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- Download: http://solutionzip.com/downloads/acct-221-final-exam-spring/
- ACCT 221 Final Exam Spring 14 6
- Problem 1: 15 points
- Here are comparative balance sheets for Delaney Company.
- Delaney Company
- Comparative Balance Sheets
- December 31, 2013
- Assets 2013 2012
- Cash $ 43,000 $ 10,000
- Accounts receivable 18,000 14,000
- Inventories 25,000 18,000
- Prepaid expenses 6,000 9,000
- Long-term investments 0 18,000
- Equipment 60,000 32,000
- Accumulated depreciation—Equipment (20,000) (14,000)
- Total assets $ 122,000 $ 87,000
- Liabilities and Stockholder’s Equity
- Accounts payable $ 17,000 $ 7,000
- Bonds payable 37,000 47,000
- Common stock ($1 par) 40,000 23,000
- Retained earnings 28,000 10,000
- Total liabilities and stockholder’s equity $ 122,000 $ 87,000
- Additional information:
- 1. The 2013 Income Statement reported $6,000 in depreciation expense, a $4,000
- loss on sale of investments and Net income of $43,000.
- 2. Cash dividends of $15,000 were declared and paid.
- 3. Long-term investments that has a cost of $18,000 were sold for $14,000
- ACCT 221 Final Exam Spring 14 7
- 4. Sales for 2013 were $120,000.
- Instructions: Prepare a statement of cash flows for 2013 using the indirect method.
- Problem 2: 10 points
- Hayes Corporation is projecting a cash balance of $31,785 in its
- December 31, 2013, balance sheet. Hayes’ schedule of expected
- collections from customers for the first quarter of 2013 shows total
- collections of $189,885. The schedule of expected payments for direct
- materials for the first quarter of 2013 shows total payments of $40,200.
- Other information gathered for the first quarter of 2013 is: sale of
- equipment $3,392; direct labor $70,178, manufacturing overhead
- $34,583, and purchase of securities $12,372. Selling and
- administrative expenses are projected to be $45,117; this figure
- includes $1,117 in depreciation expense on the office equipment. All
- costs and expenses will be paid in cash. Hayes wants to maintain a
- balance of at least $30,000 cash at the end of each quarter.
- Instructions: Complete the cash budget for the first quarter.
- Problem 3: 10 points
- Doherty Corporation has the following cost records for June 2013.
- Indirect factory labor $ 4,612 Factory utilities $ 601
- Direct materials used 22,361 Depreciation, factory
- equipment 1,585
- Work in process, 6/1/12 2,769 Direct labor 31,084
- Work in process,
- 6/30/12 3,733 Maintenance, factory
- equipment 1,792
- Finished goods, 6/1/12 4,609 Indirect materials 2,268
- Finished goods, 6/30/12 7,429 Factory manager’s salary 3,315
- Instructions: Prepare a cost of goods manufactured schedule for June
- 2013.
- ACCT 221 Final Exam Spring 14 8
- Problem 4: 4 points
- Hawkins Corporation has 72,615 shares of common stock outstanding.
- It declares a $2.10 per share cash dividend on August 1 to stockholders
- of record on September 15. The dividend is paid on October 31.
- Instructions: Prepare the entries on the appropriate dates to record the
- declaration and payment of the cash dividend.
- Problem 5: 10 points
- Arthur Manufacturing incurs unit costs of $7.90 ($6.10 variable and
- $1.80 fixed) in making a sub-assembly part for its finished product. A
- supplier offers to make 12,000 of the assembly part at $5.75 per unit. If
- the offer is accepted, Arthur will save all variable costs but no fixed
- costs.
- Instructions: Prepare an analysis showing the total cost savings, if any,
- Arthur will realize by buying the part.
- Problem 6: 5 points
- On July 1, Wagner Corporation purchases 500,000 shares of its $6 par
- value common stock for the treasury at a cash price of $10 per share.
- On September 1, it sells 275,000 shares of the treasury stock for cash
- at $13 per share. The balance in the retained earnings account is
- $6,345,000.
- Instructions: Journalize the two treasury stock transactions.
- Problem 7: 4 points
- Ketel Company has a unit-selling price of $500, variable costs per unit
- of $269, and fixed costs of $265,580.
- Instructions: Compute the break-even point in units using either (a) the
- mathematical equation or (b) contribution margin per unit. Round
- answer up to the next whole unit.
- ACCT 221 Final Exam Spring 14 9
- Problem 8: 10 points
- Mathers Company has a factory machine with a book value of $89,851
- and a remaining useful life of 4 years. A new machine is available at a
- cost of $325,275. This machine will have a 4-year useful life with no
- salvage value. The new machine will lower annual variable
- manufacturing costs from $630,925 to $425,840.
- Instructions: Prepare an analysis showing whether the old machine
- should be retained or replaced.
- Problem 9: 6 points
- For Lopez Company, variable costs are 68% of sales, and fixed costs
- are $215,000. Management’s net income goal is $78,610.
- Instructions: Compute the required sales needed to achieve
- management’s target net income of $78,610.
- ACCT 221 Final Exam Spring 14 10
- Essay Question: 6 points
- Keller Company requires its marketing managers to submit estimated
- cost-volume-profit data on all requests for new products, or expansions
- of a product line.
- Gina Lamb is a new manager. Her calculations show a fixed cost for a
- new project at $100,000 and a variable cost of $5. Since the selling
- price is only $15 for the proposed product, 10,000 would need to be
- sold to break even. That is approximately twice the volume estimate for
- the first year. She shares her dismay with Anne Smythe, another
- manager.
- Anne strongly advises her to revise her estimates. She points out that
- several of the costs that had been classified as fixed costs could be
- considered variable, since they are step costs and mixed costs. When
- the data has been revised classifying those costs as variable costs, the
- project appears viable.
- Required:
- 1. Who are the stakeholders in this decision?
- 2. Is it ethical for Gina to revise the costs as indicated? Briefly explain.
- 3. What should Gina do?
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