Accounting 2 Midterm

If $1,114,000 of 7% bonds are issued at 102 3/4, the amount of cash received from the sale is

$1,144,635

If $2,000,000 of 10% bonds are issued at 97, the amount of cash received from the sale is

$1,940,000

Which of the following is not true in regard to direct materials for a bakery?

Paper cupcake liners, that become part of the product, must be accounted for as direct materials.

The entry to record the flow of direct labor costs into production in a job order cost accounting system is to

debit Work in Process, credit Wages Payable

On the statement of cash flows prepared using the indirect method, a $7,500 gain on the sale of fixed assets would be

deducted from net income in converting the net income reported on the income statement to cash flows from operating activities

Which of the following is part of factory overhead cost?

depreciation of factory equipment and machines

Period costs include

operating costs that are shown on the income statement in the period in which they are incurred

Which of the following is the correct flow of manufacturing costs?

raw materials, work in process, finished goods, cost of goods sold

Which of the following is not a characteristic evaluated in ratio analysis?

marketability

The document authorizing the issuance of materials from the storeroom is a

materials requisition

The source document for the data for debiting Work in Process for direct materials is a

materials requisition

Managerial accounting reports are

prepared according to management needs

On the statement of cash flows, the Cash flows from financing activities section would include

receipts from the issuance of capital stock

Temporary investments such as in trading securities are

recorded at cost but reported at fair market value

Which of the following would most likely use a job order costing system?

swimming pool installer

Cash dividends paid on capital stock would be reported in the statement of cash flows in

the Cash flows from financing activities section

The basis for recording direct and indirect labor costs incurred is a summary of the period's

time tickets

Which of the following would record the labor costs for an individual job?

time tickets

An analysis in which all the components of an income statement are expressed as a percentage of sales is a

vertical analysis

The percent of fixed assets to total assets is an example of

vertical analysis

Goods that are partially completed by a manufacturer are

work in process inventory

The relationship of $370,265 to $118,364, expressed as a ratio, is

3.1 to 1

Which of the following is the most useful in analyzing companies of different sizes?

common-sized financial statements

The interest rate specified in the bond indenture is called the

contract rate

Which of the following is an example of direct materials cost for an automobile manufacturer?

cost of interior upholstery

The journal entry a company records for the issuance of bonds when the contract rate and the market rate are the same is to

debit Cash, credit Bonds Payable

The journal entry a company records for the issuance of bonds when the contract rate is greater than the market rate would be

debit Cash, credit Premium on Bonds Payable and Bonds Payable

The cost of a manufactured product generally consists of which of the following costs?

direct labor cost, direct materials cost, and factory overhead cost

The percentage analysis of increases and decreases in individual items in comparative financial statements is called

horizontal analysis

What type of analysis is indicated by the following? Increase (Decrease) Current Year Preceding Year Amount Percent Current assets $ 430,000 $ 500,000 $(70,000) (14)% Fixed assets 1,740,000 1,500,000 240,000 16

horizontal analysis

A plant manager's salary is a(n)

indirect cost

If the market rate of interest is 7%, the price of 6% bonds paying interest semiannually with a face value of $500,000 will be

less than $500,000

Short-term creditors are typically most interested in analyzing a company's

liquidity

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

make a better comparison of two companies of different sizes in the same industry

Accounting designed to meet the needs of decision makers inside the business is

managerial accounting

Bonds Payable has a balance of $832,000 and Premium on Bonds Payable has a balance of $9,152. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption?

$15,808 loss

On January 1, $849,000, five-year, 10% bonds, were issued for $823,530. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize the discount on bonds payable, the semiannual amortization amount is

$2,547

If $319,000 of 10% bonds are issued at 97, the amount of cash received from the sale is

$309,430

On January 1, $849,000, five-year, 10% bonds, were issued for $823,530. Interest is paid semiannually on January 1 and July 1. If the issuing corporation uses the straight-line method to amortize the discount on bonds payable, the semiannual amortization amount is

$309,430

Use the information below for Darwin Company to answer the question that follow. Sales $76,500 Direct materials used 7,300 Depreciation on factory equipment 4,700 Indirect labor 5,900 Direct labor 10,500 Factory rent 4,200 Factory utilities 1,200 Sales salaries expense 15,600 Office salaries expense 8,900 Indirect materials 1,200 Darwin Company's product costs are

$35,000

The current period statement of cash flows includes the following: Cash balance at the beginning of the period $310,000 Net cash flow from operating activities 185,000 Net cash flow used for investing activities 43,000 Net cash flow used for financing activities 97,000 The cash balance at the end of the period is

$355,000

Compute conversion costs given the following data: direct materials, $378,400; direct labor, $191,600; factory overhead, $192,100 and selling expenses, $42,300.

$383,700

Compute conversion costs given the following data: direct materials, $347,500; direct labor, $196,300; factory overhead, $187,900; and selling expenses, $45,290.

$384,200

When Job 117 was completed, direct materials totaled $42,228; direct labor, $62,560; and factory overhead, $51,612. A total of 3,910 units were produced at a per-unit cost of

$40

The current period statement of cash flows includes the following: Cash balance at the beginning of the period $416,872 Net cash flow from operating activities 187,468 Net cash flow used for investing activities 47,403 Net cash flow used for financing activities 80,873 The cash balance at the end of the period is

$476,064

Thomlin Company forecasts that total overhead for the current year will be $9,264,000 with 193,000 total machine hours. Year to date, the actual overhead is $4,400,000, and the actual machine hours are 88,000 hours. The predetermined overhead rate based on machine hours is Round the answer to the nearest dollar.

$48 per machine hour

An investor purchased 500 shares of common stock, $25 par, for $21,750. Subsequently, 100 shares were sold for $49.50 per share. What is the amount of gain or loss on the sale?

$600 gain

An investor purchased 609 shares of common stock, $24 par, for $23,142. Subsequently, 120 shares were sold for $33 per share. What is the amount of gain or loss on the sale?

$600 loss

A summary of the materials requisitions completed during a period serves as the basis for transferring the cost of the materials from the controlling account in the general ledger to the controlling accounts for

Work in Process and Factory Overhead

Which of the following are the two main types of cost accounting systems for manufacturing operations?

job order cost and process cost systems

Which of the following is a period cost?

salary of telephone receptionist in the sales office

On January 1 of the current year, Barton Corporation issued 10% bonds with a face value of $94,000. The bonds are sold for $89,300. The bonds pay interest semiannually on June 30 and December 31, and the maturity date is December 31, five years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 is

$10,340

Accounts receivable from sales transactions were $47,124 at the beginning of the year and $67,048 at the end of the year. Net income reported on the income statement for the year was $134,075. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method would be

$114,151

The following information is available from the current period financial statements: Net income $135,526 Depreciation expense 20,875 Increase in accounts receivable 16,232 Decrease in accounts payable 24,118 The net cash flow from operating activities using the indirect method is

$116,051

Accounts payable $25,166 Accounts receivable 64,514 Accrued liabilities 6,634 Cash 22,241 Intangible assets 40,159 Inventory 72,597 Long-term investments 93,819 Long-term liabilities 78,780 Marketable securities 31,917 Notes payable (short-term) 22,809 Property, plant, and equipment 615,217 Prepaid expenses 1,981 Based on the data for Harding Company, what is the amount of quick assets?

$118,672

Reynolds Manufacturers Inc. has estimated total factory overhead costs of $121,200 and expected direct labor hours of 10,100 for the current fiscal year. If Job 117 incurs 1,210 direct labor hours, Work in Process will be debited and Factory Overhead will be credited for

$14,520

Land costing $136,745 was sold for $176,204 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

$176,204

Aspen Technologies has the following budget data: Estimated direct labor hours 8,200 Estimated direct labor dollars $67,400 Estimated factory overhead costs $158,800 If factory overhead is to be applied based on direct labor hours, the predetermined overhead rate is

$19.37

The net income reported on the income statement for the current year was $297,462. Depreciation recorded on fixed assets and amortization of patents for the year were $42,543 and $11,882, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $47,686 $68,830 Accounts Receivable 122,921 100,158 Inventories 105,572 87,348 Prepaid Expenses 4,196 6,788 Accounts Payable (merchandise creditors) 47,548 68,334 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

$292,706

The present value of $66,000 to be received in two years, at 12% compounded annually, is (rounded to nearest dollar) ______ . Use the present value table in Exhibit 8.

$52,615

A building with a book value of $43,764 is sold for $53,684 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as an increase of

$53,684 from investing activities and a deduction from net income of $9,920

Jarvis Corporation makes an investment in 100 shares of Saxton Company's common stock. The stock is purchased for $45 a share plus brokerage fees of $280. The entry for the purchase is

Investments—Saxton Company Stock4,780 Cash4,780

The journal entry to record the purchase of $31,367 of raw materials is

Materials$31,367 Accounts Payable$31,367

Materials must have which two qualities in order to be classified as direct materials?

They must be an integral part of the finished product and a significant portion of the total product cost.

The journal entry to record the transfer of 1,210 units of Part No. 1177, with a value of $1.90 each, to work in process is

Work in Process$2,299 Materials$2,299

A bond indenture is

a contract between the corporation issuing the bonds and the bondholders

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?

a decrease in accounts payable

When the market rate of interest on bonds is higher than the contract rate, the bonds will sell at

a discount

Temporary investments

are reported as current assets

Bonds that are subject to retirement prior to maturity at the option of the issuer are called

callable bonds

Which of the following costs are not included in finished goods inventory?

chief financial officer's salary

Ruben Company purchased $100,000 of Evans Company bonds at 100. Ruben later sold the bonds at $104,500 plus $500 in accrued interest. The journal entry to record the sale of the bonds would be

debit Cash, $105,000; credit Investments—Evans Company Bonds, $100,000, Gain on Sale of Investments, $4,500, and Interest Revenue, $500

The adjusting entry to record the amortization of a discount on bonds payable is

debit Interest Expense, credit Discount on Bonds Payable

In a job order cost accounting system, the entry to record the flow of direct materials into production is to

debit Work in Process, credit Materials

The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as a

direct labor cost

A product cost is

expensed in the period the product is sold

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as

factory overhead costs