dividend?;4. Dabney, Inc., has 5,000 shares of 5%, $100 par value;noncumulative preferred stock;and 40,000 shares of $1 par value common stock outstanding;at December 31;2014. There were no dividends declared in 2013. The board of;directors declares;and pays a $60,000 dividend in 2014. What is the amount of;dividends received by;the common stockholders in 2014?;A) $0;B) $25,000;C) $10,000;D) $35,000;5. A $600,000 bond was retired at 98 when the carrying value;of the bond was;$590,000. The entry to record the retirement would include a;A) gain on bond redemption of $10,000.;B) loss on bond redemption of $10,000.;C) loss on bond redemption of $2,000.;D) gain on bond redemption of $2,000.Page 3 of 10;6. The following data are available for Two-off Company.;Increase in accounts payable $120,000;Increase in bonds payable 300,000;Sale of investments 150,000;Issuance of common stock 160,000;Payment of cash dividends 90,000;Net cash provided by financing activities is;A) $180,000.;B) $370,000.;C) $360,000.;D) $420,000.;7. The net income reported on the income statement for the;current year was $220,000.;Depreciation recorded on plant assets was $35,000. Accounts;receivable and;inventories increased by $2,000 and $8,000, respectively.;Prepaid expenses and;accounts payable decreased by $2,000 and $12,000;respectively. How much cash;was provided by operating activities?;A) $200,000;B) $235,000;C) $220,000;D) $255,000;8. If a company reports a net loss, it;A) may still have a net increase in cash.;B) will not be able to pay cash dividends.;C) will not be able to get a loan.;D) will not be able to make capital expenditures.;9. A creditor would be most interested in evaluating which;of the following ratios?;A) Asset turnover;B) Earnings per share;C) Payout ratio;D) Times interest earned;10. Lionel Company has beginning work in process inventory;of $220,000 and total;manufacturing costs of $950,000. If cost of goods;manufactured is $940,000, what;is the cost of the ending work in process inventory?;A) $210,000.;B) $230,000.;C) $240,000.;D) $206,000.Page 4 of 10;11. The principal difference between a merchandising and a;manufacturing income;statement is the;A) cost of goods sold section.;B) extraordinary item section.;C) operating expense section.;D) revenue section.;12. Given the following data for Good man Company, compute;(A) total manufacturing;costs and (B) costs of goods manufactured;Direct materials used $345,000 Beginning work in process;$15,000;Direct labor 305,000 Ending work in process 60,000;Manufacturing overhead 450,000 Beginning finished goods;75,000;Operating expenses 525,000 Ending finished goods 45,000;Total Manufacturing;Costs;Costs of Goods;Manufactured;A) $1,055,000 $1,100,000;B) $1,070,000 $1,130,000;C) $1,100,000 $1,055,000;D) $1,130,000 $1,055,000;13. Alpine Inc. uses job order costing for its brand new;line of sewing machines. The;cost incurred for production during 2014 totaled $20,000 of;materials, $8,000 of;direct labor costs, and $8,000 of manufacturing overhead;applied. The company;ships all goods as soon as they are completed which results;in no finished goods;inventory on hand at the end of any year. Beginning work in;process totaled;$9,000, and the ending balance is $15,000. During the year;the company;completed 20 machines. How much is the cost per machine?;A) $1,500;B) $1,880;C) $1,320;D) $1,760;14. For Cevu Company, the predetermined overhead rate is 75%;of direct labor cost.;During the month, $750,000 of factory labor costs are;incurred of which $200,000 is;indirect labor. Actual overhead incurred was $420,000. The;amount of overhead;debited to Work in Process Inventory should be;A) $560,000;B) $412,500;C) $420,000;D) $562,500Page 5 of 10;15. Hunten Manufacturing assigns overhead based on machine;hours. The Milling;Department logs 1,400 machine hours and Cutting Department;shows 3,000;machine hours for the period. If the overhead rate is $5 per;machine hour, the entry;to assign overhead will show a;A) debit to Manufacturing Overhead for $22,000.;B) credit to Work in Process?Cutting Department for $15,000.;C) debit to Work in Process for $15,000.;D) credit to Manufacturing Overhead for $22,000.;16. The Molding Department of Bidwell Company has the;following production data;beginning work process 40,000 units (60% complete), started;into production;680,000 units, completed and transferred out 640,000 units;and ending work in;process 80,000 units (40% complete). Assuming materials are;entered at the;beginning of the process, equivalent units for materials;are;A) 720,000.;B) 600,000.;C) 640,000.;D) 760,000.;17. ThoAon, Inc. collected the following production data for;the past month;Units Produced Total Cost;1,600 $22,000;1,300 19,000;1,500 22,500;1,100 16,500;If the high-low method is used, what is the monthly total;cost equation?;A) Total cost = $4,400 + $11/unit;B) Total cost = $5,500 + $10/unit;C) Total cost = $0 + $15/unit;D) Total cost = $3,300 + $12/unit;18. At the break-even point of 2,000 units, variable costs;are $120,000, and fixed costs;are $64,000. How much is the selling price per unit?;A) $92;B) $32;C) $28;D) Not enough informationPage 6 of 10;19. The following information is taken from the production;budget for the first quarter;Beginning inventory in units 1,800;Sales budgeted for the quarter 678,000;Capacity in units of production facility 708,000;How many finished goods units should be produced during the;quarter if the company;desires 4,800 units available to start the next quarter?;A) 675,000;B) 681,000;C) 711,000;D) 682,800;20. Jared Manufacturing is planning to sell 1,200 boxes of;ceramic tile, with production;estimated at 1,120 boxes during May. Each box of tile;requires 44 pounds of clay;mix and a quarter hour of direct labor. Clay mix costs $0.50;per pound and;employees of the company are paid $15.00 per hour.;Manufacturing overhead is;applied at a rate of 110% of direct labor costs. Jacob has;5,200 pounds of clay mix;in beginning inventory and wants to have 6,000 pounds in;ending inventory.;What is the total amount to be budgeted for manufacturing;overhead for the month?;A) $4,620;B) $4,950;C) $18,480;D) $19,800;21. Sales results that are evaluated by a static budget;might show;1. favorable differences that are not justified.;2. unfavorable differences that are not justified.;A) 1;B) 2;C) both 1 and 2.;D) neither 1 nor 2.;22. If the materials price variance is $3,600 F and the;materials quantity and labor;variances are each $2,800 U, what is the total materials;variance?;A) $3,600 F;B) $2,800 U;C) $6,300 F;D) $800 F;23. The per-unit standards for direct labor are 1.5 direct;labor hours at $15 per hour. If in;producing 2,300 units, the actual direct labor cost was;$46,000 for 3,000 direct;labor hours worked, the total direct labor variance is;A) $2,300 unfavorable.;B) $5,750 favorable.;C) $6,750 unfavorable.;D) $5,750 unfavorable.Page 7 of 10;24. It costs Maker Company $22 of variable and $15 of fixed;costs to produce one;Panini press which normally sells for $57. A foreign;wholesaler offers to purchase;1,000 Panini presses at $40 each. Maker would incur special;shipping costs of $5;per press if the order were accepted. Maker has sufficient;unused capacity to;produce the 1,000 Panini presses. If the special order is;accepted, what will be the;effect on net income?;A) $13,000 decrease;B) $13,000 increase;C) $22,000 decrease;D) $7,000 increase;25. Nelson Manufacturing Company can make 100 units of a;necessary component part;with the following costs;Direct Materials $120,000;Direct Labor 25,000;Variable Overhead 45,000;Fixed Overhead 70,000;If Nelson Manufacturing Company purchases the component;externally, $30,000 of the;fixed costs can be avoided. At what external price for the;100 units is the company;indifferent between making or buying?;A) $190,000;B) $200,000;C) $210,000;D) $220,000;Part II. 6 Comprehensive problems worth 50 points total;26. Points = 4;Brigg Enterprises produces miniature parasols. Each parasol;consists of $1.20 of;variable costs and $.90 of fixed costs and sells for $4.50.;A French wholesaler;offers to buy 8,000 units at $1.40 each, of which Pederson;has the capacity to;produce. Brigg will incur extra shipping costs of $.12 per;parasol.;Instructions;Determine the incremental income or loss that Brigg;Enterprises would realize by;accepting the special order.;27. Points = 4;R&R Inc. produces several models of clocks. An outside;supplier has offered to produce;the commercial clocks for R&R for $270 each. R&R;needs 1,500 clocks annually.;R&R has provided the following unit costs for its;commercial clocks;Direct materials $100;Direct labor 110;Variable overhead 30;Fixed overhead (70% avoidable) 150;Instructions;Prepare an incremental analysis, which shows the effect of;the make-or-buy decision.Page 8 of 10;28. Points = 12;The current sections of Donny Inc.'s balance sheets at;December 31, 2013 and 2014;are presented here.;Donny's net income for 2014 was $203,000. Depreciation;expense was $25,000.;2014 2013;Current assets;Cash $115,000 $99,000;Accounts receivable;105,000 89,000;Inventory 154,000;172,000;Prepaid expense;27,000 21,000;Total current assets;$401,000 $381,000;Current liabilities;Accrued expenses;payable $ 15,000 $ 5,000;Accounts payable;85,000 93,000;Total current;liabilities $100,000 $ 98,000;Instructions;Prepare the net cash provided by operating activities;section of the company's statement;of cash flows for the year ended December 31, 2014, using;the indirect method.;29. Points = 10;Nona Manufacturing Company uses a job order cost accounting;system and keeps;perpetual inventory records. Prepare journal entries to;record the following;transactions during the month of June.;June 1 Purchased raw materials for $22,000 on account.;8 Raw materials requisitioned by production;Direct materials $8,500;Indirect materials 1,500;15 Paid factory utilities, $2,400 and repairs for factory;equipment, $7,500.;25 Incurred $98,000 of factory labor.;25 Time tickets indicated the following;Direct Labor (6,000 hrs. @ $13 per;hr.);= $78,000;Indirect Labor (2,500 hrs. @ $8 per hr.) = 20,000;$98,000;25 Applied manufacturing overhead to production based on a;predetermined;overhead rate of $8 per direct labor hour worked.;28 Goods costing $20,000 were completed in the factory and;were transferred to;finished goods.;30 Goods costing $16,000 were sold for $23,000 on;account.Page 9 of 10;30. Points = 12;Meyer Manufacturing Company uses a process cost system. The;Molding Department;adds materials at the beginning of the process and;conversion costs are incurred;uniformly throughout the process. Work in process on May 1;was 75% complete;and work in process on May 31 was 40% complete.;Instructions;Complete the Production Cost Report for the Molding;Department for the month of;May using the above information and the information;below.Page 10 of 10;31. Points = 8;Data concerning manufacturing overhead for Analina;Industries are presented below.;The Mixing Department is a cost center.;An analysis of the overhead costs reveals that all variable;costs are controllable by;the manager of the Mixing Department and that 50% of;supervisory costs are;controllable at the department level.;The flexible budget formula and the cost and activity for;the months of June and;July are as follows;Instructions;(a) Prepare the responsibility reports for the Mixing;Department for each month.;(b) Comment on the manager's performance in controlling;costs during the two-month period.


Paper#40792 | Written in 18-Jul-2015

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