Accounting

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DrSharonLevinACCT221FinalExamF13Ver137481 #!

Multiple Choice: 2 points each 1. On January 1, 2013, Daniels Corporation issued $5,000,000, 10-year, 8% bonds

at 98. Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2013 is

a. Cash ............................................................................. 5,000,000 Bonds Payable ..................................................... 5,000,000 b. Cash ............................................................................. 4,900,000 Discount on Bonds Payable!!!!!!!!!!!.. 100,000 Bonds Payable ..................................................... 5,000,000 c. Premium on Bonds Payable ......................................... 100,000 Cash ............................................................................. 4,800,000 Bonds Payable ..................................................... 4,900,000 d. Cash ............................................................................. 5,000,000 Bonds Payable ...................................................... 4,900,000 Discount on Bonds Payable .................................. 100,000

2. Levin Company issued 500 shares of no-par common stock for $10,000. Which

of the following journal entries would be made if the stock has a stated value of $1 per share?

a. Cash 10,000 Common Stock 10,000 b. Cash 10,000 Common Stock 500 Paid in Capital in Excess of Par 9,500 c. Cash 10,000 Common Stock 500 Paid-in Capital in Excess of Stated Value 9,500 d. Cash 9,500 Common Stock 9,000 Paid-in Capital in Excess of Stated Value 500

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3. Quader industries owns 25% of Maxi Company. For the current year, Maxi reports net income of $1,000,000 and declares and pays a $100,000 cash dividend. Which of the following correctly presents the journal entries to record Quader’s equity in Maxi’s net income and the receipt of dividends from Maxi?

a. Dec. 31 Stock Investments ....................... 1,000,000 Revenue from Stock Investments 1,000,000 Dec. 31 Cash .............................................. 100,000 Stock Investments .................. 100,000 b. Dec. 31 Stock Investments ............................. 25,000 Revenue from Stock Investments 25,000 Dec. 31 Cash ................................................... 2,500 Stock Investments ....................... 2,500 c. Dec. 31 Stock Investments ........................ 750,000 Revenue from Stock Investments 750,000 Dec. 31 Cash ................................................. 25,000 Stock Investments ..................... 25,000 d. Dec. 31 Revenue from Stock Investments 250,000 Stock Investments ......................... 250,000250250,000 Dec. 31 Stock Investments ........................... 25,000 Cash ........................................ 25,000

4. A company budgeted unit sales of 200,000 units for January 2013 and 300,000

units for February 2013. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 60,000 units of inventory on hand on December 31, 2013, how many units should be produced in January 2013 in order for the company to meet its goals? a. 60,000 units b. 90,000 units c. 190,000 units d. 230,000 units

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5. Poisson, Inc. has the following income statement (in millions): Poisson, Inc. Income Statement For the Year Ended December 31, 3 Net Sales $10,000 Cost of Goods Sold 3,500 Gross Profit 6,500 Operating Expenses 5,000 Net Income $1,500 Using vertical analysis, what percentage is assigned to Cost of Goods Sold? a. 30% b. 35% c. 65% d. None of the above

6. Rose, Inc. completed Job No. B14 during 2013. The job cost sheet listed the

following: Direct materials $50,000 Direct labor $30,000 Manufacturing overhead applied $20,000 Units produced 10,000 units Units sold 3,000 units

How much is the cost of the finished goods on hand from this job? a. $100,000 b. $90,000 c. $80,000 d. $70,000

7. In the month of November, a department had 40,000 units in beginning work in process that were 80% complete. During November, 60,000 units were transferred into production from another department. At the end of November there were 30,000 units in ending work in process that were 30% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for materials for November were a. 90,000 equivalent units. b. 100,000 equivalent units. c. 104,000 equivalent units. d. 80,000 equivalent units.

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8. A company developed the following per-unit standards for its product: 1.75 pounds of direct materials at $5 per pound. Last month, 3,000 pounds of direct materials were purchased for $15,700. The direct materials price variance for last month was a. $500 unfavorable b. $700 unfavorable c. $500 favorable d. $700 favorable

9. In incremental analysis, a. only fixed costs are relevant b. only variable costs are relevant c. costs are relevant if they change between alternatives d. costs are not relevant if they change between alternatives

10. A company's planned activity level for next year is expected to be 200,000

machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs:

Variable Fixed Indirect materials $300,000 Depreciation $80,000 Indirect labor 400,000 Taxes 70,000 Factory supplies 100,000 Supervision 50,000

A flexible budget prepared at the 225,000 machine hours level of activity would show total manufacturing overhead costs of a. $800,000 b. $900,000 c. $1,000,000 d. $1,100,000

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DrSharonLevinACCT221FinalExamF13Ver137481 '!

Problem 1: 10 points Caballero Manufacturing incurs unit costs of $15 ($10 variable and $5 fixed) in making

a sub-assembly part for its finished product. A supplier offers to make 20,000 of the assembly part at $13.75 per unit. If the offer is accepted, Caballero will save all variable costs but no fixed costs.

Instructions: Part A) Prepare an analysis showing the total cost savings, if any, Caballero will

realize by buying the part. Part B) Caballero Company should _________ the part because total annual costs to

make are _________ than total costs to buy.

Problem 2: 10 points Ziray Corporation has the following cost records for November 2013.

Indirect factory labor $ 5,107 Factory utilities $ 613 Direct materials used 24,826 Depreciation, factory equipment 1,499 Work in process, 11/1/13 3,267 Direct labor 33,052 Work in process, 11/30/13 3,633 Maintenance, factory equipment 1,958 Finished goods, 11/1/13 4,609 Indirect materials 2,749 Finished goods, 11/30/13 7,429 Factory manager's salary 4,038

Instructions: Prepare a cost of goods manufactured schedule for November 2013.

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Problem 3: 15 points

Here are comparative balance sheets for Wilson Company.

Wilson Company Comparative Balance Sheets

December 31, 2013

Assets 2013 2012

Cash $ 44,550 $ 13,500

Accounts receivable 24,300 18,900

Inventories 33,750 24,300

Prepaid expenses 8,100 12,150

Long-term investments 0 24,300

Equipment 81,000 43,200

Accumulated depreciation—Equipment (27,000) (18,900)

Total assets $ 164,700 $ 117,450

Liabilities and Stockholder’s Equity

Accounts payable $ 22,950 $ 9,450

Bonds payable 49,950 63,450

Common stock ($1 par) 54,000 31,050

Retained earnings 37,800 13,500

Total liabilities and stockholder’s equity $ 164,700 $ 117,450

Additional information: 1. The 2013 Income Statement reported $8,100 in depreciation expense, a $5,400 loss on sale of investments and Net income of $48,600. 2. Cash dividends of $24,300 were declared and paid. 3. Long-term investments that has a cost of $24,300 were sold for $18,900 4. Sales for 2013 were $162,000.

Instructions: Prepare a statement of cash flows for 2013 using the indirect method.

Prob

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Problem 5: 10 points Stein Company had the following transactions pertaining to its short-term stock investments. Stein owns more than 20% of the Pine Company stock and has significant influence in decision-making.

Jan. 1 Purchased 50,000 shares of Pine Company stock as an investment for

$499,750 cash plus brokerage fees of $250.

June 1 Received cash dividends of $0.25 per share on the Pine Company stock investment.

Sept. 15 Sold 2,000 shares of the Pine Company stock investment for $220,100 less brokerage fees of $100.

Instructions Journalize the transactions.

Problem 6: 10 points Long Company has a unit-selling price of $750, variable costs per unit of $400, and fixed costs of $300,000. Instructions: Part A) Compute the break-even point in units. Round answer up to the next whole unit. Part B) Compute the break even in dollars. Part C) Assume Long Company sets a target net income goal of $1,200,000.

Problem 4: 10 points Cosmo Corporation is projecting a cash balance of $32,785 in its December 31, 2013, balance sheet. Cosmo schedule of expected collections from customers for the third quarter of 2013 shows total collections of $190,875. The schedule of expected payments for direct materials for the third quarter of 2013 shows total payments of $41,300. Other information gathered for the first quarter of 2013 is: sale of equipment $3,471, direct labor $69,178, manufacturing overhead $37,543, and purchase of securities $15,000, plus a $300 brokerage fee. Selling and administrative expenses are projected to be $45,116; this figure includes $1,116 in depreciation expense on the office equipment. All costs and expenses will be paid in cash. Cosmo wants to maintain a balance of at least $25,000 cash at the end of each quarter. Instructions: Complete the cash budget for the first quarter.