ACC 211 Final Exam 1 Cody Industries owns

ACC 211 Final Exam 100 Score Question 1 Cody Industries owns

ACC 211 – Final Exam – 100% Score

Question 1

Cody Industries owns 35% of Macarthy Company. For the current year, Macarthy reports net income of $250,000 and declares and pays a $60,000 cash dividend. Which of the following correctly presents the journal entries to record Cody’s equity in Macarthy’s net income and the receipt of dividends from Macarthy?

Dec. 31 Stock Investments 87,500

Revenue from Stock Investments 87,500

Dec. 31 Cash 21,000

Stock Investments 21,000

Dec. 31 Revenue from Stock Investments 87,500

Stock Investments 87,500

Dec. 31 Stock Investments 21,000

Cash 21,000

Dec. 31 Stock Investments 87,500

Revenue from Stock Investments 87,500

Dec. 31 Cash 60,000

Stock Investments 60,000

Dec. 31 Stock Investments 66,500

Revenue from Stock Investments 66,500

Question 2

If stock is issued for a noncash asset, the asset should be recorded on the books of the corporation at

a nominal amount.

fair value.

zero.

cost.

Question 3

Saira, Inc. has the following income statement (in millions):

SAIRA, INC.

Income Statement

For the Year Ended December 31, 2014

Net Sales $300

Cost of Goods Sold 180

Gross Profit 120

Operating Expenses 45

Net Income $75

Using vertical analysis, what percentage is assigned to Cost of Goods Sold?

40%

None of these answer choices are correct.

60%

100%

Question 4

If a company anticipates that other sales will be affected by the acceptance of a special order, then

lost sales should be considered in the incremental analysis.

lost sales should not be considered in the incremental analysis.

the order should not be accepted.

the order will only be accepted if the plant is below capacity.

Question 5

The master budget of Handy Company shows that the planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the following manufacturing overhead costs are expected:

Indirect labor $480,000

Machine supplies 120,000

Indirect materials 140,000

Depreciation on factory building 80,000

Total manufacturing overhead $820,000

A flexible budget for a level of activity of 120,000 machine hours would show total manufacturing overhead costs of

$820,000.

$968,000.

$940,000.

$984,000.

Question 6

A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 90,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for materials for the month of January?

90,000 equivalent units.

98,000 equivalent units.

70,000 equivalent units.

82,000 equivalent units.

Question 7

On January 1, 2014, Meeks Corporation issued $5,000,000, 10-year, 4% bonds at 102. Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2014 is

Cash……………………………………………… 5,000,000

Bonds Payable………………………………. 5,000,000

Cash……………………………………………… 5,100,000

Bonds Payable………………………………. 5,100,000

Premium on Bonds Payable…………………….. 100,000

Cash……………………………………………… 5,000,000

Bonds Payable………………………………. 5,100,000

Cash……………………………………………… 5,100,000

Bonds Payable………………………………. 5,000,000

Premium on Bonds Payable………………… 100,000

Question 8

The following information is taken from the production budget for the first quarter:

Beginning inventory in units 1,800

Sales budgeted for the quarter 678,000

Capacity in units of production facility 708,000

How many finished goods units should be produced during the quarter if the company desires 4,800 units available to start the next quarter?

682,800

711,000

681,000

675,000

Question 9

The standard number of hours that should have been worked for the output attained is 6,000 direct labor hours and the actual number of direct labor hours worked was 6,300. If the direct labor price variance was $3,150 favorable, and the standard rate of pay was $9 per direct labor hour, what was the actual rate of pay for direct labor?

$9.50 per direct labor hour

$8.50 per direct labor hour

$7.50 per direct labor hour

$9.00 per direct labor hour

Question 10

Madaas Company manufactures customized desks. The following pertains to Job No. 987:

Direct materials used $11,450

Direct labor hours worked 360

Direct labor rate per hour $15.00

Machine hours used 300

Applied factory overhead rate per machine hour $22.00

What is the total manufacturing cost for Job No. 987?

$26,750

$21,650

$23,450

$24,950

Question 11

The comparative balance sheets for Rothlisberger Company as of December 31 are presented below.

ROTHLISBERGER COMPANY

Comparative Balance Sheets

December 31

Assets 2014 2013

Cash $71,310 $45,180

Accounts receivable 44,810 61,910

Inventory 151,370 141,220

Prepaid expenses 14,860 21,430

Land 104,880 130,660

Buildings 200,520 200,520

Accumulated depreciation—buildings (60,660 ) (39,800 )

Equipment 228,770 154,840

Accumulated depreciation—equipment (45,900 ) (35,480 )

Total $709,960 $680,480

Liabilities and Stockholders’ Equity

Accounts payable $47,390 $39,670

Bonds payable 260,180 300,750

Common stock, $1 par 199,650 159,080

Retained earnings 202,740 180,980

Total $709,960 $680,480

Additional information:

1. Operating expenses include depreciation expense of $41,310 and charges from prepaid expenses of $6,570.

2. Land was sold for cash at book value.

3. Cash dividends of $15,200 were paid.

4. Net income for 2014 was $36,960.

5. Equipment was purchased for $94,010 cash. In addition, equipment costing $20,080 with a book value of $10,050 was sold for $5,710 cash.

6. Bonds were converted at face value by issuing 40,570 shares of $1 par value common stock.

Prepare a statement of cash flows for the year ended December 31, 2014, using the indirect method. (Show amounts that decrease cash flow with either a – sign e.g. -15,000 or in parenthesis e.g. (15,000).)

ROTHLISBERGER COMPANY

Statement of Cash Flows

For the Year Ended December 31, 2014

$

Adjustments to reconcile net income to

$

$

$

Question 12

Lager Dental Clinic is a medium-sized dental service specializing in family dental care. The clinic is currently preparing the master budget for the first 2 quarters of 2014. All that remains in this process is the cash budget. The following information has been collected from other portions of the master budget and elsewhere.

Beginning cash balance $ 30,154

Required minimum cash balance 25,298

Payment of income taxes (2nd quarter) 3,787

Professional salaries:

1st quarter 139,716

2nd quarter 139,611

Interest from investments (2nd quarter) 5,360

Overhead costs:

1st quarter 74,771

2nd quarter 100,014

Selling and administrative costs, including

$3,132 depreciation:

1st quarter 49,848

2nd quarter 69,632

Purchase of equipment (2nd quarter) 50,473

Sale of equipment (1st quarter) 15,322

Collections from clients:

1st quarter 229,638

2nd quarter 380,475

Interest payments (2nd quarter) 302

Prepare a cash budget for each of the first two quarters of 2014.

LAGER DENTAL CLINIC

Cash Budget

For the Two Quarters Ending June 30, 2014

1st Quarter 2nd Quarter

$ $

:

:

:

:

$ $

Question 13

Cepeda Corporation has the following cost records for June 2014.

Indirect factory labor $4,060 Factory utilities $490

Direct materials used 16,610 Depreciation, factory equipment 1,470

Work in process, 6/1/14 2,990 Direct labor 37,650

Work in process, 6/30/14 3,960 Maintenance, factory equipment 2,020

Finished goods, 6/1/14 6,430 Indirect materials 2,100

Finished goods, 6/30/14 6,890 Factory manager’s salary 4,310

Prepare a cost of goods manufactured schedule for June 2014.

CEPEDA CORPORATION

Cost of Goods Manufactured Schedule

For the Month Ended June 30, 2014

$

$

$

:

$

Prepare an income statement through gross profit for June 2014 assuming sales revenue are $90,770.

CEPEDA CORPORATION

Income Statement (Partial)

For the Month Ended June 30, 2014

$

$

:

$

Question 14

Rachel Rey recently opened her own basketweaving studio. She sells finished baskets in addition to the raw materials needed by customers to weave baskets of their own. Rachel has put together a variety of raw material kits, each including materials at various stages of completion. Unfortunately, owing to space limitations, Rachel is unable to carry all varieties of kits originally assembled and must choose between two basic packages.

The basic introductory kit includes undyed, uncut reeds (with dye included) for weaving one basket. This basic package costs Rachel $11.50 and sells for $27.71. The second kit, called Stage 2, includes cut reeds that have already been dyed. With this kit, the customer need only soak the reeds and weave the basket. Rachel is able to produce the second kit by using the basic materials included in the first kit and adding one hour of her own time, which she values at $18.10 per hour. Because she is more efficient at cutting and dying reeds than her average customer, Rachel is able to make two kits of the dyed reeds, in one hour, from one kit of undyed reeds. The Stage 2 kit sells for $34.74.

Determine whether Rachel’s basketweaving shop should carry the basic introductory kit with undyed and uncut reeds, or the Stage 2 kit with reeds already dyed and cut. Prepare an incremental analysis to support your answer. (Round answers to 2 decimal places, e.g. 2.45.)

Sell

(Basic Kit)

Process Further

(Stage 2 Kit) Net Income

Increase

(Decrease)

Sales per unit $

$

$

Costs per unit

Direct materials $

$

$

Direct labor

Total $

$

$

Net income per unit $

$

$

Should Rachel’s basketweaving shop carry the Stage 2 kit with reeds already dyed and cut?

Rachel the Stage 2 Kits.

Question 15

Naylor Company had $153,010 of net income in 2013 when the selling price per unit was $160, the variable costs per unit were $60, and the fixed costs were $1,306,990. Management expects per unit data and total fixed costs to remain the same in 2014. The president of Naylor Company is under pressure from stockholders to increase net income by $59,410 in 2014.

Compute the number of units sold in 2013. (Round answers to 0 decimal places, e.g. 5,275.)

The Number of Units Sold

units

Compute the number of units that would have to be sold in 2014 to reach the stockholders’ desired profit level. (Round answer to 0 decimal places, e.g. 5,275.)

Units needed in 2014

units

Assume that Naylor Company sells the same number of units in 2014 as it did in 2013. What would the selling price have to be in order to reach the stockholders’ desired profit level? (Round answers to 0 decimal places, e.g. 5,275.)

The selling price in 2014 $

Question 16

Kobe Company has a factory machine with a book value of $81,800 and a remaining useful life of 4 years. It can be sold for $32,400. A new machine is available at a cost of $220,700. This machine will have a 4-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $575,700 to $409,500.

Prepare an analysis showing whether the old machine should be retained or replaced.

Retain

Equipment

Replace

Equipment Net 4-Year

Income

Increase

(Decrease)

Variable manufacturing costs $

$

$

New machine cost

Sell old machine

Total $

$

$

The old factory machine should be .

Question 17

Quay Co. had the following transactions during the current period.

Mar. 2 Issued 5,700 shares of $7 par value common stock to attorneys in payment of a bill for $44,200 for services performed in helping the company to incorporate.

June 12 Issued 62,900 shares of $7 par value common stock for cash of $507,900.

July 11 Issued 1,100 shares of $110 par value preferred stock for cash at $140 per share.

Nov. 28 Purchased 2,700 shares of treasury stock for $80,500.

Journalize the transactions. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date Account Titles and Explanation Debit Credit

Question 18

On January 1, 2014, Frontier Corporation had $1,109,000 of common stock outstanding that was issued at par. It also had retained earnings of $744,300. The company issued 38,400 shares of common stock at par on July 1 and earned net income of $394,700 for the year.

Journalize the declaration of a 15% stock dividend on December 10, 2014, for the following independent assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)

(a) Par value is $10, and market value is $19.

(b) Par value is $5, and market value is $20.

No. Account Titles and Explanation Debit Credit

(a)

(b)

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ACC 211 Final Exam 1 Cody Industries owns