Questions 2-8

Final Examination Acct221: Principles of Accounting II For this exam, omit all general journal entry explanations. Ensure to include correct dollar signs, underlines & double underlines. Question 1: 30% points: Flip Corporation's trial balance at December 31, 2014, is presented below. All 2014 transactions have been recorded except for the items described below. Flip Corporation Trial Balance December 31, 2014 Accounts Cash Debit Credit $23,000 Accounts Receivable 51,000 Inventory 22,700 Land 65,000 Buildings 95,000 Equipment 40,000 $450 Allowance for Doubtful Accounts Accumulated Depreciation, Buildings 30,000 Accumulated Depreciation, Equipment 14,400 Accounts Payable 19,300 Interest Payable 0 Dividends Payable 0 8,000 Unearned Rent Revenue Bonds Payable (10%) 50,000 Common Stock ($10 par) 30,000 6,000 Paid-in Capital in Excess of Par, Common Stock Preferred Stock ($20 par) 0 Paid-in Capital in Excess of Par, Preferred Stock 0 75,050 Retained Earnings Treasury Stock 0 Cash Dividends 0 Sales Revenue 570,000 Rent Revenue 0 Bad Debt Expense Interest Expense 0 2,500 Cost of Goods Sold Depreciation Expense 400,000 0 Other Operating Expenses 39,000 Salaries and Wages Expense 65,000 _______ $803,200 $803,200 Totals Unrecorded transactions: 1. On January 1, 2014, Flip issued 1,000 shares of $20 par, 6% preferred stock for $22,000. 2. On January 1, 2014, Flip also issued 1,000 shares of common stock for $23,000. 3. Flip reacquired 300 shares of its common stock on July 1, 2014, for $49 per share. 4. On December 31, 2014, Flip declared the annual preferred stock dividend and a $1.50 per share dividend on the outstanding common stock, all payable on January 15, 2015. 5. Flip estimates that uncollectible accounts receivable at year-end is $5,100. 6. The building is being depreciated using the straight-line method over 30 years. The salvage value is $5,000. 7. The equipment is being depreciated using the straight-line method over 10 years. The salvage value is $4,000. 8. The unearned rent was collected on October 1, 2014. It was receipt of 4 months' rent in advance (October 1, 2014 through January 31, 2015). 9. The 10% bonds payable pay interest every January 1 and July 1. The interest for the 6 months ended December 31, 2014, has not been paid or recorded. Instructions: (Ignore income taxes.) a. Prepare journal entries for the transactions listed above. b. Prepare an updated/adjusted December 31, 2014, trial balance, reflecting the unrecorded transactions. c. Prepare a multiple-step income statement for the year ending December 31, 2014. d. Prepare a retained earnings statement for the year ending December 31, 2014. e. Prepare a classified balance sheet as of December 31, 2014. Question 2: 6% points: January 1, 2014 Flip Company purchased 35,000 shares of common stock of Flop Corporation as a long-term investment for $900,000. December 31, 2014, Flop Corporation reported net income of $300,000 and paid dividends of $100,000. Instructions: a. Assuming that the 35,000 shares represent a 10% interest in Flop Corporation: 1. Prepare the journal entry to record the investment in Flop stock. 2. Prepare any entries that Flip Company should make in accounting for its investment in Flop stock during the year. 3. What is the balance of the Stock Investments account on Flip Company's books at the end of the year? b. Repeat requirement (a) above except assume that the 35,000 shares represent a 20% interest in Flop Corporation. Question 3: 15% points: The following information is available for Flip Corporation for the year ended December 31, 2014: Collection of principal on long-term loan to a supplier Acquisition of equipment for cash Proceeds from the sale of long-term investment at book value Issuance of common stock for cash Depreciation expense Redemption of bonds payable at carrying (book) value Payment of cash dividends Net income Purchase of land by issuing bonds payable $15,000 10,000 20,000 27,000 28,000 35,000 15,000 25,000 45,000 In addition, the following information is available from the comparative balance sheet for Flip at the end of 2013 and 2014: Cash Accounts receivable (net) Prepaid insurance Total current assets 2014 $ 66,000 20,000 18,000 $104,000 2013 $14,000 16,000 13,000 $43,000 Accounts payable Salaries payable Total current liabilities $ 30,000 3,000 $ 33,000 $20,000 7,000 $27,000 Instructions: Prepare Flip's statement of cash flows for the year ended December 31, 2014 using the indirect method. Question 4: 6% points: Determine the missing amounts. Unit Selling Price Unit Variable Costs Contribution Margin per Unit Contribution Margin Ratio 1. $300 $195 A. B. 2. $600 C. $150 D. 3. E. F. $480 30% Question 5: 6% points: Flip Inc. provided the following information: Projected merchandise purchases April $184,000 May $156,000 June $132,000 Flip pays 40% of merchandise purchases in the month purchased and 60% in the following month. General operating expenses are budgeted to be $62,000 per month of which depreciation is $8,000 of this amount. Hoover pays operating expenses in the month incurred. Flip makes loan payments of $8,000 per month of which $700 is interest and the remainder is principal. Instructions: Calculate budgeted cash disbursements for May. Question 6: 5% points: Flip Enterprises produces miniature parasols. Each parasol consists of $1.20 of variable costs and $.90 of fixed costs and sells for $4.50. A Dutch wholesaler offers to buy 8,000 units at $1.40 each, of which Pederson has the capacity to produce. Flip will incur extra shipping costs of $.12 per bear. Instructions: Determine the incremental income or loss that Flip Enterprises would realize by accepting the special order. Question 7: 6% points: Flip Inc. produces several models of clocks. An outside supplier has offered to produce the commercial clocks for Flip for $270 each. Flip needs 1,500 clocks annually. Flip has provided the following unit costs for its commercial clocks: Direct materials Direct labor Variable overhead Fixed overhead (70% avoidable) $100 110 30 150 Instructions: Prepare an incremental analysis which shows the effect of the make-or-buy decision. Question 8: 6% points: Flip Company provided the following information concerning two products: Contribution margin per unitProduct 13 Contribution margin per unitProduct 44 Machine hours required for one unitProduct 13 Machine hours required for one unitProduct 44 $23 $18 2.5 hours 1.5 hours Instructions: Compute the contribution margin per unit of limited resource for each product. Which product should Flip tell its sales personnel to 'push' to customers? Multiple choice questions allocated 1% point each. Make your selection by recording the letter in the answer box provided. Question 9: Which one of the following would not be classified as manufacturing overhead? a. b. c. d. Indirect labor Direct materials Insurance on factory building Indirect materials Question 10: The product cost that is most difficult to associate with a product is a. b. c. d. direct materials. direct labor. manufacturing overhead. advertising. Question 11: Direct materials and direct labor of a company total $9,000,000. If manufacturing overhead is $4,000,000, what is direct labor cost? a. b. c. d. $5,000,000 $9,000,000 $0 Cannot be determined from the information provided Question 12: A manufacturing company calculates cost of goods sold as follows: a. b. c. d. Beginning FG inventory + cost of goods purchased - ending FG inventory. Ending FG inventory - cost of goods manufactured + beginning FG inventory. Beginning FG inventory - cost of goods manufactured - ending FG inventory. Beginning FG inventory + cost of goods manufactured - ending FG inventory. Question 13: As of December 31, 2014, Flip Industries had $3,500 of raw materials inventory. At the beginning of 2014, there was $2,000 of materials on hand. During the year, the company purchased $314,500 of materials; however, it paid for only $302,500. How much inventory was requisitioned for use on jobs during 2014? a. b. c. d. $301,000 $304,000 $316,000 $313,000 Question 14: Flip Manufacturing has the following labor costs: FactoryGross wages FactoryNet wages Employer Payroll Taxes Payable $450,000 420,000 40,000 The entry to record the cost of factory labor and the associated payroll tax expense will include a debit to Factory Labor for a. b. c. d. $450,000. $490,000. $460,000. $420,000. Question 15: The following information is available for completed Job No. 404: Direct materials, $60,000; direct labor, $90,000; manufacturing overhead applied, $120,000; units produced, 6,000 units; units sold, 5,000 units. The cost of the finished goods on hand from this job is a. b. c. d. $45,000. $270,000. $54,000. $225,000. Question 16: Cost of goods manufactured equals $67,000 for 2014. Finished goods inventory is $5,500 at the beginning of the year and $2,000 at the end of the year. Beginning and ending work in process for 2014 are $5,000 and $4,000, respectively. How much is cost of goods sold for the year? a. b. c. d. $72,500 $69,000 $63,500 $70,500 Question 17: Flip Industries has equivalent units of 8,000 for materials and for conversion costs. Total manufacturing costs are $160,000. Total materials costs are $120,000. How much is the conversion cost per unit? a. b. c. d. $15. $5. $40. $20. Question 18: Flip Company's Assembly Department has materials cost at $5 per unit and conversion cost at $8 per unit. There are 20,000 units in ending work in process, all of which are 70% complete as to conversion costs. How much are total costs to be assigned to inventory? a. b. c. d. $112,000. $212,000. $182,800. $260,000. Question 19: A department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of July, there was no beginning work in process; 40,000 units were completed and transferred out; and there were 20,000 units in the ending work in process that were 40% complete. During July, $96,000 materials costs and $84,000 conversion costs were charged to the department. The unit production costs for materials and conversion costs for July was a. b. c. d. Materials $1.60 $1.60 $2.00 $2.40 Conversion Costs $1.40 $1.75 $1.40 $2.13 Question 20: Which of the following is considered a difference between a job order cost and a process cost system? a. b. c. d. The manufacturing cost elements. Documents used to track costs. The accumulation of the costs of materials, labor, and overhead. The flow of costs. Question 21: The following information is taken from the production budget for the first quarter: Beginning inventory in units Sales budgeted for the quarter Capacity in units of production facility 1,800 678,000 708,000 How many finished goods units should be produced during the quarter if the company desires 4,800 units available to start the next quarter? a. b. c. d. 675,000 681,000 711,000 682,800 Question 22: Flip, Inc. determines that 54,000 pounds of direct materials are needed for production in July. There are 3,200 pounds of direct materials on hand at July 1 and the desired ending inventory is 2,800 pounds. If the cost per unit of direct materials is $3.20, what is the budgeted total cost of direct materials purchases? a. b. c. d. $162,560. $172,800. $174,080. $171,520. Question 23: Which of the following statements about a budgeted income statement is not true? a. The budgeted income statement is prepared after the financial budgets are prepared. b. The budgeted income statement is prepared on the accrual basis of accounting. c. The budgeted income statement can be prepared in a multiple-step format. d. The budgeted income statement is prepared using the individual operating budgets. Question 24: The cash budget reflects a. all revenues and all expenses for a period. b. expected cash receipts and cash disbursements from all sources. c. all the items that appear on a budgeted income statement. d. all the items that appear on a budgeted balance sheet. Question 25: If costs are not responsive to changes in activity level, then these costs can be best described as a. b. c. d. mixed. flexible. variable. fixed. Question 26: A flexible budget a. b. c. d. is prepared when management cannot agree on objectives for the company. projects budget data for various levels of activity. is only useful in controlling fixed costs. cannot be used for evaluation purposes because budgeted data are adjusted to reflect actual results. Question 27: In developing a flexible budget within a relevant range of activity, a. b. c. d. only fixed costs are included. it is necessary to relate variable cost data to the activity index chosen. it is necessary to prepare a budget at 1,000 unit increments. variable and fixed costs are combined and are reported as a total cost. Question 28: Within the relevant range of activity, the behavior of total costs is assumed to be a. b. c. d. linear and upward sloping. linear and downward sloping. curvilinear and upward sloping. linear to a point and then level off. Name: Acct 221.Fa.14 Question 1: 30% points a. General Journal Entries: Date Answer Sheet Page 1 of 10 .Fa.14 Final Exam Account Debit Credit Final Exam b. Adjusted Trial Balance: Flip Corporation Adjusted Trial Balance Accounts Answer Sheet Page 2 of 10 .Fa.14 Debit Credit Final Exam c. Multi-step Income Statement: d. Retained Earnings Statement: Answer Sheet Page 3 of 10 .Fa.14 Final Exam e. Classified Balance Sheet (Assets section only): Answer Sheet Page 4 of 10 .Fa.14 Final Exam e. Classified Balance Sheet (liabilities & equity sections only): Answer Sheet Page 5 of 10 .Fa.14 Final Exam Question 2. 6% points a1 & a2: General Journal Entries: (Cost Method): Date Account Debit Credit Debit Credit a3. Stock Investments Accounts Balance b1 & b2: : General Journal Entries: (Equity Method): Date Account b3. Stock Investments Accounts Balance Answer Sheet Page 6 of 10 .Fa.14 Final Exam Question 3. 15% points: Answer Sheet Page 7 of 10 .Fa.14 Final Exam Question 4. 6% points Question 5. 6% points: Flip Inc. Cash Disbursements Budget For the Month of May Question 6. 5% points: Flip Enterprises Incremental Analysis Special Order Answer Sheet Page 8 of 10 .Fa.14 Final Exam Question 7. 6% points: Flip Inc. Incremental Analysis To Make Incremental Analysis Incremental Effect Question 8. 6% points: Flip Company Incremental Analysis Which Product to Push Answer Sheet Page 9 of 10 .Fa.14 Final Exam Multiple choice questions allocated 1% point each: Make your selection by indicating the letter corresponding to your answer. Question Question Answer Answer Number Number 9: 19: 10: 20: 11: 21: 12: 22: 13: 23: 14: 24: 15: 25: 16: 26: 17: 27: 18: 28: Answer Sheet Page 10 of 10 .Fa.14 Final Exam