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1. On January 1, 2013, Darrow Corporation issued $5,000,000, 10-year, 8% bonds at 103. Interest is payable semiannually on January 1 and July 1. The journal entry to record this transaction on January 1, 2013 is a. Cash …………………………………………………………………. 5,000,000 Bonds Payable …………………………………………….. 5,000,000 b. Cash …………………………………………………………………. 5,150,000 Bonds Payable …………………………………………….. 5,150,000 c. Premium on Bonds Payable …………………………………. 150,000 Cash …………………………………………………………………. 5,000,000 Bonds Payable …………………………………………….. 5,150,000 d. Cash …………………………………………………………………. 5,150,000 Bonds Payable …………………………………………….. 5,000,000 Premium on Bonds Payable ………………………….. 150,000 2. Vitale Company issued 500 shares of no-par common stock for $5,500. Which of the following journal entries would be made if the stock has a stated value of $2 per share? a. Cash 5,500 Common Stock 5,500 b. Cash 5,500 Common Stock 1,000 Paid-in Capital in Excess of Par 4,500 c. Cash 5,500


Common Stock 1,000 Paid-in Capital in Excess of Stated Value 4,500 d. Common Stock 5,500 Cash 5,500 ACCT 221 Final Exam Spring 14 3 3. Reed industries owns 45% of Newton Company. For the current year, Newton reports net income of $250,000 and declares and pays a $60,000 cash dividend. Which of the following correctly presents the journal entries to record Reed’s equity in Newton’s net income and the receipt of dividends from Newton? a. Dec. 31 Stock Investments …………………….. 112,500 Revenue from Stock Investments 112,500 Dec. 31 Cash ………………………………………… 27,000 Stock Investments ……………….. 27,000 b. Dec. 31 Stock Investments ……………………… 112,500 Revenue from Stock Investments 112,500 Dec. 31 Cash …………………………………………. 60,000 Stock Investments ………………… 60,000 c. Dec. 31 Stock Investments …………………….. 85,500 Revenue from Stock Investments 85,500 Dec. 31 Cash …………………………………………. 27,000 Stock Investments ………………… 27,000 d. Dec. 31 Revenue from Stock Investments 112,500 Stock Investments …………………………………….. 112,500 Dec. 31 Stock Investments ……………………… 27,000 Cash…………………………………. 27,000 4. Mah, Inc. has the following income statement (in millions): Mah, INC. Income Statement For the Year Ended December 31, 3 Net Sales $300 Cost of Goods Sold 120 Gross Profit 180 Operating Expenses 44 Net Income $136 Using vertical analysis, what percentage is assigned to Cost of Goods Sold? a. 30% b. 40% c. 100% d. None of the above ACCT 221 Final Exam Spring 14 4 5. Talbot, Inc. completed Job No. B14 during 2013. The job cost sheet listed the following: Direct materials $55,000 Direct labor $30,000 Manufacturing overhead applied $20,000 Units produced 3,000 units Units sold 1,800 units How much is the cost of the finished goods on hand from this job? a. $105,000 b. $63,000 c. $42,000 d. $51,000 6. In the month of June, a department had 20,000 units in beginning work in


process that were 70% complete. During June, 80,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for materials for June were a. 90,000 equivalent units. b. 100,000 equivalent units. c. 104,000 equivalent units. d. 80,000 equivalent units. 7. A company budgeted unit sales of 204,000 units for January, 2013 and 240,000 units for February, 2013. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month’s budgeted unit sales. If there were 61,200 units of inventory on hand on December 31, 2013, how many units should be produced in January, 2013 in order for the company to meet its goals? a. 214,800 units b. 204,000 units c. 193,200 units d. 276,000 units ACCT 221 Final Exam Spring 14 5 8. A company’s planned activity level for next year is expected to be 200,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs: Variable Fixed Indirect materials $280,000 Depreciation $120,000 Indirect labor 400,000 Taxes 20,000 Factory supplies 40,000 Supervision 100,000 A flexible budget prepared at the 160,000 machine hours level of activity would show total manufacturing overhead costs of a. $576,000. b. $720,000. c. $768,000. d. $816,000. 9. A company developed the following per-unit standards for its product: 2 pounds of direct materials at $4 per pound. Last month, 1,500 pounds of direct materials were purchased for $5,700. The direct materials price variance for last month was a. $5,700 favorable. b. $300 favorable. c. $150 favorable. d. $300 unfavorable. 10. In incremental analysis, a. costs are not relevant if they change between alternatives. b. all costs are relevant if they change between alternatives. c. only fixed costs are relevant. d. only variable costs are relevant.

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