10 MCQ On January 1, 2013, Darrow Corporation issued

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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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