Accounting 203 exam 3

In Crawford Company, the predetermined overhead rate is 80% of direct labor cost. During the month, $210,000 of factory labor costs are incurred, of which $180,000 is direct labor and $30,000 is indirect labor. Actual overhead incurred was $200,000. The amount of overhead debited to Work in Process Inventory should be

$144,000

Swifty Corporation reported total manufacturing costs of $290000, manufacturing overhead totaling $49000, and direct materials totaling $61000. How much is direct labor cost? Entry field with correct answer $229000 $180000 Cannot be determined from the information provided. $241000

$180000

The interest on a $18000, 8%, 30-day note receivable is Entry field with correct answer $720. $120. $240. $360.

120

Which one of the following is not a manufacturing cost? -Factory maintenance -Wheels that are being installed on new automobiles being manufactured -Advertising cost -Wages of assembly workers

Advertising cost This is a nonmanufacturing cost and is often called a period cost or operating expense. Advertising is not part of the cost of getting the products ready to sell. Instead, it is a cost relating to selling the product after it is ready for sale.

Which one of the following is true concerning manufacturing and merchandising companies' inventories on the balance sheet? -A merchandiser reports its inventories as a current asset, and a manufacturer reports inventories as an expense. -Finished goods is to a manufacturer what merchandise inventory is to a merchandiser. -Raw materials is to a manufacturer what merchandise inventory is to a merchandiser. -Manufacturer's include raw materials, work in process, finished goods, and cost of goods sold on the balance sheet, while merchandisers include only merchandise inventory and cost of goods sold on their balance sheet.

B When a merchandiser sells inventory, the merchandise inventory decreases, whereas when a manufacturer sells inventory, the finished goods account decreases.

Sunland Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $210000 and credit sales are $2110000. Management estimates that 5% of accounts receivable will be uncollectible. What adjusting entry will Sunland Company make if the Allowance for Doubtful Accounts has a credit balance of $4200 before adjustment? Entry field with correct answer Bad Debt Expense 42200 Allowance for Doubtful Accounts 42200 Bad Debt Expense 42200 Accounts Receivable 42200 Bad Debt Expense 6300 Allowance for Doubtful Accounts 6300 Bad Debt Expense 6300 Accounts Receivable 6300

Bad Debt Expense 6300 Allowance for Doubtful Accounts 6300

Assume that Jackson Traders has $5 million in the account: Allowance for Doubtful Accounts at the beginning of the period. The managers believe that given the improved state of the economy this balance is too high and should be reduced by $1 million. What are the entries required to adjust this account to the new balance? Entry field with correct answer Credit Allowance for Doubtful Accounts - $1 million; Debit Bad Debt Expense - $1 million. Debit Allowance for Doubtful Accounts - $1 million; Credit Bad Debt Expense - $1 million. Credit Allowance for Doubtful Accounts - $1 million; Debit Accounts Receivable - $1 million. Credit Accounts Receivable - $1 million; Debit Cash - $1 million.

Debit Allowance for Doubtful Accounts - $1 million; Credit Bad Debt Expense - $1 million.

is added to direct labor and manufacturing overhead to get total manufacturing costs for the current period.

Direct Material

Which group of costs consists of only product costs? -Factory maintenance, sales commissions, salaries paid to sales clerks -Indirect labor, factory building depreciation, administrative expenses -Direct labor, indirect labor, factory utilities -Direct labor, direct materials, and selling expenses

Direct labor, indirect labor, factory utilities All of these are considered product costs. Product costs are related to manufacturing products.

When incurred, factory labor costs are debited to:

Factory Labor

The inventory accounts that show the cost of completed goods on hand and the costs applicable to production that is only partially completed are, respectively Entry field with correct answer Work in Process Inventory and Raw Materials Inventory. Raw Materials Inventory and Work in Process Inventory. Finished Goods Inventory and Raw Materials Inventory. Finished Goods Inventory and Work in Process Inventory.

Finished Goods Inventory and Work in Process Inventory.

When a job is completed in a job order cost accounting system, the cost of the job is transferred to

Finished goods inventory

Comanies assign manufacturing overhead to work in process on an estimated basis through the use of a(n)

Predetermined overhead rate

Product costs include each of the following except -direct labor. -selling and administrative expenses. -direct materials. -manufacturing overhead.

Selling and administrative expenses are period costs, not product costs ("Product versus Period Costs").

On June 15, Kersee Company sold merchandise on account to Eng Co. for $1,000, terms 2/10, n/30. On June 20, Eng Co. returns merchandise worth $300 to Kersee Company. On June 24, payment is received from Eng Co. for the balance due. What is the amount of cash received on June 24? Entry field with correct answer $700. $680. $686. None of the answer choices are correct.

The amount received on June 24 is $686. Because payment is made within the discount period of 10 days, the amount received is $700 ($1,000 - return of $300) minus the discount of $14 ($700 × 2%), for a cash amount of $686.

Under the allowance method of accounting for bad debts, why must uncollectible accounts receivable be estimated at the end of the accounting period? Entry field with correct answer To match bad debt expense to the period in which the revenues were earned. To allow the collection department to schedule work for the next accounting period. To determine the gross realizable value of accounts receivable. The IRS rules require the company to make the estimate.

To match bad debt expense to the period in which the revenues were earned.

The sum of the direct materials costs, direct labor costs, and manufacturing overhead incurred is the -total manufacturing costs. -cost of goods manufactured. -total manufacturing overhead. -total cost of work in process.

Total manufacturing costs are the sum of direct materials costs, direct labor costs, and manufacturing overhead ("Cost of Goods Manufactured").

For a manufacturing company, which of the following is an example of a period cost rather than a product cost? Entry field with correct answer -Wages of machine operators -Insurance on factory equipment -Depreciation on factory equipment -Wages of salespersons

Wages of Salespersons

When the company assigns factory labor costs to jobs, the direct labor cost is debited to

Work in process inventory

The entry when direct factory labor is assigned to jobs is a debit to

Work in process inventory and credit to factory labor

The cost applicable to units that have been started into production but not completed is shown as work in process inventory. finished goods inventory. merchandise inventory. raw materials inventory.

Work in process is the cost applicable to units that have been started into production but are only partially completed ("Balance Sheet").

The cost applicable to units that have been started into production but not completed is shown as -raw materials inventory. -finished goods inventory. -merchandise inventory. -work in process inventory.

Work in process is the cost applicable to units that have been started into production but are only partially completed ("Balance Sheet").

Each of the following is a period cost except -administrative expenses. -selling expenses. -indirect labor. -non-manufacturing costs.

indirect labor. Indirect labor is a product cost, not a period cost ("Product versus Period Costs").

Allowance for Doubtful Accounts on the balance sheet Entry field with correct answer is deducted from accounts receivable. increases the cash realizable value of accounts receivable. appears under the heading "Other Assets." is offset against total current assets.

is deducted from accounts receivable.

Direct materials are

only product cost

Under the allowance method, when a specific account is written off Entry field with correct answer total assets will increase. total assets will decrease. net income will decrease. total assets will be unchanged.

total assets will be unchanged.