Accounting Multiple Misc problems



1. Which of the following is not an internal user?
a. Creditor
b. Department manager
c. Controller
d. Treasurer

2. Internal reports are generally
a. aggregated.
b. detailed.
c. regulated.
d. unreliable.

3. The reporting standard for external financial reports is
a. industry-specific.
b. company-specific.
c. generally accepted accounting principles.
d. department-specific.

4. A distinguishing feature of managerial accounting is
a. external users.
b. general-purpose reports.
c. very detailed reports.
d. quarterly and annual reports.

5. The job cost sheet does not show
a. costs chargeable to a specific job.
b. the total costs of a completed job.
c. the unit cost of a completed job.
d. the cost of goods sold.

6. Which one of the following best describes a job cost sheet?
a. It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job.
b. It is used to track manufacturing overhead costs to specific jobs.
c. It is used by management to understand how direct costs affect profitability.
d. It is a daily form that management uses for tracking worker productivity on which employee raises are based.

7. Manufacturing overhead applied is added to direct labor incurred and to what other item to equal total manufacturing costs for the period?
a. Goods available for sale.
b. Raw materials purchased.
c. Work in process.
d. Direct materials used.

8. At the beginning of the year, Monroe Company estimates annual overhead costs to be $1,600,000 and that 300,000 machine hours will be operated. Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 315,000 hours is
a. $1,600,000.
b. $1,523,809.
c. $1,120,000.
d. $1,680,000.

9. Which of the following is not used in assigning manufacturing costs to work in process inventory?
a. Actual manufacturing overhead
b. Time tickets
c. Materials requisitions
d. Predetermined overhead rate

10. At the end of the year, any balance in the Manufacturing Overhead account is generally eliminated by adjusting
a. Work In Process Inventory.
b. Finished Goods Inventory.
c. Cost of Goods Sold.
d. Raw Materials Inventory.

11. Which of the following is not a fixed cost?
a. Direct materials
b. Depreciation
c. Lease charge
d. Property taxes

12. A mixed cost contains
a. a variable element and a fixed element.
b. both selling and administrative costs.
c. both retailing and manufacturing costs.
d. both operating and nonoperating costs.

13. A variable cost is a cost that
a. varies per unit at every level of activity.
b. occurs at various times during the year.
c. varies in total in proportion to changes in the level of activity.
d. may or may not be incurred, depending on management’s discretion.

14. When budgeted and actual results are not the same amount, there is a budget
a. error.
b. difference.
c. anomaly.
d. by-product.

15. If costs are not responsive to changes in activity level, then these costs can be best described as
a. mixed.
b. flexible.
c. variable.
d. fixed.

16. A static budget is appropriate for
a. variable overhead costs.
b. direct materials costs.
c. fixed overhead costs.
d. None of these.

17. What is the primary difference between a static budget and a flexible budget?
a. The static budget contains only fixed costs, while the flexible budget contains only variable costs.
b. The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.
c. The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management.
d. The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold.

18. A standard which represents an efficient level of performance that is attainable under expected operating conditions is called a(n)
a. ideal standard.
b. loose standard.
c. tight standard.
d. normal standard.

19. The perspectives included in the balanced scorecard approach include all of the following except the
a. internal process perspective.
b. capacity utilization perspective.
c. learning and growth perspective.
d. customer perspective.

20. The customer perspective of the balanced scorecard approach
a. is the most traditional view of the company.
b. evaluates the internal operating processes critical to the success of the organization.
c. evaluates how well the company develops and retains its employees.
d. evaluates the company from the viewpoint of those people who buy its products or services.

— Solve the following problems —

21. Dirt Cleaners, Inc. has the following production data for January:
Transferred out 50,000 units
Ending work in process 6,000 units

The units in ending work in process are 100% complete for materials and 60% complete for conversion costs. There is no beginning work in process. Materials cost is $6 per unit and conversion costs are $11 per unit.

Determine the costs to be assigned to the units transferred out and the units in ending work in process.

22. Rhode Company provides architectural services for mall development companies. The following data are available for 2013

Expected Use of
Activity Cost Pool Estimated Overhead Cost Driver per Activity
Secretarial support $ 220,000 27,500 professional hours
Direct labor fringe benefits 200,000 $500,000 direct labor cost
Printing and copying 30,000 20,000 pages
Computer support 250,000 62,500 minutes
Liability insurance 140,000 $2,800,000 billed revenue

Compute the activity-based overhead rates.

23. Telemark Production’s manufacturing costs for July when production was 2,000 units appears below:
Direct materials $10 per unit
Factory depreciation $16,000
Variable overhead 10,000
Direct labor 4,000
Factory supervisory salaries 11,600
Other fixed factory costs 3,000

How much is the flexible budget manufacturing cost amount for a month when 2,200 units are produced?

24. Qwik Service has over 200 auto-maintenance service outlets nationwide. It provides primarily two lines of service: oil changes and brake repair. Oil change-related services represent 75% of its sales and provide a contribution margin ratio of 20%. Brake repair represents 25% of its sales and provides a 60% contribution margin ratio. The company’s fixed costs are $12,000,000 (that is, $60,000 per service outlet).

(a) Calculate the dollar amount of each type of service that the company must provide in order to break even.
(b) The company has a desired net income of $45,000 per service outlet. What is the dollar amount of each type of service that must be provided by each service outlet to meet its target net income per outlet?

25. Jent Company reported the following information for 2013:
October November December
Budgeted sales $320,000 $340,000 $360,000
Budgeted purchases $120,000 $128,000 $144,000

• All sales are on credit.
• Customer amounts on account are collected 40% in the month of sale and 60% in the following month.

Compute the amount of cash Jent will receive during November.

26. Seacoast Company provided the following information about its standard costing system for 2013:
Standard Data Actual Data
Materials 10 lbs. @ $4 per lbs. Produced 4,000 units
Labor 3 hrs. @ $21 per hr. Materials purchased 50,000 lbs. for $215,000
Budgeted production 3,500 units Materials used 41,000 lbs.
Labor worked 11,000 hrs. costing $220,000

Calculate the labor price variance and the labor quantity variance.

27. Selected data from the Florida Fruit Company are presented below:
Total assets $1,500,000
Average total assets 1,850,000
Net income 175,000
Net sales 1,300,000
Average common stockholders’ equity 1,000,000
Net cash provided by operating activities 275,000

Assuming that no dividends were declared or paid during the period, calculate the following profitability ratios from the above information:
1. Profit margin
2. Asset turnover
3. Return on assets
4. Return on common stockholders’ equity


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Accounting Multiple Misc. Problems



1)On January 1, 2010, Inea Fishery sold $650,000 (face amount) of bonds. The bonds are dated January 1, 2010 and will mature on January 1, 2025. Interest is paid annually on June 30 and December 31. The bonds are callable after December 31, 2012 at 101. The following partial amortization schedule was prepared by the accountant for the first 2 years of the life of the bonds:
Carrying Value
Date Cash Interest Amort. of Bonds
Payment Expense
6/30/2010 32500 30496 -2004 760394
12/31/2010 32500 30416 -2084 758310
6/30/2011 32500 30332 -2168 756142
12/31/2011 32500 30246 -2254 753888

On the basis of the information above, answer the following questions (round your answers to the nearest dollar or percent). For complete credit you must show your calculations:

(a) What is the nominal or stated rate of interest for this bond issue?

(b) What is the effective or market rate of interest for this bond issue?

(c) Complete the schedule above for the years 2012 through 2025.

(d) Present the journal entry to record the sale of the bond issue.

(e) Present the appropriate entry(ies) at December 31, 2012

(f) On June 30, 2013, $250,000 of the bond issue was redeemed at the call price. Present the journal entry for this redemption.

(g) The remainder of the bond issue was allowed to mature. Present the journal entry on January 1, 2025 to record this maturity.

Part A: Dyke Company’s net incomes for the past three years are presented below:
2014 2013 2012
$480,000 $450,000 $360,000

During the 2014 year-end audit, the following items come to your attention:

1. Dyke bought equipment on January 1, 2011 for $294,000 with a $29,000 estimated salvage value and a five-year life. The company debited an expense account and credited cash on the purchase date for the entire cost of the asset. (Straight-line method)

2. During 2014, Dyke changed from the straight-line method of depreciating its cement plant to the double-declining balance method. The following computations present depreciation on both bases:
2014 2013 2012
Straight-line 36,000 36,000 36,000
Double-declining 46,080 57,600 72,000
The net income for 2014 was computed using the double-declining balance method, on the January 1, 2014 book value, over the useful life remaining at that time. The depreciation recorded in 2014 was $72,000.

3. Dyke, in reviewing its provision for uncollectibles during 2014, has determined that 1.5% is the appropriate amount of bad debt expense to be charged to operations. The company had used 1/2 of 1% as its rate in 2013 and 2014 when the expense had been $18,000 and $12,000, respectively. The company recorded bad debt expense under the new rate for 2014. The company would have recorded $6,000 less of bad debt expense on December 31, 2014 under the old rate.

(a) Prepare in general journal form the entry necessary to correct the books for the transaction in part 1 of this problem, assuming that the books have not been closed for the current year.
(b) Compute the net income to be reported each year 2012 through 2014.
(c) Assume that the beginning retained earnings balance (unadjusted) for 2012 was $1,260,000. At what adjusted amount should this beginning retained earnings balance for 2012 be stated, assuming that comparative financial statements were prepared?
(d) Assume that the beginning retained earnings balance (unadjusted) for 2014 is $1,800,000 and that non-comparative financial statements are prepared. At what adjusted amount should this beginning retained earnings balance be stated?

Part B:
Show how the following independent errors will affect net income on the Income Statement and the stockholders’ equity section of the Balance Sheet using the symbol + (plus) for overstated, – (minus) for understated, and 0 (zero) for no effect.
2012 2013
Income Balance Income Balance
Statement Sheet Statement Sheet
1. Ending inventory in 2012 overstated.

2. Failed to accrue 2012 interest revenue.

3. A capital expenditure for factoryequipment (useful life, 5 years)was erroneously charged tomaintenance expense in 2012.

4. Failed to count office supplies onhand at 12/31/12. Cash expenditureshave been charged to a supplies expenseaccount during the year 2012.
5. Failed to accrue 2012 wages.
6. Ending inventory in 2012 understated.
7. Overstated 2012 depreciation expense; 2013 expense correct.


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Accounting Multiple Misc. problems



1. Kennedy Inc. reported the following data:
Net income $118,000
Depreciation Expense $15,000
Loss on Disposal of equipment $10,000
Increase in accounts receivable $7,000
Decrease in accounts payable ($2,000)
Prepare the cash flows for the operating activities under the indirect method as it would appear on the statement of cash flows.

2. For each of the following, identify whether it would be disclosed as an operating, financing, or investing, activity on the statement of cash flows under the indirect method.
-Purchased buildings A. Operating
-Sold patents B. Financing
-Net income C. Investing
-Issued Common Stock D. Would not be reported
-Paid Cash dividends
-Depreciation Expense

3. Land costing $46,000 was sold for $79,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?

4. On January 1, 2012, Valuation Allowance for Trading Investments has a zero balance. On December 31, 2012, the cost of trading securities portfolio was $52,400, and the fair value was $53,000. Prepare the December 31, 2012, adjusting journal entry to record the unrealized gain or loss on the trading investments.

5. Jarvis Corporation makes an investment in 100 shares of Saxton Company’s common stock. The stock is purchased for $40 a share plus brokerage fees of $300. Write the journal entry to record this purchase:

6.Match each of the following investment terms with the appropriate definition.

– Equity Securities
– Trading Securities
– Available-for-sale Securities
-Equity Method
– Cost Method

A. Preferred and common stock that represent ownership in a company and do not have a fixed maturity date.
B.The method of reporting an investment that represents less than 20% of the voting stock of another company.
C.When using this, dividends are treated as a reduction of the investment.Se
D.Securities not held for trading or to maturity or other strategic reasons.
E.Debt and equity securities purchased and sold to earn short-term profits from changes in the market price.

7.Using a minimum of 3 sentences, describe the relationship between the market rate of interest, the rate of interest on bonds being issued, and the price the bonds sell at.
8. If $3,000,000 of 10% bonds are issued at 95, the amount of cash received from the sale is
9. The adjusting entry to record the amortization of a discount on Bonds Payable is
A.debit Discount on Bonds Payable, credit Interest Expense
B.debit Interest Expense, credit Discount on Bonds Payable
C.debit Interest Expense, credit Cash
D.debit Bonds Payable, credit Interest Expense
10.When a corporation owns less than 20% of the stock of another company, dividend received are not treated as income.
True or False
11.The account Unrealized Gain (Loss) on Trading Securities should be included in the
A.Income Statement as Other Revenue (Expenses)
B.Balance Sheet as an adjustment to the asset account
C.Balance Sheet as an adjustment to Stockholders’ Equity
D. Statement of Retained Earnings


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