Accounting Chapter 15&16

Hula's Heavyweights, Inc., is a company that manufactures forklifts. During the year, Hula's purchased $1,450,000 of direct materials and placed $1,500,000 worth of direct materials into production. Hula's beginning balance in the Materials Inventory account was $320,000. What is the ending balance in Hula's Materials Inventory account?

$1,450,000+$320,000-$1,500,000=270,000 beginning balance + purchases of direct materials - direct materials used= ending balance

Chapin Company reported net income of $410,000 for 2018. Balances of selected current asset and current liability accounts are as shown on the indicated dates: Depreciation expense for 2018 amounted to $65,000. Using only the above information, compute Chapin's net cash flow from operating activities (indirect method) for 2018.

$410,000 + $65,000 - $9,400 - $11,000 - $6,000 = $448,600

Hines Cannery issued capital stock in 2018 for $700,000. During 2018 the company paid dividends of $250,000. What is the effect of these events in Hines' statement of cash flows for 2018?

$450,000 net cash provided by financing activities.

The following information is available about the August transactions of the Helpful Tool Company:

$739,000 Costs of Goods Sold totaling $739,000 is the amount to be deducted from revenue for the month of August.

Manufacturing overhead is best described as:

All manufacturing costs other tan direct materials and direct labor

Which of the following would indicate a cash disbursement?

An increase in prepaid expenses

In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a managerial accounting report is more likely to:

Be tailored to the specific needs of an individual decision maker

Which method will yield higher cash flows from operating activities?

Both direct and indirect methods will yield the same amount.

Which of the following should not be classified as a manufacturing cost?

Commissions paid to salespeople

In an aircraft factory, the inventory of direct materials would not include:

Completed aircraft, available for sale.

Which of the following sets of data is sufficient to compute the amount of cash paid for merchandise?

Cost of goods sold, increase or decrease in inventory, increase or decrease in accounts payable.

Which of the following indicates cash receipts?

Credit entries in the Marketable Securities account.

Compute amount of manufacturing overhead

Depreciation on factory building + telephone expense in factory office + factory foreman's salary + maintenance cost for the factory

The cost of the employee who installs the leather on the seats of a new automobile would be considered:

Direct Labor

Wages of assembly-line workers who package frozen food

Direct labor

Tubing used in manufacturing bicycles

Direct materials

During the current year, the cost of direct materials purchased by a manufacturing firm was $340,000, and the direct materials inventory increased by $65,000. What was the cost of direct materials used during the year?

Direct materials used = Direct materials purchased ($340,000) less the increase in the ending balance of direct materials ($65,000) = $275,000.

Amounts paid by a mobile home manufacturer to a subcontractor who installs plumbing in each mobile home.

Direct product cost

A cash dividend paid to shareholders is reported on the:

Financing activities section of the statement of cash flows.

Cost of disposal of hazardous waste materials to a chemical plant.

Indirect product cost

The principal difference between managerial accounting and financial accounting is that managerial accounting information is:

Intended primarily for use by decision makers inside the business organization.

Which of the following is not classified among the investing activities in a statement of cash flows?

Investment of cash made in the business by the owners.

All of the following are financing activities except:

Lending money

Property taxes on a manufacturing facility

Manufacturing overhead

Patterson Company reported net income for the current year of $722,000. During the year, the company's accounts receivable increased by $50,000, inventory decreased by $23,000, accounts payable decreased by $55,000, and accrued expenses payable increased by $14,000. Determine the amount of cash provided by or used for operating activities by the indirect method.

Net Cash= provided by Operating activities= $654,000 Net income= $722,000 Adjustments to reconcile net income to net cash from operations: -Increase in accounts receivable $(50,000) +Decrease in inventory $23,000 -Decrease in accounts payable($55,000) +Increase in accrued expenses payable +$14,000 -(68,000) Net cash provided by operating activities= $654,000

New Mexico, Inc., sold common stock for $560,000 and preferred stock for $56,000 during the current year. In addition, the company purchased treasury stock for $47,000 and paid dividends on common and preferred stock for $24,000. Determine the amount of cash provided by or used for financing activities during the year.

Net cash - provided by Financing activities- $545,000 Cash received from sale of common stock $560,000 +Cash received from sale of preferred stock $56,000 -Cash paid to purchase treasury stock ($47,000) -Cash paid for dividends($24,000) =Net cash provided by financing activities $ 545,000

Direct labor costs in a paint factory would include wages of employees who:

Operate paint-mixing machines

In a statement of cash flows, collections of accounts receivable are classified as:

Operating activities

In the statement of cash flows, the purchase of supplies is classified as:

Operating activities

Depreciation on sales showroom fixtures

Period cost

A company that assembles trucks produces 60 trucks during the current year and incurs $4.5 million of material, labor, and overhead costs. Fifty-three trucks were sold during the year and each is allocated the same amount of costs. How much of the $4.5 million assembly costs should appear on the company's income statement for the current year?

Product costs per truck: $4,500,000 ÷ 60 = $75,000 Costs recognized due to matching: 53 trucks sold × $75,000 = $3,975,000 The company should recognize $3,975,000 in product costs in the current year income statement.

Which of the following is an investing activity?

Purchase of equipment

Manufacturing companies normally have three types of inventory:

Raw materials, work in process, finished goods

Manufacturing costs do not include

Selling expenses related to goods manufactured during the period

In a manufacturing company, the cost of goods sold is equal to:

The cost of goods available for sale, less the ending inventory of finished goods.

Compute amount of work in process at year-end

WIP beginning balance + Direct materials used + direct labor + manufacturing overhead= total cost of all goods in process - cost of finished goods manufactured= WIP ending balance

Which of the following indicates a cash receipt?

decrease in accounts receivable

The set of linked activities and resources needed to create and deliver a product or service to the customer is referred to as:

the value chain