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Acct221 Final Exam Principles of Accounting II




Question;Final Examination;Acct221: Principles of Accounting II;For this exam;omit all general journal entry explanations.;Ensure to;include correct dollar signs, underlines & double underlines.;Question 1: 30% points:Flip Corporation's trial;balance at December 31, 2014, is presented below. All 2014 transactions have;been recorded except for the items described below.;Flip Corporation;Trial Balance;December 31, 2014;Accounts;Debit;Credit;Cash;$23,000;Accounts;Receivable;51,000;Inventory;22,700;Land;65,000;Buildings;95,000;Equipment;40,000;Allowance for Doubtful Accounts;$450;Accumulated Depreciation, Buildings;30,000;Accumulated Depreciation, Equipment;14,400;Accounts Payable;19,300;Interest Payable;0;Dividends Payable;0;Unearned Rent Revenue;8,000;Bonds Payable (10%);50,000;Common Stock ($10 par);30,000;Paid-in Capital in Excess of Par, Common Stock;6,000;Preferred Stock ($20 par);0;Paid-in Capital in Excess of Par, Preferred Stock;0;Retained Earnings;75,050;Treasury Stock;0;Cash Dividends;0;Sales Revenue;570,000;Rent Revenue;0;Bad Debt Expense;0;Interest Expense;2,500;Cost of Goods Sold;400,000;Depreciation Expense;0;Other Operating Expenses;39,000;Salaries and Wages Expense;65,000;Totals;$803,200;$803,200;Unrecorded transactions;1.On January 1, 2014, Flip issued 1,000 shares of $20 par, 6%;preferred stock for $22,000.;2. On January 1, 2014, Flip also issued 1,000 shares of common;stock for $23,000.;3. Flip reacquired 300 shares of its common stock on July 1, 2014;for $49 per share.;4. On December 31;2014, Flip declared the annual preferred stock dividend and a $1.50 per share;dividend on the outstanding common stock, all payable on January 15, 2015.;5. Flip estimates that uncollectible accounts receivable at;year-end is $5,100.;6. The building is;being depreciated using the straight-line method over 30 years. The salvage;value is $5,000.;7. The equipment is;being depreciated using the straight-line method over 10 years. The salvage;value is $4,000.;8. The unearned rent;was collected on October 1, 2014. It was receipt of 4 months' rent in advance;(October 1, 2014 through January 31, 2015).;9.The 10% bonds payable pay interest every January 1 and July 1. The;interest for the 6 months ended December 31, 2014, has not been paid or;recorded.;Instructions:(Ignore income taxes.);a.Prepare journal;entries for the transactions listed above.;b.Prepare an updated/adjusted;December 31, 2014, trial balance, reflecting the unrecorded transactions.;c.Prepare a;multiple-step income statement for the year ending December 31, 2014.;d.Prepare a retained;earnings statement for the year ending December 31, 2014.;e.Prepare a classified;balance sheet as of December 31, 2014.;Question 2: 6% points;January 1;2014 Flip Company purchased 35,000 shares of common stock of Flop Corporation;as a long-term investment for $900,000. December 31, 2014, Flop Corporation;reported net income of $300,000 and paid dividends of $100,000.;Instructions;a. Assuming;that the 35,000 shares represent a 10% interest in Flop Corporation;1. Prepare;the journal entry to record the investment in Flop stock.;2. Prepare;any entries that Flip Company should make in accounting for its investment in Flop;stock during the year.;3. What;is the balance of the Stock Investments account on Flip Company's books at the;end of the year?;b. Repeat requirement (a) above except assume;that the 35,000 shares represent a 20% interest in Flop Corporation.;Question 3: 15% points:The following information is available for Flip;Corporation for the year ended December 31, 2014;Collection;of principal on long-term loan to a supplier $15,000;Acquisition;of equipment for cash 10,000;Proceeds;from the sale of long-term investment at book value 20,000;Issuance;of common stock for cash 27,000;Depreciation;expense 28,000;Redemption;of bonds payable at carrying (book) value 35,000;Payment;of cash dividends 15,000;Net;income 25,000;Purchase;of land by issuing bonds payable 45,000;In addition;the following information is available from the comparative balance sheet for Flip;at the end of 2013 and 2014;2014 2013;Cash $ 66,000 $14,000;Accounts;receivable (net) 20,000 16,000;Prepaid;insurance 18,000 13,000;Total;current assets $104,000 $43,000;Accounts;payable $ 30,000 $20,000;Salaries;payable 3,000 7,000;Total;current liabilities $ 33,000 $27,000;Instructions:Prepare Flip's statement of cash flows for the;year ended December 31, 2014 using the indirect method.;Question 4: 6% points;Determine;the missing amounts.;Unit Selling Price;Unit Variable Costs;Contribution Margin per Unit;Contribution Margin Ratio;1.;$300;$195;A.;B.;2.;$600;C.;$150;D.;3.;E.;F.;$480;30%;Question 5: 6% points;Flip Inc. provided the following;information;April May June;Projected merchandise purchases $184,000 $156,000 $132,000;?;Flip pays 40% of merchandise;purchases in the month purchased and 60% in the following month.;?;General operating expenses are;budgeted to be $62,000 per month of which depreciation is $8,000 of this;amount. Hoover;pays operating expenses in the month incurred.;?;Flip makes loan payments of;$8,000 per month of which $700 is interest and the remainder is;principal.;Instructions;Calculate budgeted cash disbursements for May.;Question 6: 5% points;Flip Enterprises produces miniature parasols.;Each parasol consists of $1.20 of variable costs and $.90 of fixed costs and;sells for $4.50. A Dutch wholesaler offers to buy 8,000 units at $1.40 each, of;which Pederson has the capacity to produce. Flip will incur extra shipping;costs of $.12 per bear.;Instructions:Determine the incremental income;or loss that Flip Enterprises would realize by accepting the special order.;Question 7: 6% points;Flip;Inc. produces several models of clocks. An outside supplier has offered to;produce the commercial clocks for Flip for $270 each. Flip needs 1,500 clocks;annually. Flip 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.;Question 8: 6% points;Flip;Company provided the following information concerning two products;Contribution margin per;unit?Product 13 $23;Contribution margin per;unit?Product 44 $18;Machine hours required for one;unit?Product 13 2.5 hours;Machine hours required for one;unit?Product 44 1.5 hours;Instructions:Compute the contribution margin per;unit of limited resource for each product. Which product should Flip tell its;sales personnel to ?push? to customers?;Multiple;choice questions allocated 1% point each. Make your;selection by recording the letter in the answer box provided.;Question;9:Which one of the;following would notbe;classified as manufacturing overhead?;a. Indirect;labor;b. Direct;materials;c. Insurance;on factory building;d. Indirect;materials;Question;10:The product cost;that is most difficult to associate with a product is;a. direct;materials.;b. direct;labor.;c. manufacturing;overhead.;d. advertising.;Question 11:Direct materials and direct labor of a company;total $9,000,000. If manufacturing overhead is $4,000,000, what is direct labor;cost?;a. $5,000,000;b. $9,000,000;c. $0;d. Cannot;be determined from the information provided;Question 12:A manufacturing company calculates cost of goods;sold as follows;a. Beginning;FG inventory + cost of goods purchased ? ending FG inventory.;b. Ending;FG inventory ? cost of goods manufactured + beginning FG inventory.;c. Beginning;FG inventory ? cost of goods manufactured ? ending FG inventory.;d. Beginning;FG inventory + cost of goods manufactured ? ending FG inventory.;Question 13:As of;December 31, 2014, Flip Industries had $3,500 of raw materials inventory. At;the beginning of 2014, there was $2,000 of materials on hand. During the year;the company purchased $314,500 of materials, however, it paid for only $302,500.;How much inventory was requisitioned for use on jobs during 2014?;a. $301,000;b. $304,000;c. $316,000;d. $313,000;Question 14:Flip Manufacturing has the following labor costs;Factory?Gross wages $450,000;Factory?Net wages 420,000;Employer Payroll Taxes Payable 40,000;The entry to record;the cost of factory labor and the associated payroll tax expense will include a;debit to Factory Labor for;a. $450,000.;b. $490,000.;c. $460,000.;d. $420,000.;Question;15:The following;information is available for completed Job No. 404: Direct materials, $60,000;direct labor, $90,000, manufacturing overhead applied, $120,000, units;produced, 6,000 units, units sold, 5,000 units. The cost of the finished goods;on hand from this job is;a. $45,000.;b. $270,000.;c. $54,000.;d. $225,000.;Question 16:Cost of goods;manufactured equals $67,000 for 2014. Finished goods inventory is $5,500 at the;beginning of the year and $2,000 at the end of the year. Beginning and ending;work in process for 2014 are $5,000 and $4,000, respectively. How much is cost;of goods sold for the year?;a. $72,500;b. $69,000;c. $63,500;d. $70,500;Question 17:Flip Industries has equivalent units of 8,000 for materials and for;conversion costs. Total manufacturing costs are $160,000. Total materials costs;are $120,000. How much is the conversion cost per unit?;a. $15.;b. $5.;c. $40.;d. $20.;Question 18:Flip Company's Assembly Department has materials cost at $5 per unit;and conversion cost at $8 per unit. There are 20,000 units in ending work in;process, all of which are 70% complete as to conversion costs.;How much are total costs to be assigned to inventory?;a. $112,000.;b. $212,000.;c. $182,800.;d. $260,000.;Question 19:A department adds materials at the;beginning of the process and incurs conversion costs uniformly throughout the;process. For the month of July, there was no beginning work in process, 40,000;units were completed and transferred out, and there were 20,000 units in the;ending work in process that were 40% complete. During July, $96,000 materials;costs and $84,000 conversion costs were charged to the department.;The unit production costs for materials and;conversion costs for July was;Materials Conversion Costs;a. $1.60 $1.40;b. $1.60 $1.75;c. $2.00 $1.40;d. $2.40 $2.13;Question 20:Which of the;following is considered a difference between a job order cost and a process;cost system?;a. The;manufacturing cost elements.;b. Documents;used to track costs.;c. The;accumulation of the costs of materials, labor, and overhead.;d. The;flow of costs.;Question 21: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;Question 22:Flip, Inc. determines that 54,000;pounds of direct materials are needed for production in July. There are 3,200;pounds of direct materials on hand at July 1 and the desired ending inventory;is 2,800 pounds. If the cost per unit of direct materials is $3.20, what is the;budgeted total cost of direct materials purchases?;a. $162,560.;b. $172,800.;c. $174,080.;d. $171,520.;Question 23:Which of the following statements about a;budgeted income statement is not;true?;a. The budgeted income statement is prepared;after the financial budgets are prepared.;b. The budgeted income statement is prepared on;the accrual basis of accounting.;c. The budgeted income statement can be prepared;in a multiple-step format.;d. The budgeted income statement is prepared;using the individual operating budgets.;Question;24:The cash budget;reflects;a. all revenues and all expenses for a period.;b. expected cash receipts and cash disbursements;from all sources.;c. all the items that appear on a budgeted;income statement.;d. all the items that appear on a budgeted;balance sheet.;Question 25:If costs are not responsive to changes in activity level;then these costs can be best described as;a. mixed.;b. flexible.;c. variable.;d. fixed.;Question 26:A flexible budget;a. is prepared when management cannot agree on;objectives for the company.;b. projects budget data for various levels of;activity.;c. is only useful in controlling fixed costs.;d. cannot be used for evaluation purposes;because budgeted data are adjusted to reflect actual results.;Question 27:In developing a flexible budget within a relevant range of activity;a. only fixed costs are included.;b. it is necessary to relate variable cost data;to the activity index chosen.;c. it is necessary to prepare a budget at 1,000;unit increments.;d. variable and fixed costs are combined and are;reported as a total cost.;Question 28:Within the relevant range of activity;the behavior of total costs is assumed to be;a. linear and upward sloping.;b. linear and downward sloping.;c. curvilinear and upward sloping.;d. linear to a point and then level off.


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