ACCT 202 Final Exam

Sadie White receives an hourly rate of $30, with time and a half for all hours worked in excess of 40 during a Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $300; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to White?

$1,143 explanation: 30 x 40 + $45 x 8 = 1,200 + 360 = 1,560 SS Tax - 0.06 x 1,560 = $93.60 Medicare Tax - 0.015 x 1,560 = $23.40 Federal Income Tax Withheld - 300 + $93.60 + $23.40 = $417 Net Income - 1,560 - $417 = $1,143

What are the dividends per common share for Diane Company?

$1.50 explanation:

Lee Company has the following information for the pay period of December 15-31: Gross payroll $16,000 Federal income tax withheld $4,000 Social security rate 6% Federal unemployment tax rate 0.8% Medicare rate 1.5% State unemployment tax rate 5.4% Assuming no employees are subject to ceilings for taxes on their earnings, Salaries Payable would be recorded for __________.

$10,800 explanation: 16,000 - 4,000 - (16,000 x 6%) - (16,000 x 1.5%) 12,000 - 960 - 240 = $10,800

The charter of a corporation provides for the issuance of 100,000 shares of common Assume that 60,000 shares were originally issued and 10,000 were subsequently reacquired. What is the amount of cash dividends to be paid if a $2 per share dividend is declared?

$100,000 explanation: 60,000 - 10,000 = 50,000 x 0.02 = 100,000

When Job 117 was completed, direct materials totaled $4,400; direct labor, $5,600; and factory overhead, $2,400. A total of 1,000 units were produced at a per-unit cost of __________.

$12.40 explanation:

The following information is taken from the financial records of Gunner Manufacturing: Cost of materials used $45,000 Direct labor costs 48,000 Factory overhead 39,000 Work in process, beg. 18,000 Work in process, end. 28,000 What is cost of goods manufactured?

$122,000 explanation:

******** The net income reported on an income statement for the current year was $63,000. Depreciation recorded on fixed assets for the year was $24,000. Balances of the current asset and current liability accounts at the end and beginning of the year are listed below. What is the total Net Cash Flows from Operating Activities? End Beginning Cash $65,000 $ 75,000 Accounts receivable 68,000 57,000 Inventories 49,000 102,000 Prepaid expenses 3,400 4,900 Accounts payable 61,000 58,000 Salaries payable What is the total Net Cash Flows from Operating Activities reported in the Statement of Cash Flows?

$135,000 explanation:

On January 1, Year 1, Zero Company obtained a $52,000, 4-year, 6.5% installment note from Regional Bank. The note requires annual payments of $15,179, beginning on December 31, Year 1. The December 31, Year 3 carrying amount in the amortization table for this installment note will be equal to ____________.

$14,252

Bonds Payable has a balance of $900,000 and Premium on Bonds Payable has a balance of $10,000. If the issuing corporation redeems the bonds at 103, what is the amount of gain or loss on redemption?

$17,000 loss explanation: 900,000 x 1.03 = 927,000 900,000 + 10,000 = $910,000 927,000 - 910,000 = 17,000

The following budget data are available for Sharp Company: Estimated direct labor hours 12,000 Estimated direct labor dollars $90,000 Estimated factory overhead costs $180,000 Actual direct labor hours 11,500 Actual direct labor dollars $92,000 Actual factory overhead costs $181,000 If factory overhead is applied based on direct labor hours, the amount of overhead to be applied is

$172,500 explanation:

Keith and Amanda have original investments of $50,000 and $100,000 respectively in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 10%; salary allowances of $27,000 and $18,000, respectively; and the remainder to be divided equally. How much of the net income of $42,000 is allocated to Keith?

$23,000 explanation: 42,000 - (50,000 x 10% + 100,000 x 10%) - (27,000 + 18,000) 42,000 - (5,000 + 10,000) - ($45,000) = 18,000 18,000/2 = 9,000 Keith : 5,000 + 27,000 - 9,000 = $23,000 Amanda : 10,000 + 18,000 - 9,000 = $19,000

Reynolds Manufacturers Inc. has estimated total factory overhead costs of $95,000 and expected direct labor hours of 9,500 for the current fiscal year. If job number 117 incurred 2,300 direct labor hours, how much overhead will be allocated to work in process for Job 117?

$23,000 explanation:

Tobias Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common The following amounts were distributed as dividends: Year 1: $10,000 Year 2: $45,000 Year 3: $90,000 Determine Tobias' the dividends in arrears for preferred stock for the second year.

$25,000 explanation:

Department R had 5,000 units in work in process that were 75% completed as to labor and overhead at the beginning of the period; 30,000 units of direct materials were added during the period; 32,000 units were completed during the period; and 3,000 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was ___________,

$29,000 explanation:

Tobias Company has 20,000 shares of $100 par, 2% cumulative preferred stock and 100,000 shares of $50 par common The following amounts were distributed as dividends: Year 1: $10,000 Year 2: $45,000 Year 3: $90,000 Determine the dividends per share for preferred and common stock for the third year.

$3.25 and $0.25 explanation:

The Daytona Company reports the following information: 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 Product costs are:

$35,000

An investor purchased 500 shares of common stock, $20 par, for $19,250. Subsequently, 100 shares were sold for $35 per share. What is the amount of gain or loss on the sale?

$350 loss

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 explanation:

On June 1, $40,000 of treasury bonds were purchased between interest dates. The broker commission was $600. The bonds pay interest at 12%, which is paid semiannually on January 1 and July 1. How much interest revenue will be recorded on July 1?

$400 explanation:

Benton and Orton are partners who share income in the ratio of 3:1 and have capital balances of $70,000 and $30,000, respectively. Ramsey is admitted to the partnership and is given a 40% interest by investing $20,000. What is Benton's capital balance after admitting Ramsey?

$49,000 explanation:

Chang Co. issued a $50,000, 120-day, discounted note to Guarantee Bank. The discount rate is 6%. Assuming a 360-day year, the cash proceeds to Chang Co. are _______.

$49,000 explanation: $50,000 x 9% x (120/360) - $50,000 = $49,00 $50,000 x 0.06 x 0.33 = $1,000 $50,000 - $1,000 = $49,000

On January 1, the Elias Corporation issued 10% bonds with a face value of $50,000. The bonds are sold for $46,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31,ten years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is _______________.

$5,400 explanation: 50,000 x 10% = 5,000 50,000 - 46,000 / 10 = $400 5,000 + 400 = 5,400

Assuming a 360-day year, when a $50,000, 90-day, 9% interest-bearing note payable matures, total payment will be __________.

$51,125 explanation: $50,000 x 9% x (90/360) + $50,000 = $51,125 $50,000 x 0.09 x 0.25 = $1,125 $50,000 + $1,125 = $51,125

Jones Company is a manufacturing company that has worked on several production jobs during the month of January. Below is a list of all the jobs for January: Job 250 $150,000 Job 251 $ 57,000 Job 252 $ 68,000 Jobs 250 and 251 were completed in January, and Job 250 was sold for $175,000 in January. What is the ending balance of Finished Goods inventory at the end of January?

$57,000

Department M had 600 units 60% completed in process at the beginning of June, 6,000 units completed during June, and 700 units 30% completed at the end of June. Using the first-in, first-out method of inventory costing, what was the number of equivalent units of production for conversion costs for the period?

$6,550 explanation:

The Thomlin Company forecasts that total overhead for the current year will be $15,500,000 with 250,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. The predetermined overhead rate based on machine hours is __________.

$62 per machine hour

Jon and Ruth share income equally. For the current year, the partnership net income is $40,000. Jon made withdrawals of $14,000, and Ruth made withdrawals of $15,000. At the beginning of the year, the capital account balances were Jon, capital, $42,000; Ruth capital, $58,000. Ruth's capital account balance at the end of the year is __________.

$63,000 explanation:

What is the total stockholders' equity based on the following account balances? Common Stock $400,000 Paid-In Capital in Excess of Par 95,000 Retained Earnings 180,000 Treasury Stock 20,000

$655,000 explanation: 400,000 + 180,000 + 95,000 - 20,000 = $655,000

Texas has 10,000 shares of 6%, $125 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31. What is the annual dividend on the preferred stock?

$75,000 in total explanation: 10,000 x 125 x 0.06 = 75,000

A company with 100,000 authorized shares of $4 par common stock issued 40,000 shares at $8. Subsequently, the company declared a 2% stock dividend on a date when the market price was $11 a What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend?

$8,800 explanation: 40,000 x 0.02 x 11 = 8,800

Accounts payable $ 30,000 Accounts receivable 35,000 Accrued liabilities 7,000 Cash 15,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 20,000 Property, plant, and equipment 400,000 Prepaid expenses 2,000 Based on the above data, what is the amount of quick assets?

$86,000

Determine the earnings per share of common stock, assuming that the income before bond interest and income taxes is $2,280,000. Bonds payable, 9% issued at face X Co. $5,000,000 Common stock, $25 par 3,000,000 Income tax is estimated at 40% of income __________.

$9.15 explanation:

The following information pertains to Diane Company for questions 5-10. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Assets Cash and short-term investments $ 30,000 Accounts receivable (net) 20,000 Inventory 15,000 Property, plant, and equipment 185,000 Total assets $250,000 Liabilities and Stockholders' Equity Current liabilities $ 45,000 Long-term liabilities 70,000 Stockholders' equity—Common 135,000 Total liabilities and stockholders' equity $250,000 Income Statement Sales $ 85,000 Cost of goods sold 45,000 Gross margin $ 40,000 Operating expenses (15,000) Interest expense (5,000) Net income $ 20,000 Number of shares of common stock outstanding 6,000 Market price of common stock $20 Total dividends paid $9,000 Cash provided by operations $30,000 What is the ratio of sales to total assets for Diane Company?

0.34

Match the items below for a bakery to the type of cost: 1. Salesman commissions 2. Factory rent 3. Frosting 4. Baker's wages 5. Depreciation expense - office

1. Non-Manufacturing Costs 2. Factory Overhead 3. Direct Materials 4. Direct Labor 5. Non-Manufacturing Cost

Identify the section of the statement of cash flows where each of the following items would be reported. 1. Increase in accounts payable 2. Redemption of bond payable 3. Purchase of the stock of another company as an investment 4. Payment of dividends to stockholders 5. Issuing stock to new stockholders 6. Purchase of a Building 7. Gain on sale of equipment

1. Operating Activity 2. Financing Activity 3. Investing Activity 4. Financing Activity 5. Financing Activity 6. Investing Activity 7. Operating Activity

What is the rate earned on total assets for Diane Company?

10.0% explanation:

What is the rate earned on common stockholders' equity for Diane Company?

14.8% explanation:

Based on the following data, what is the accounts receivable turnover? Sales on account during year $600,000 Cost of merchandise sold during year 270,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 110,00

15.0

A ratio of 3:4:3 is the same as ________.

30%:40%:30%

For Questions 9 and 10: The following unit data were assembled for the assembly process of the Super Co. for the month of April. Direct materials are added at the beginning of the process. Conversion costs are added uniformly over the production process. The company uses the FIFO method. Beginning work in process, (60% completed) 5,000 Units started in April 48,000 Ending work in process, (30% completed) 4,000 The number of equivalent units produced with respect to conversion costs is

47,200 explanation:

For Questions 9 and 10: The following unit data were assembled for the assembly process of the Super Co. for the month of April. Direct materials are added at the beginning of the process. Conversion costs are added uniformly over the production process. The company uses the FIFO method. Beginning work in process, (60% completed) 5,000 Units started in April 48,000 Ending work in process, (30% completed) 4,000 The number of equivalent units produced with respect to direct materials costs is

48,000 explanation:

What is the price earnings ratio for Diane Company?

6.0 times

The following production data were taken from the records of the Finishing Department for June: Inventory in process, June 1 (30% completed) 4,000 units Completed units during June 65,000 units Ending inventory (60% complete) 7,000 units What is the number of conversion equivalent units of production in the June 30 Finishing Department inventory, assuming that the first-in, first-out method is used to cost inventories?

68,000 units

What is the dividend yield for Diane Company?

7.5% explanation:

Process Cost System

A type of cost system that accumulates costs for each of the various departments within a manufacturing facility.

The journal entry to record the conversion of a $6,300 accounts payable to a notes payable would be ___________.

Debit - Accounts Payable 6,300 Credit - Notes Payable 6,300

Using the balance sheet information above, how would you describe the line in the Statement of Cash Flows for the change in accounts payable and how would it be adjusted to net income?

Decrease in accounts payable 3,000

Using the above balance sheet information, how would you describe the line in the Statement of Cash Flows for the change in prepaid expenses and how would it be adjusted to net income?

Decrease in prepaid expenses 1,500

While some businesses have been granted charters under state laws, most businesses receive their charters under federal.

False

Under the equity method, the receipt of cash dividends on an investment in common stock of Vallerio Corporation is accounted for as a debit to Cash and a credit to _____________.

Investment in Vallerio.

Which of the following is not a characteristic of a job order costing system?

It accumulates cost for each department within the factory. characteristics: • It provides a separate record for the cost of each quantity of product that passes through the factory. • It is best suited for industries that manufacture custom goods. • It uses only one work in process account.

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

Job order cost and process cost systems

Luke and John share income and losses in a 2:1 ratio after allowing for salaries to Luke of $48,000 and $60,000 to Net income for the partnership is $93,000. Income should be divided as ______.

Luke, $38,000; John, $55,000 explanation:

Treasury stock that had been purchased for $5,600 last month was reissued this month for $8,500. The journal entry to record the reissuance would include a credit to ____________.

Paid-In Capital from Treasury Stock for $2,900 explanation: 8,500 - 5,600 = 2,900

Which of the following costs incurred by a tool manufacturer would not be included in conversion costs?

Raw steel

Which of the following is not a characteristic of a process cost system?

The system measures costs for each completed job. characteristics: • manufacturing costs are grouped by departments. • the system may use several work in process accounts. • system allocates costs between completed and partially completed units within a departmen

Which of the following forms is typically given to employees at the end of the calendar year so that employees can file their individual income tax forms?

Wage and Tax Statement (Form W-2)

A bond indenture is _________________.

a contract between the corporation issuing the bonds and the bondholders

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

a discount

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

a swimming pool installer

When a limited liability company is formed _____________.

all partners have limited liability

In a process cost system, the amount of work in process inventory is valued by _______________.

allocating departmental costs between completed and partially completed units

In order to be useful to managers, managerial accounting reports should possess all of the following characteristics except ___________.

be prepared in accordance with generally accepted accounting principles. need to possess: • be prepared to report information for any unit of the business to support decision making. • be provided at any time management needs information. • provide objective measures of past operations and subjective estimates about future decisions.

When the corporation issuing the bonds has the right to redeem the bonds prior to the maturity, the bonds are ______________.

callable bonds

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

chief financial officer's salary. what is included: • direct labor • factory overhead • direct materials

What term is used to describe the process of monitoring operating results and comparing actual results with the expected results?

controlling

The Hayden Corporation issues 1,000, 10-year, 8%, $2,000 bonds dated January 1 at 92. The journal entry to record the issuance will show a

credit to Bonds Payable for $2,000,000 explanation:

The liability for a dividend is recorded on which of the following dates?

date of declaration

Blanton Corporation purchased 15% of the outstanding shares of common stock of Worton Corporation as a long-term investment. Subsequently, Worton Corporation reported net income and declared and paid cash dividends. What journal entry would Blanton Corporation use to record the dividends it receives?

debit Cash; credit Dividend Revenue

Henry Corporation purchases $200,000 bonds plus accrued interest for 3 months of $3,000 from Dylan Company on April 1. The bonds have an annual interest rate of 6% payable on June 30 and December 31. The entry to record the purchase of the bonds would include a _________.

debit to Interest Receivable for $3,000

A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 a The effect of the declaration and issuance of the stock dividend is to ________.

decrease retained earnings, increase common stock, and increase paid-in capital

Conversion Cost

direct labor + overhead

Product Cost

direct materials + direct labor + manufacturing overhead

If a company borrows money from a bank as an installment note, the interest portion of each annual payment will __________.

equal the interest rate on the note times the carrying amount of the note at the beginning of the period.

Armando Company owns 17,000 of the 70,000 shares of common stock outstanding of Tito Company and exercises a significant influence over its operating and financial policies. The investment should be accounted for by the __________.

equity method

When a partnership is formed, assets contributed by the partners should be recorded on the partnership books at their _________________.

fair market value at the time of the contribution

The total earnings of an employee for a payroll period is referred to as ________.

gross pay

******* 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

Which of the following stock investments should be accounted for using the cost method?

investments of less than 20%

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

Parker Company owns 83% of the outstanding stock of Tadeo Company. Parker Company is referred to as the __________.

parent

When a liquidating a partnership, there should be a(n) ______________.

realization of assets

The equity method of accounting for investments _________________.

requires the investment be increased by the reported net income of the investee.

For which of the following businesses would a process cost system be appropriate?

shampoo manufacturer

One potential advantage of financing corporations through the use of bonds rather than common stock is _______________.

the interest expense is deductible for tax purposes by the corporation.

If there is no written agreement as to the way income will be divided among partners ____________.

they will share income and losses equally

An aid in internal control over payrolls that indicates employee attendance is a _________.

time card

Which of the following will have no effect on an employee's take-home pay?

unemployment tax

A disadvantage of the partnership form of business organization is _________.

unlimited liability

A current liability is a debt that is reasonably expected to be paid __________.

within one year