Question 15:

Assume that actual overhead consisted of $30,000 for indirect labor, $20,000 for indirect material, and $10,000 for depreciation of factory equipment. Based on the preset rates, $65,000 of overhead was applied to work in process.

a. Overhead is underapplied.

b. This is viewed as an unfavorable situation.

c. There will be a $5,000 debit balance in Factory Overhead.

d. All of the above.

e. None of these

Question 16:

The contract interest rate for bonds:

A. must equal the effective interest rate.

B. is greater than the effective interest rate when bonds are issued at a premium.

C. has no relation to the cash flow associated with a particular bond.

D. will fluctuate over the life of a bond.

E. None of these.

Question 17:

Frick Corporation issued $100,000 of 7%, 15-year bonds on June 1, 2014 (dated April 1 2014) at 101 plus accrued interest, which is paid on April 1 and October 1. The proper entry to record issuance of the bonds includes a debit to Cash for:

a. $100,000.

b. $101,000.

c. $101,167.

d. $102,167.

e. None of these.

Question 18:

Which of the following statements about treasury stock is true?

a. Excess of the sales price over cost should be credited to retained earnings.

b. Gains are not recorded on treasury stock transactions but losses are.

c. Losses on treasury stock transactions are recorded in income.

d. Reacquiring treasury stock causes stockholders equity to decrease.

e. None of these.