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ACCT221: Principles of Accounting II FINAL EXAM (LATEST ONE)




Part A.;On January 1, 2014, Flip Corporation had 560,000 shares of $1 par value common stock issued and outstanding. There was a $3,000,000 balance in the Retained Earnings account at the beginning of the year. During the first quarter of the year, the following transactions occurred;Jan. 8;Issued 40,000 shares of its own common stock for $400,000.;Jan. 18;Declared a cash dividend of $1 per share to stockholders of record on Jan. 10.;Jan. 31;Paid the $1 cash dividend declared on Jan. 18.;Feb. 2;Purchased 3,000 shares of its own common stock for the treasury at $11 per share.;Feb. 14;Sold 2,000 shares of the treasury stock purchased on Feb. 2 for $12 per share.;March 25;Declared a 2 for 1 stock split on outstanding shares.;Instructions;Prepare journal entries to record the above transactions.;Part B.;The following information is available for Flip Corporation for the year ended December 31, 2014;Beginning retained earnings $ 340,000;Cost of goods sold 620,000;Declared cash dividends 50,000;Operating expenses 170,000;Other expenses and losses 40,000;Other revenues and gains 60,000;Sales 1,000,000;Tax rate 30%;Instructions;1. Prepare a corporate income statement in good form.;2. Prepare a retained earnings statement for the year.;Question 2: 10 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, 2012 using the indirect method.;Question 4: 10 points;Flip Corporation prepared the following income statement for 2014;Flip Corporation;Income Statement;For the Year Ended December 31, 2014;???????????????????????????????????????????;Sales (20,000 units).............................................................................................. $600,000;Variable expenses................................................................................................ 360,000;Contribution margin............................................................................................. 240,000;Fixed expenses..................................................................................................... 150,000;Net income........................................................................................................... $ 90,000;Instructions;Answer the following independent questions and show computations to support your answers.;1. What is the company's break-even point in units?;2. How many more units would the company have had to sell to earn net income of $150,000 in 2014?;3. If the company expects a 25% increase in sales in 2015, what would be the expected net income in 2015?;4. How much sales dollars would the company have to generate in order to earn a target net income of $160,000 in 2015?;Question 5: 7 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: 6 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 Inc. relies heavily on a copier to process its paperwork. Recently, the copy clerk has not been able to process all the necessary copies within the regular workweek. Management is considering updating the current copier with a new faster model.;Current copier;New Model;Original purchase cost;$12,000;$22,000;Accumulated depreciation;6,000;0;Estimated annual operating costs;8,000;4,000;Useful life in years;4;4;If sold now, the current copier would have a sales value of $1,000. If operated for the remainder of its useful life, the current copier would have $0 salvage value. The new copier is expected to have $1,200 salvage value after 4 years. Prepare an analysis to show whether the company should retain or replace the copier.;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 not be 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.


Paper#74265 | Written in 18-Jul-2015

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