Acct221 Final Exam Principles of Accounting II

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

Debit

Credit

Cash

$23,000

Accounts
Receivable

51,000

Inventory

22,700

Land

65,000

Buildings

95,000

Equipment

40,000

Allowance for Doubtful Accounts

$450

Accumulated Depreciation, Buildings

30,000

Accumulated Depreciation, Equipment

14,400

Accounts Payable

19,300

Interest Payable

0

Dividends Payable

0

Unearned Rent Revenue

8,000

Bonds Payable (10%)

50,000

Common Stock ($10 par)

30,000

Paid-in Capital in Excess of Par, Common Stock

6,000

Preferred Stock ($20 par)

0

Paid-in Capital in Excess of Par, Preferred Stock

0

Retained Earnings

75,050

Treasury Stock

0

Cash Dividends

0

Sales Revenue

570,000

Rent Revenue

0

Bad Debt Expense

0

Interest Expense

2,500

Cost of Goods Sold

400,000

Depreciation Expense

0

Other Operating Expenses

39,000

Salaries and Wages Expense

65,000

_______

Totals

$803,200

$803,200

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 $15,000
Acquisition
of equipment for cash 10,000
Proceeds
from the sale of long-term investment at book value 20,000
Issuance
of common stock for cash 27,000
Depreciation
expense 28,000
Redemption
of bonds payable at carrying (book) value 35,000
Payment
of cash dividends 15,000
Net
income 25,000
Purchase
of land by issuing bonds payable 45,000

In addition,
the following information is available from the comparative balance sheet for Flip
at the end of 2013 and 2014:

2014 2013
Cash $ 66,000 $14,000
Accounts
receivable (net) 20,000 16,000
Prepaid
insurance 18,000 13,000
Total
current assets $104,000 $43,000

Accounts
payable $ 30,000 $20,000
Salaries
payable 3,000 7,000
Total
current liabilities $ 33,000 $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:
April May June
Projected merchandise purchases $184,000 $156,000 $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 $100
Direct labor 110
Variable overhead 30
Fixed overhead (70% avoidable) 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
unit—Product 13 $23
Contribution margin per
unit—Product 44 $18
Machine hours required for one
unit—Product 13 2.5 hours
Machine hours required for one
unit—Product 44 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 notbe
classified as manufacturing overhead?
a. Indirect
labor
b. Direct
materials
c. Insurance
on factory building
d. Indirect
materials

Question
10:The product cost
that is most difficult to associate with a product is
a. direct
materials.
b. direct
labor.
c. manufacturing
overhead.
d. 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. $5,000,000
b. $9,000,000
c. $0
d. Cannot
be determined from the information provided

Question 12:A manufacturing company calculates cost of goods
sold as follows:
a. Beginning
FG inventory + cost of goods purchased – ending FG inventory.
b. Ending
FG inventory – cost of goods manufactured + beginning FG inventory.
c. Beginning
FG inventory – cost of goods manufactured – ending FG inventory.
d. 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. $301,000
b. $304,000
c. $316,000
d. $313,000

Question 14:Flip Manufacturing has the following labor costs:
Factory—Gross wages $450,000
Factory—Net wages 420,000
Employer Payroll Taxes Payable 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. $450,000.
b. $490,000.
c. $460,000.
d. $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. $45,000.
b. $270,000.
c. $54,000.
d. $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. $72,500
b. $69,000
c. $63,500
d. $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. $15.
b. $5.
c. $40.
d. $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. $112,000.
b. $212,000.
c. $182,800.
d. $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
Materials Conversion Costs
a. $1.60 $1.40
b. $1.60 $1.75
c. $2.00 $1.40
d. $2.40 $2.13

Question 20:Which of the
following is considered a difference between a job order cost and a process
cost system?
a. The
manufacturing cost elements.
b. Documents
used to track costs.
c. The
accumulation of the costs of materials, labor, and overhead.
d. The
flow of costs.

Question 21: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?
a. 675,000
b. 681,000
c. 711,000
d. 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. $162,560.
b. $172,800.
c. $174,080.
d. $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. mixed.
b. flexible.
c. variable.
d. fixed.

Question 26:A flexible budget
a. is prepared when management cannot agree on
objectives for the company.
b. projects budget data for various levels of
activity.
c. is only useful in controlling fixed costs.
d. 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. only fixed costs are included.
b. it is necessary to relate variable cost data
to the activity index chosen.
c. it is necessary to prepare a budget at 1,000
unit increments.
d. 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. linear and upward sloping.
b. linear and downward sloping.
c. curvilinear and upward sloping.
d. linear to a point and then level off.