ACCT 221 Final Exam

ACCT 221 Final Exam

Part I: 20 Multiple choice questions @ 2.5 points each = 50 points

1. Jackson Company is a publicly held corporation whose $1 par value stock is actively traded at $75 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) debit Land for $225,000.

C) credit Common Stock for $195,000.

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) debit to Paid-in Capital in Excess of Par for $4,000.

C) credit to Treasury Stock for $18,000.

D) credit to Paid-in Capital from Treasury Stock for $4,000.

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 97 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) gain on bond redemption of $8,000.

C) loss on bond redemption of $10,000.

D) loss on bond redemption of $8,000.

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) $360,000.

C) $370,000.

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) will not be able to pay cash dividends.

B) will not be able to get a loan.

C) may still have a net increase in cash.

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) Times interest earned

D) Payout ratio

10. Lionel Company has beginning work in process inventory of $220,000 and total manufacturing costs of $900,000. If ending work in process is $210,000 what is the cost of goods manufactured?

A) $700,000.

B) $950,000.

C) $910,000.

D) $940,000.

11. The principal difference between a merchandising and a manufacturing income statement is the

A) extraordinary item section.

B) cost of goods sold 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. For Cevu Company, the predetermined overhead rate is 80% of direct labor cost. During the month, $800,000 of factory labor costs are incurred of which $200,000 is indirect labor. The amount of overhead debited to Work in Process Inventory should be:

A) $600,000

B) $412,500

C) $480,000

D) $450,000

14. Hunten Manufacturing assigns overhead based on machine hours. The Milling Department logs 1,400 machine hours and Cutting Department shows 4,000 machine hours for the period. If the overhead rate is $6 per machine hour, the entry to assign overhead will show a

A) debit to Manufacturing Overhead for $22,000.

B) credit to Manufacturing Overhead for $27,000.

.C) credit to Manufacturing Overhead for $32,400.

D) debit to Work in Process for $24,000.

15. 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 (50% complete). Assuming 100% of materials are added, equivalent units for conversion costs are:

A) 720,000.

B) 640,000.

C) 760,000.

D) 680,000.

16. 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	21,500
	1,100	16,500

If the high-low method is used, what is the monthly total cost equation?

A) Total cost = $5,500 + $10/unit

B) Total cost = $0 + $15/unit

C) Total cost = $4,400 + $11/unit

D) Total cost = $3,300 + $12/unit

17. 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) $32

B) $92

C) $28

D) Not enough information

18. 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 5,000 units available to start the next quarter?

A) 675,000

B) 681,000

C) 711,000

D) 681,200

19. 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) neither 1 nor 2.

D) both 1 and 2.

20. 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) $22,000 decrease

C) $7,000 increase

D) $13,000 increase

Part II. 6 Comprehensive problems worth 50 points total

21. Points = 4

Brigg Enterprises produces miniature parasols. Each parasol consists of $1.40 of variable costs and $.90 of fixed costs and sells for $4.50. A French wholesaler offers to buy 7,000 units at $$2 each, of which Pederson has the capacity to produce. Brigg will incur extra shipping costs of $.12 per parasol.

Instructions show format to say reject, accept

Determine the incremental income or loss that the company would realize by accepting the special order.

22. Points = 4

R&R Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for R&R for $300 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	35
Fixed overhead(60% avoidable if	buy) 150

Instructions

Prepare an incremental analysis, which shows the effect of the make-or-buy decision.

23. 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 $103,000. Depreciation expense was $15,000.

2014	2013
Current assets
Cash	$115,000	$99,000
Accounts receivable	110,000	90,000
Inventory	160,000	172,000
Prepaid expense	27,000	21,000
Total current assets	$412,000	$382,000
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.

24. 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 $30,000 on account.
	8		Raw materials requisitioned by production:
				Direct materials	$8,500
				Indirect materials	1,500
	15		Paid factory utilities, $3,000 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 $25,000 were completed in the factory and were transferred to finished goods.
	30		Goods costing $22,000 were sold for $30,000 on account

Instructions

Prepare an incremental analysis, which shows the effect of the make-or-buy decision.

25. 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 as to conversion cost and 100% complete as to materials.

Instructions

Complete the Production Cost Report for the Molding Department for the month of May using the above information and the information below.

Instructions: Complete the Production Cost Report below for the Molding Department for the month of May.

		Equivalent Units
QUANTITIES	Physical Units	Materials	Conversion Costs
Work in process, May 1	7,000
Started into production	28,000
Total units	35,000
Units accounted for:
Transferred out	30,000
Work in process, May 31	5,000
Total units	35,000
COSTS
Unit costs		Materials	Conversion Costs	Total
Costs in May		$140,000	$160,000	$300,000
Equivalent units
Units costs
Costs to be accounted for
Work in process, May 1				$60,000
Started into production				240,000
				$300,000
Cost Reconciliation Schedule
Costs accounted for:
Transferred out
Work in process, May 31:
….Materials
….Conversion costs
Total costs				$300,000

26. 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. Depreciation and Property Taxes are not controllable by the manager.

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.
	June July Controllable Cost Budget Actual Delta F or U Budget Actual Delta F or U Indirect materials Indirect labor Factory supplies Supervision Total costs · F = Favorable variance · U = Unfavorable variance

(b) Comment on the manager's performance in controlling costs during the two-month period.

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