MBA 510 module 6 and 7
Cold Creek Kayaks, a manufacturing company, has beginning finished goods inventory of $25,000; cost of goods manufactured of $320,000; and ending finished goods inventory of $32,000. What is the cost of goods available for sale?
$345,000 beginning finished goods inventory + cost of goods manufactured
Anderson Corporation had a credit balance of $43,000 in its Retained Earnings account on December 31, 2021. Net income of $6,000 was reported on its income statement for the year ended December 31, 2022. Dividends in the amount of $5,625 were declared on December 31, 2021; the dividends are payable to the company's stockholders on February 1, 2022. The balance in its Retained Earnings account on December 31, 2022 equals _____.
$43,375 Beginning retained earnings: $43,000 + Net income: $6,000 − Cash dividends: $5,625 = Ending retained earnings: $43,375.
Alto Company issued 7% preferred stock with a $100 par value. This means that: The amount of the potential dividend is _____ per year per preferred share.
$7 per year
A company issued 60 shares of $100 par value common stock for $7,000 cash. The total amount of paid-in capital is:
$7,000
Ultimate Sportswear has $100,000 of 8% noncumulative, preferred stock outstanding. Ultimate Sportswear also has $500,000 of common stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $30,000. This dividend should be distributed as follows:
$8,000 preferred; $22,000 common.
Which of the following statements are true regarding dividends?
-a stock dividend commonly indicates managements confidence that the company is doing well -a stock dividend increases the number of outstanding shares -the payment date reflects the date a cash dividend is paid to stockholders
Stockholders' equity, reported on the balance sheet, consists of which of the following accounts?
-contributed (paid in) capital -retained earnings
Identify the disadvantages of the corporate form of business.
-corporate taxation -government regulation
items that are classified as a materials activity:
-raw materials beginning inventory -raw materials purchases
The managerial accountant at XYZ Company told her friend that the company expects to announce a major recall in a few weeks. The friend promptly sells all her stock in XYZ. The accountant violated which IMA requirement?
Confidentiality Integrity
Consider a service company that provides carpet cleaning. Classify the cost of the hourly workers who clean carpets for customers.
Direct and Variable Reason: The hourly workers who clean carpets are a direct and variable product cost.
Which of the following are product costs for a manufacturer?
Direct materials Depreciation on the factory equipment
True or false: The main purpose of managerial accounting is to provide general-purpose financial statements.
FALSE
factory overhead used in production
Factory supervisor salary + Depreciation expense Factory building + indirect materials
What types of information does managerial accounting provide?
Information for managers Financial Non-financial
allows estimates and projections
Managerial information:
Consider a company that manufactures picture frames. Which of the following costs would be considered direct costs?
Oak wood used for frame Glass used in the frame Wages of assembly line worker
Which of the following are indirect costs for the finishing department of a furniture manufacturer?
Rent on the manufacturing facility Electricity cost for the plant Plant manager's salary
Which of the following are period costs for a manufacturer?
Rent on the office building Salary for administrative staff Sales commissions
All of the following are true about a corporation except: a. a corporation is separate from its owners. b. a corporation may be either privately held or publicly held. c. a public sale refers to selling stock on an organized stock market. d. a corporation issues bond certificates to its owners.
a corporation issues bond certificates to its owners.
The Institute of Management Accountants requires members to:
act with integrity be competent
________ stock is the number of shares that a corporation's charter allows it to sell.
authorized
____________ stock is the number of shares that a corporation's charter allows it to sell. The number of these shares usually exceeds the number of shares issued (and outstanding), often by a large amount.
authorized
_________ stock is a general term that refers to any shares issued to obtain capital (owner financing).
capital
is a general term that refers to any shares issued to obtain capital (owner financing).
capital stock
On January 2, Carlton, Incorporated, issued 100 shares of $10 par value common stock for cash of $10 per share. Complete the necessary journal entry
cash 1,000 common stock, $10 par value 1,000 $10 x 100
Record the issue of 1,250 shares of $50 par value preferred stock for $100,500 cash.
cash debit 100,500 preferred stock credit 62,500 paid in capital in excess of par value, preferred stock credit 38,000
On May 3, Zirbal Corporation purchased 4,000 shares of its own stock for $48,000 cash. On November 4, Zirbal reissued 1,300 shares of this treasury stock for $16,900. Record the reissue of 1,300 shares of this treasury stock for $16,900.
cash: debit 16,900 treasury stock: credit 15,600 (48,000 / 4000 = 12 x 1300) paid in capital, treasury stock: credit 1,300
Investors who buy a corporation's stock sometimes receive a stock ____________ as proof of share of ownership
certificate
Darby, Inc. has 25,000 shares of stock issued and outstanding. All the shares of stock have the same rights and characteristics; therefore, the stock is called __________ stock
common
When all authorized shares of stock have the same rights and characteristics, the stock is called ________________ stock
common
August 31: Paid the dividend declared on July 15. Record the payment of cash dividend.
common dividends payable 165,000 cash: 165,000
Epic Incorporated has 10,300 shares of $2 par value common stock outstanding. Epic declares a 8% stock dividend on July 1 when the stock's market value is $11 per share. The stock dividend is distributed on July 20. Record the distribution of 8% stock dividend
common stock dividend distributable 1,648 common stock, $2 par value 1,648
Treasury stock is classified as:
contra equity account
Philip's Inc. reports stockholders' equity on its financial statements. The two items reported in the stockholders' equity section of Philip's balance sheet are ___________ capital and Retained Earnings.
contributed (or paid in)
A __________ is an entity created by law that is separate from its owners. Owners are called stockholders or shareholders. These entities can be privately or publicly held.
corporation
The purposes of managerial accounting is to provide useful information to aid in determining _________ of products and services and comparing actual to planned ___________
cost; results
The date the directors vote to declare and pay a dividend is called the:
date of declaration
The three dates related to a cash dividend include all of the following:
date of declaration date of record date of payment
On July 1, Hanson Corporation issued 10 shares of $100 par value preferred stock for cash of $1,000 per share. Complete the necessary journal entry
debit: cash 10,000 ($1,000 x 10) credit: preferred stock 1,000 ($100 x 10) credit: paid in capital in excess of par value: 9,000 10,000- 1,000 = 9,000 paid in capital
Epic Incorporated has 10,300 shares of $2 par value common stock outstanding. Epic declares a 8% stock dividend on July 1 when the stock's market value is $11 per share. The stock dividend is distributed on July 20. Record the declaration of a 8% stock dividend.
debit: retained earnings 9,064 (10,300 x .08 x $11) credit: common stock dividend distributable 1,648 (10,300 x .08 x $2) credit: paid in capital in excess of par value, common stock 7,416 (9,064 -1,648)
Labor used on the football production line. Leather used to produce footballs.
direct cost
Costs which are crucial parts of the finished product are called
direct costs
The efforts of employees who work directly to convert direct materials into the finished product are referred to as
direct labor
Those who work directly on the product to convert raw materials into a finished product are known as
direct labor
total manufacturing cost is computed as:
direct materials used in production direct labor used in production factory overhead used in production
Stockholders elect the board of ___________
directors
Identify the advantages of the corporate form of business. ECL
ease of capital accumulation continuous life limited liability of stockholders
Financial accounting provides information for _____________ users, while managerial accounting provides information for ______________ decision makers
external; internal
Conversion costs consist of:
factory overhead and direct labor
Uses past performance using historical information
financial
Its information is often available only after an audit is complete. It focuses mainly on past results. Its primary focus is on the organization as a whole.
financial accounting
The main purpose of managerial accounting is providing ___________ and ____________ information to an organizations managers
financial; non financial
Completed products ready for sale are referred to as:
finished goods inventory
Managerial reporting systems are
flexible
Managerial accounting has the following characteristics?
focus is on internal users Includes mostly monetary and some nonmonetary information Emphasis is on projects, processes, and divisions
manufacturer?
if it has Raw materials inventory Work in process inventory Finished goods inventory
Electricity used in the production plant. Depreciation on maintenance equipment used in the plant. Salary of manager who supervises the entire plant.
indirect cost
Each of the following are examples of factory overhead:
indirect labor indirect materials
Managerial accounting primarily provides information to ____________ users
internal
Identify which of the following is not generally a right of common stockholders.
manage operations
Uses current performance and future projections
managerial
_____________ accounting allows internal users to determine what information they need to make planning and control decisions and is not rules-based.
managerial
its primary users are company managers its principles and capitals are relatively flexible
managerial accounting
Managerial accounting is different from financial accounting in that _____________ ___________ is used in planning and control decisions and _____________ ___________ is used in making investment and credit decisions
managerial accounting; financial accounting
The _________ value per share is the price at which a stock is bought and sold.
market
Jordan Inc.'s charter states that there are 50,000 shares of stock authorized with a par value of $5 per share. This typically means that investors must pay a ________________ of $5 per share to invest in the corporation.
minimum
Record the entry on the date of record for the cash dividend of $165,000.
no journal entry required
_____________ value stock is stock not assigned a value per share by the corporate charter. Its advantage is that it can be issued at any price without the possibility of a minimum legal capital.
no-par
Record the issue of 2,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $38,000. The stock has no stated value.
organization expense debit 38,000 common stock, no par value credit 38,000
Record the issue of 2,500 shares of no-par common stock to its promoters in exchange for their efforts, estimated to be worth $38,000. The stock has a $2 per share stated value.
organization expenses: debit 38,000 common stock, stated value $2 credit 5,000 paid in capital in excess of stated value, common stock credit 33,000
Consider a service company that provides carpet cleaning and uses straight-line depreciation. Classify the cost of the depreciation on the carpet cleaning machines.
overhead indirect
The total amount of cash and other assets that a corporation receives from its stockholders in exchange for its stock is:
paid in capital
the ________ value of stock is an amount assigned per share by the corporation in its charter. In many states, this amount establishes the minimum legal capital, which refers to the least amount that the buyers of stock must contribute or be subject to paying at future dates.
par
The market value per share is the price at which stock is bought and sold. Which of the following factors does not influence market value?
par value
common examples of __________ costs include selling expenses and general office personnel, advertising expenses, and depreciation of office expenses
period
Sales commissions. Depreciation on office equipment. tax accountant salary. Office manager salary Administrative expenses. interest expense advertising
period cost
The right of common stockholders to purchase their proportional share of any common stock later issued by a corporation is called the:
preemptive right
Corporations can be separated into two types. A _______________ held corporation does not offer its stock for public sale and usually has few stockholders. A ______________ held corporation offers its stock for public sale and can have thousands of stockholders.
privately; publicly
Factory insurance. Depreciation on factory equipment. Rent on factory building. Indirect labor in making goods. Wages paid to assembly line workers.
product cost
A charter application usually must be signed by the prospective stockholders called incorporaters or ________________ Then, it is filed with the appropriate state official
promoters
Managerial accounting information is normally provided to managers as they:
request it
July 15: Declared a cash dividend payable to common stockholders of $165,000. Record the declaration of a cash dividend payable to common stockholders.
retained earnings 165,000 common dividends payable 165,000
Vernon, Inc.'s charter did not assign a par-value to its authorized stock. However, Vernon's directors assigned a ___________ value per share. This value becomes the minimum legal capital per share in this case
stated
__________ value stock is no-par stock to which the directors assigned a certain value per share. This value becomes the minimum legal capital per share in this case.
stated
Changes in retained earnings are commonly reported in the:
statement of stockholders' equity
A corporation sometimes issues a ______________ as proof of share of ownership
stock certificate
Rank the following groups in order of authority--with the highest authority at the top. SBPE
stockholders board of directors president, vice president, and other officers employees
Two of the biggest disadvantages of the corporate form of business are government regulation and corporate ________
taxation
A corporation is created by obtaining a charter from:
the state government
No-par value stock is stock not assigned a value per share by the corporate charter. Its advantage is that:
there is no minimum legal capital
Direct materials costs for an automobile manufacturer would include all of the following:
tires steering wheels bumpers
On May 3, Zirbal Corporation purchased 4,000 shares of its own stock for $48,000 cash. On November 4, Zirbal reissued 1,300 shares of this treasury stock for $16,900. Record the purchase of 4,000 shares of its own stock for $48,000 cash.
treasury stock 48,000 cash 48,000
Prior to June 1, Sandler Company had no treasury stock transactions. Then, on June 1, the company paid $5,000 to purchase 100 shares of its common stock on the open market.
treasury stock 5,000 cash 5,000
Factory overhead includes all manufacturing costs except direct materials and direct labor.
true
Stockholders do not have the power to bind the corporation to contracts. This is referred to as lack of mutual agency.
true
True or false: Managerial accounting provides information to internal managerial and executive employees who are in charge of a company's business activities.
true
stock dividend does not affect total equity but it transfers amounts between the components of equity.
true
sales commissions computed as a percent of sales revenue are _______ costs
variable
Stockholders have the right to ________ at stockholder meetings
vote
