Exam 8 Question 1 of 20 5.0/ 5.0 Points What is the journal entry to record the direct labor summarized on the labor distribution report? • A. Debit Finished Goods; credit Payroll • B. Debit Work-in-Process; credit Payroll • C. Debit Payroll; credit Direct Labor • D. Debit Payroll; credit Cash Question 2 of 20 0.0/ 5.0 Points The entry for indirect materials (such as glue, etc.) requisitioned for use in production is which of the following? • A. Raw Materials Inventory Work-in-Process Inventory • B. Work-in-Process Inventory Accounts Payable • C. Work-in-Process Inventory Raw Materials Inventory • D. None of the above Question 3 of 20 0.0/ 5.0 Points Calculate the cost of goods sold when beginning finished goods inventory equals $70,000, ending finished goods inventory is $85,000, and cost of goods manufactured is $600,000. • A. $615,000 • B. $445,000 • C. $685,000 • D. $585,000 Question 4 of 20 5.0/ 5.0 Points The entry to record the requisition of supplies from the storeroom would include which of the following? • A. Debit to Raw Materials; credit to Work-in-Process • B. Debit to Overhead—Applied; credit to Overhead—Control • C. Debit to Work-in-Process; credit to Overhead—Control • D. Debit to Overhead—Control; credit to Supplies Inventory Question 5 of 20 5.0/ 5.0 Points Journal entries crediting Payroll and debiting Work-in-Process Inventory are made for • A. administrative salaries. • B. hourly manufacturing labor. • C. foremen’s salaries. • D. raw materials. Question 6 of 20 0.0/ 5.0 Points Manufacturing overhead includes all manufacturing costs, • A. including raw materials. • B. including overhead. • C. excluding raw materials and direct labor. • D. None of the above Question 7 of 20 0.0/ 5.0 Points If direct labor for the month is $40,000, overhead is applied based on direct labor, annual overhead is $600,000, and annual direct labor is $1,000,000, what is the entry to charge direct labor to production? • A. Debit Work-in-Process Inventory $40,000; credit Payroll $40,000 • B. Debit Overhead—Applied $40,000; credit Work-in-Process Inventory $40,000 • C. Debit Work-in-Process Inventory $24,000; credit Overhead—Applied $24,000 • D. Debit Work-in-Process Inventory $66,000; credit Overhead—Applied $66,000 Question 8 of 20 0.0/ 5.0 Points Direct labor includes the wages of • A. an hourly worker producing the product. • B. the shop foreman. • C. maintenance workers. • D. administrators. Question 9 of 20 0.0/ 5.0 Points In a manufacturing company, the purchase of materials on account should be recorded as follows: • A. Raw Materials Inventory Accounts Payable • B. Work-in-Process Inventory Accounts Payable • C. Finished Goods Inventory Accounts Payable • D. Accounts Payable Raw Materials Inventory Question 10 of 20 5.0/ 5.0 Points Lumber used in construction of a building is part of • A. raw material costs. • B. labor costs. • C. manufacturing overhead. • D. None of the above Question 11 of 20 0.0/ 5.0 Points The formula for cost of goods manufactured is • A. raw materials plus direct labor minus overhead plus beginning work-in-process inventory plus ending work-in-process inventory. • B. raw materials minus direct labor plus overhead plus beginning work-in-process inventory plus ending work-in-process inventory. • C. beginning work-in-process plus total manufacturing cost minus ending work-inprocess. • D. raw materials plus direct labor less overhead plus beginning work-in-process inventory less ending work-in-process inventory. Question 12 of 20 5.0/ 5.0 Points What is the journal entry to record issuing supplies from the storeroom? • A. Debit Overhead—Applied; credit Raw Materials Inventory • B. Debit Overhead—Control; credit Supplies Inventory • C. Debit Supplies Inventory; credit Overhead—Applied • D. Debit Overhead—Applied; credit Supplies Inventory Question 13 of 20 5.0/ 5.0 Points The statement of cost of goods manufactured includes • A. direct labor costs. • B. raw material costs. • C. manufacturing overhead. • D. All of the above Question 14 of 20 5.0/ 5.0 Points If direct labor for the month is $80,000 and overhead is applied based on 75% of direct labor dollars, what is the entry to apply overhead? • A. Debit Work-in-Process Inventory $80,000; credit Payroll $80,000 • B. Debit Overhead—Applied $60,000; credit Work-in-Process Inventory $60,000 • C. Debit Work-in-Process Inventory $60,000; credit Overhead—Applied $60,000 • D. Debit Work-in-Process Inventory $80,000; credit Overhead—Applied $80,000 Question 15 of 20 0.0/ 5.0 Points Candyland completed the manufacturing process. The entry to transfer the product to finished goods is which of the following? • A. Raw Materials Inventory Finished Goods Inventory • B. Finished Goods Inventory Cost of Goods Sold • C. Finished Goods Inventory Work-in-Process Inventory • D. Finished Goods Inventory Raw Materials Inventory Question 16 of 20 0.0/ 5.0 Points Factory Supplies Expense, Depreciation Expense—Factory, and Heat, Light, and Power—Factory appear on which section of the worksheet? • A. Statement of cost of goods manufactured • B. Balance sheet • C. Income statement • D. Statement of cost of goods sold Question 17 of 20 0.0/ 5.0 Points During the week ending on November 30, total factory payroll incurred was $6,000. Of this total, 80% was for direct labor. The entry to record the payroll distribution would include which of the following? • A. Debit Work-in-Process Inventory $4,800 and Overhead—Control $1,200 • B. Debit Work-in-Process Inventory $6,000 • C. Debit Work-in-Process Inventory $4,800 and Overhead—Applied $1,200 • D. Debit Work-in-Process Inventory $4,800 and Indirect Labor Expense $1,200 Question 18 of 20 5.0/ 5.0 Points What is the journal entry to record issuing raw materials from the storeroom? • A. Debit Raw Materials Inventory; credit Work-in-Process • B. Debit Overhead—Control; credit Work-in-Process • C. Debit Work-in-Process; credit Overhead—Control • D. Debit Work-in-Process; credit Raw Materials Inventory Question 19 of 20 0.0/ 5.0 Points Omega.com sold 25 jet skis for $7,000, which cost $5,000. The entry to record the sale would include a • A. credit to Finished Goods Inventory for $5,000. • B. credit to Sales for $7,000. • C. debit to Cost of Goods Sold for $5,000. • D. All of the above Question 20 of 20 0.0/ 5.0 Points The entry to record rent expense of $9,000, supervision expense of $19,000, and depreciation expense of $7,000 to overhead is which of the following? • A. Debit Overhead—Applied $35,000; credit Rent Expense $9,000; credit Supervision $19,000; credit Depreciation Expense $7,000 • B. Debit Overhead—Control $35,000; credit Rent Expense $9,000; credit Supervision $19,000; credit Depreciation Expense $7,000 • C. Debit Overhead—Applied $35,000; credit Overhead—Control $35,000 • D. None of the above GRADED PROJECT Directions: Be sure to make an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English spelling and grammar. Sources must be cited in APA format. Your response should be a minimum of one (1) single-spaced page to a maximum of two (2) pages in length; refer to the “Assignment Format” page for specific format requirements. Assignment Details: This assignment will include the three-part graded project described below and 30 multiple choice exam questions (Exam 5) covering this lesson, Corporations and Bonds Payable and the next lesson Investments and Cash Flow. The combined project and exam portions of this Assignment total 100 points. You should complete your work for this project at this time and submit it with the exam questions (available at the Assignments tool) after your next lesson. Part A (5 points each for a possible total of 10 points) 1. After several years of business, Abel, Barney, and Cole are liquidating. The following are post-closing account balances. Cash 18,000 Inventory 73,000 Other assets 157,000 Accounts Payable 61,000 Abel, Capital 50,000 Barney, Capital 50,000 Cole, Capital 87,000 Noncash assets are sold for $275,000. Profits and losses are shared equally. After all liabilities are paid, divide the remaining cash amongst the partners. PRINCIPLES OF ACCOUNTING 2 75 2. The partnership of Brandon and Ryan is being liquidated. All gains and losses are shared in a 3:1 ratio, respectively. Before liquidation, their balance sheet balances are as follows: Cash Other Assets Liabilities Brandon, Capital Ryan, Capital $10,000 8,000 4,000 7,000 7,000 a. If the Other Assets are sold for $10,000, how much will each partner receive before paying liabilities and distributing the remaining assets? b. If the Other Assets are sold for $8,000, how much will each partner receive before paying liabilities and distributing remaining assets? Part B (10 points each for a possible total of 20 points) 1. Simon Brothers pays $47,000 into a bond sinking fund each year to redeem the future maturity of its bonds. During the first year, the fund earned $3,825. At the time of bond redemption, the fund has a balance of $417,000. Of this, $400,000 was used to redeem the bonds. Journalize the following entries. a. Initial deposit b. The first year’s interest c. The redemption of the bonds 2. On January 1, Auctions Online issued $300,000, 9%, 10-year bonds to lenders at the contract rate. Interest is to be paid semiannually on July 1 and January 1. Journalize the following entries. 76 a. Issued the bonds b. Paid first semiannual interest payment c. Retired the bonds at maturity PRINCIPLES OF ACCOUNTING 2 Part C (10 points each for a possible total of 20 points) 1. Prepare a statement of retained earnings in proper form for White Corporation for the year ended December 31, 2012, from the following: Retained Earnings, January 1, 2012 $2,000 Dividends paid during the year 800 Net income for the year 3,000 Correction of prior year error. Purchase of land recorded as rent expense 1,000 2. Curtis Corporation’s balance sheet included the following: Common Stock, $5 par value, 5,000 shares issued and outstanding $25,000 Retained Earnings Total Stockholders’ Equity 20,000 $45,000 Prepare journal entries for the following transactions. May 3 Issued 500 shares at $6 per share 9 Reacquired 100 shares at $4 per share 15 Reissued 50 of the Treasury shares at $7 per share 17 Reissued 10 of the Treasury shares at $3 per share PRINCIPLES OF ACCOUNTING 2 77 GRADED PROJECT Directions: Be sure to make an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete sentences, and be sure to use correct English spelling and grammar. Sources must be cited in APA format. Your response should be a minimum of one (1) single-spaced page to a maximum of two (2) pages in length; refer to the “Assignment Format” page for specific format requirements. Assignment Details: This assignment will include the four-part graded project described below and 20 multiple choice exam questions covering this lesson, Manufacturing Accounting. The combined project and exam portions of this Assignment total 100 points. You should complete your work for this project at this time and submit it with the exam questions (available at the Assignments tool). Part A (2 points each for a possible total of 6 points) The following information is given for Tripp Company, which uses the indirect method. Net income Depreciation expense Increase in accounts receivable Payment of dividends Proceeds from sale of equipment Increase in accounts payable Decrease in inventory $20,000 3,000 2,000 2,000 6,000 4,000 3,000 From the information provided, answer the following questions: 1. The cash flow from operating activities is ________. 2. The cash flow from investing activities is ________. 3. The cash flow from financing activities is ________. PRINCIPLES OF ACCOUNTING 2 135 Part B (2 points each for a possible total of 10 points) Selected data for Stick’s Design are given as of December 31, Year 1 and Year 2 (rounded to the nearest hundredth). Year 2 Year 1 Net Credit Sales Cost of Goods Sold Net Income Cash Accounts Receivable Inventory Current Liabilities $25,000 16,000 2,000 5,000 3,000 2,000 6,000 $30,000 18,000 2,800 900 2,000 3,600 5,000 Compute the following: 1. Current ratio for Year 2 2. Acid-test ratio for Year 2 3. Accounts receivable turnover for Year 2 4. Average collection period for Year 2 5. Inventory turnover for Year 2 Part C (10 points) Prepare an income statement showing departmental contribution margin based on the following: Dept. X Dept. Y Rent Expense Space (square feet) Net Sales Cost of Goods Sold 136 17,500 $60,000 35,000 $40,000 18,000 16,000 Rent Expense (allocated based on square feet) $2,700 PRINCIPLES OF ACCOUNTING 2 Part D (4 points each for a possible total of 24 points) From the following transactions, prepare the appropriate general journal entries for the month of April. 1. Raw materials costing $60,000 were issued from the storeroom. 2. Direct labor of $53,000 was charged to production. 3. Indirect labor costs of $17,000 were incurred. 4. Overhead was applied at the rate of 40% of direct labor dollars. 5. Completed products costing $42,000 were transferred to finished goods. 6. Products costing $32,000 were sold. PROJECT UPLOAD Once you’ve completed this assignment, login to the student portal at https:// students.ashworthcollege.edu. To log in, you’ll need the username and password that you received via email. From the Student Portal page, enter your username and password (Figure 1). Then click Login. Figure 1 PRINCIPLES OF ACCOUNTING 2 137
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