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Preparing Accurate Accounting Reports for Class Projects
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Exam Preparation
1. Prepare a trial balance on April 30, 2012.Victoria Hall is a licensed dentist. During the first month of the operation of her business, the following events and transactions occurred.
Victoria uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 301 Owner’s Capital, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.
Instructions
(a) Journalize the transactions.
(b) Post to the ledger accounts.
(c) Prepare a trial balance on April 30, 2012.
2. Match the flowchart, context diagram, or data flow diagram segments in the right column to an approp
Match the flowchart, context diagram, or data flow diagram segments in the right column to an appropriate description in the left column.
3. Question 1 Which of the following estimates are required when calculating depreciation expense?...
Question 1
Which of the following estimates are required when calculating depreciation expense?
1.
Depreciation rate
2.
Useful life
3.
Expected maintenance costs
4.
Salvage value
Answer
A.
1, 2, 3, and 4
B.
2 and 4
C.
2, 3, and 4
D.
1, 2, and 4
1 points
Question 2
Which of the following is not necessary in calculating the depreciation expense for the first year for a newly purchased factory forklift?
Answer
A.
Total cost of the forklift at acquisition
B.
Market value of the forklift during its useful life
C.
Estimated salvage value
D.
Depreciation rate
E.
Estimated useful life
1 points
Question 3
At what point is an asset considered to be impaired?
Answer
A.
When the net book value is less than the sum of expected cash flows
B.
When the net book value is less than the market value
C.
When the net book value is greater than the sum of expected cash flows
D.
When the net book value is greater than the market value
1 points
Question 4
AT Company purchased a tractor at a cost of $60,000. The tractor has an estimated salvage value of $10,000 and an estimated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2012 and was used 2,400 hours in 2012 and 2,100 hours in 2013. What method of depreciation will produce the maximum depreciation expense in 2013?
Answer
A.
Double-declining-balance
B.
Straight-line
C.
All methods produce the same expense in 2013
D.
Units-of-production
1 points
Question 5
AT Company purchased a tractor at a cost of $60,000 on January 1, 2012. The tractor has an estimated salvage value of $10,000 and an estimated life of 8 years. If AT uses the straight-line method, what is the book value at January 1, 2016?
Answer
A.
$35,000
B.
$25,000
C.
$41,250
D.
Some other answer
1 points
Question 6
Goodwill can be recorded as an asset when:
Answer
A.
An offer is received to purchase the business at a price in excess of the value of the assets
B.
A business has above normal profitability compared to other businesses in its industry
C.
A business can determine that it has created customer goodwill and name recognition
D.
A business is purchased and payment is made in excess if the fair value of the identifiable net assets
1 points
Question 7
How should intangible assets be disclosed on the balance sheet?
Answer
A.
At cost in the current assets section
B.
As a reduction of stockholders' equity
C.
At the estimated market value at the balance sheet date
D.
Net of the costs already amortized
1 points
Question 8
Which of the following is not a balance sheet category for long-lived assets?
Answer
A.
Plant assets
B.
Revenue expenditures
C.
Intangible assets
D.
None of the above
1 points
Question 9
Which of the following plant assets is not depreciated?
Answer
A.
Leasehold improvements
B.
Equipment
C.
Land for site use
D.
Furniture
E.
All of these are depreciated
1 points
Question 10
Swain, Inc., acquired a machine that involved the following expenditures and related factors:
Gross invoice price
$28,500
Sales tax
1,425
Cash discount taken
570
Freight
675
Assembly of machine
900
Installation of machine
1,350
Assorted spare parts for future use
2,700
Tuning and adjusting machine before use
450
The initial accounting cost of the machine should be:
Answer
A.
$33,870
B.
$32,280
C.
$30,030
D.
$32,730
E.
None of the above
1 points
Question 11
A land site for a new office building is purchased for $180,000. A barn on the site will be razed at a net cost of $10,000. The $10,000 razing expenditure is properly debited to:
Answer
A.
Office Building
B.
Land
C.
Razing Expense
D.
Land Improvements
E.
None of the above
1 points
Question 12
For $5,550,000, Bale, Inc., purchased another company's land, building, and equipment. Independent appraisals indicate the values of these assets as follows: land, $600,000; building, $3,600,000; and equipment, $1,800,000. How much should be recorded as the acquisition cost of each asset?
Answer
A.
Land, $600,000; building, $3,600,000; equipment, $1,800,000
B.
Land, $555,000; building, $3,330,000; equipment, $1,665,000
C.
Land, $525,000; building, $3,375,000; equipment, $1,650,000
D.
Land, $550,000; building, $3,200,000; equipment, $1,800,000
E.
None of the above
1 points
Question 13
What is the term identifying the expected net recovery from the disposal of a plant asset at the end of its useful life?
Answer
A.
Accumulated depreciation
B.
Salvage value
C.
Depreciation expense
D.
Market value
E.
None of the above
1 points
Question 14
On April 1, 2012, Flyer, Inc., acquired a new machine for $80,000. Its estimated useful life is eight years with an expected salvage value of $8,000. Assuming straight-line depreciation, 2012 depreciation expense is:
Answer
A.
$ 9,000
B.
$ 6,750
C.
$ 7,500
D.
$10,000
E.
None of the above
1 points
Question 15
On January 1, 2012, Casler Company purchased a bottle-capping machine for $80,000. During its useful life, the company expects that the machine will cap 1,500,000 bottles. The machine's expected salvage value is $5,000. During 2012, the machine capped 250,000 bottles and during 2013, the machine capped 300,000 bottles. Assuming units-of-production depreciation, 2013 depreciation expense is:
Answer
A.
$12,500
B.
$13,333
C.
$15,000
D.
$16,000
E.
None of the above
1 points
Question 16
On January 1, 2012, Global, Inc., purchased a new machine for $60,000. Its estimated useful life is eight years with an expected salvage value of $6,000. Assuming double-declining balance depreciation, 2012 depreciation expense is:
Answer
A.
$ 7,500
B.
$ 6,750
C.
$13,500
D.
$15,000
E.
None of the above
1 points
Question 17
On January 1, 2012, Vandell, Inc., purchased a new machine for $96,000. Its estimated useful life is 16 years with an expected salvage value of $16,000. Assuming double-declining balance depreciation, 2012 depreciation expense is:
Answer
A.
$10,000
B.
$ 6,000
C.
$12,000
D.
$13,500
E.
None of the above
1 points
Question 18
At the end of the expected useful life of a depreciable asset with an estimated 15% salvage value, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods?
Answer
A.
Straight Line
Units-of Production
Double-Declining Balance
No
Yes
Yes
B.
Straight Line
Units-of Production
Double-Declining Balance
Yes
Yes
Yes
C.
Straight Line
Units-of Production
Double-Declining Balance
No
No
No
D.
Straight Line
Units-of Production
Double-Declining Balance
No
Yes
No
E.
Straight Line
Units-of Production
Double-Declining Balance
Yes
No
Yes
1 points
Question 19
Barber, Inc., purchased a truck on January 1, 2010, for $36,000. At that time, the truck's useful life was an estimated four years with no salvage value. Before the entry to record 2013 depreciation was made, the truck's estimated useful life was changed to six years with a $900 salvage value. Using straight-line deprecation, what is the 2013 depreciation expense?
Answer
A.
$2,700
B.
$6,000
C.
$3,000
D.
$1,350
E.
None of the above
1 points
Question 20
The book value of a depreciable asset is:
Answer
A.
The original cost of the asset
B.
The original cost of the asset less its accumulated depreciation
C.
The original cost of the asset less its salvage value
D.
The accumulated depreciation on the asset
E.
None of the above
4. Given this information, construct Burghoff’s 2003 multi-step income statement
In 2003, Burghoff, Inc. (a hardware retail company) sold 10,000 units of its product at an average price of $400 per unit. The company reported estimated Returns and allowances in 2003 of $200,000. Burghoff actually purchased 11,000 units of its product from its manufacturer in 2003 at an average cost of $300 per unit. Burghoff began 2003 with 900 units of its product in inventory (carried at an average cost of $300 per unit). Operating expenses (excluding depreciation) for Burghoff, Inc. in 2003 were $400,000 and depreciation expense was $100,000. Burghoff had $2,000,000 in debt outstanding throughout all of 2003. This debt carried an average interest rate of 10 percent. Finally, Burghoff’s tax rate was 40 percent. Burghoff’s fiscal year runs from January 1 through December 31. Given this information, construct Burghoff’s 2003 multi-step income statement.
5. Thakin Industries Inc. manufactures dorm furniture in separate processes. In each process, materi...
6. 1. Hairston Stamp Company records stamp service revenue and provides for the cost of redemptions ...
1. Hairston Stamp Company records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees. Hairstons past experience indicates that only 80% of the stamps sold to licensees will be redeemed. Hairstons liability for stamp redemptions was $13,000,000 at December 31, 2013. Additional information for 2014 is as follows.
Stamp service revenue from stamps sold to licensees 9,500,000
Cost of redemptions (stamps sold prior to 1/1/14) 6,000,000
If all the stamps sold in 2014 were presented for redemption in 2015, the redemption cost would be $5,200,000. What amount should Hairston report as a liability for stamp redemptions at December 31, 2014?
In packages of its products, Burnitz Inc. includes coupons that may be presented at retail stores to obtain discounts on other Burnitz products. Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs. Burnitz honors requests for coupon redemption by retailers up to 3 months after the consumer expiration date. Burnitz estimates that 60% of all coupons issued will ultimately be redeemed. Information relating to coupons issued by Burnitz during 2014 is as follows.
Consumer expiration date 12/31/2014
Total face amount of coupons issued $800,000
Total payments to retailer as of 12/31/2014 330,000
What amount should Burnitz report as a liability for unredeemed coupons at December 31, 2014
Roland Company sold 700,000 boxes of pie mix under a new sales promotional program. Each box contains one coupon, which submitted with $4.00, entitles the customer to a baking pan. Roland pays $6.00 per pan and $0.50 for handling and shipping. Roland estimates that 70% of the coupons will be redeemed, even though only 250,000 coupons had been processed during 2014. What amount should Roland report as a liability for unredeemed coupons at December 31, 2014?
7. PROBLEM 10-9 Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3] Marvel Parts, Inc, manufact...
PROBLEM 10-9 Comprehensive Variance Analysis [LO10-1, LO10-2, LO10-3] Marvel Parts, Inc, manufactures auto accessories. One of the company's products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 2.850 hours each month to produce 1,900 sets of covers. The standard costs associated with this level of production are Problems Direct materials Direct labor Variable manufacturing overhead (Based on direct labor-hours) Total $42,560 $17,100 $6,840 Per Set of Covers $22.40 9.00 3.60 $35.00 During August, the factory worked only 2,800 direct labor-hours and produced 2,000 sets of cox- ers The following actual costs were recorded during the month Direct materials (12,000 yards) Direct labor. Variable manufacturing overhead Total $A5,600 $18,200 $7,000 Per Set of Covers $22.80 9.10 3.50 $35.40 At standard, each set of covers should require 5.6 yards of material. All of the materials purchased during the month were used in production Required: Compute the following variances for August 1 the materials price and quantity variances. 2 The labor rate and efficiency variances. 3. The variable overhead rate and efficiency
8. Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the c...
Profits have been decreasing for several years at Pegasus Airlines. In an effort to improve the company’s performance, the company is thinking about dropping several flights that appear to be unprofitable.
A typical income statement for one round-trip of one such flight (flight 482) is as follows:
The following additional information is available about flight 482:
Members of the flight crew are paid fixed annual salaries, whereas the flight assistants are paid based on the number of round trips they complete.
One-third of the liability insurance is a special charge assessed against flight 482 because in the opinion of the insurance company, the destination of the flight is in a “high-risk” area. The remaining two-thirds would be unaffected by a decision to drop flight 482.
The baggage loading and flight preparation expense is an allocation of ground crews’ salaries and depreciation of ground equipment. Dropping flight 482 would have no effect on the company’s total baggage loading and flight preparation expenses.
If flight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with another flight.
Aircraft depreciation is due entirely to obsolescence. Depreciation due to wear and tear is negligible.
Dropping flight 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleet or the number of flight crew on its payroll.
Required:
1. What is the financial advantage (disadvantage) of discontinuing flight 482?
Show transcribed image text Required: 1. What is the financial advantage (disadvantage) of discontinuing flight 482? Financial (disadvantage)
9. Come-Clean Corporation produces a variety of cleaning compounds and solutions for both industrial...
Come-Clean Corporation produces a variety of cleaning compounds and solutions for both industrial and household use. While most of its products are processed independently, a few are related, such as the company’s Grit 337 and its Sparkle silver polish. Grit 337 is a coarse cleaning powder with many industrial uses. It costs $1.60 a pound to make, and it has a selling price of $7.80 a pound. A small portion of the annual production of Grit 337 is retained in the factory for further processing. It is combined with several other ingredients to form a paste that is marketed as Sparkle silver polish. The silver polish sells for $5.00 per jar. This further processing requires one-fourth pound of Grit 337 per jar of silver polish. The additional direct costs involved in the processing of a jar of silver polish are: Other ingredients $ 0.60 Direct labor 1.36 Total direct cost $ 1.96 Overhead costs associated with processing the silver polish are: Variable manufacturing overhead cost 25% of direct labor cost Fixed manufacturing overhead cost (per month): Production supervisor $ 3,300 Depreciation of mixing equipment $ 1,600 The production supervisor has no duties other than to oversee production of the silver polish. The mixing equipment is special-purpose equipment acquired specifically to produce the silver polish. Its resale value is negligible and it does not wear out through use. Direct labor is a variable cost at Come-Clean Corporation. Advertising costs for the silver polish total $1,700 per month. Variable selling costs associated with the silver polish are 5% of sales. Due to a recent decline in the demand for silver polish, the company is wondering whether its continued production is advisable. The sales manager feels that it would be more profitable to sell all of the Grit 337 as a cleaning powder. Required: 1. What is the incremental contribution margin per jar from further processing of Grit 337 into silver polish? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 2. What is the minimum number of jars of silver polish that must be sold each month to justify the continued processing of Grit 337 into silver polish? (Round your intermediate calculations to 2 decimal places.)
