TJ’s Inc., makes three nut mixes for sale to grocery chains

Question
	TJ’s Inc., makes three nut mixes for sale to grocery chains located in the Southeast. The three mixes, referred to as Regular Mix, Deluxe Mix, and Holiday Mix are made by mixing different percentages of five types of nuts.
In preparation for the fall season, TJ’s has just purchased the following shipments of nuts at the prices shown.
Type of Nut Shipment Amount (Pounds) Total Cost
Almond 6,000 $7,500
Brazil 7,500 $7.125
Filbert 7,500 $6,750
Pecan 6,000 $7,200
Walnut 7,500 $7,875

The Regular Mix consists of 15% Almonds, 25% Brazil nuts, 25% Filberts, 10% Pecans, and 25% Walnuts. The Deluxe Mix consists of 20% of each type of nut, and the Holiday Mix consists of 25% Almonds, 15% Brazil nuts, 15% Filberts, 25% Pecans, and 20% Walnuts.
TJ’s accountant has analyzed the cost of packaging materials, sales price per pound and so forth and determined that the profit contribution per pound is $1.65 for the Regular Mix, $2.00 for the Deluxe Mix, and $2.25 for the Holiday Mix. These figures do not include the cost for the specific types of nuts in the different mixes because that cost can vary greatly in the commodity markets. Customer orders already received are summarized here:
Type of Mix Orders (pounds)
Regular 10,000
Deluxe 3,000
Holiday 5,000

Because demand is running high, TJ’s expects to receive many more orders than can be satisfied.
TJ’s is committed to using the available nuts to maximize profit over the fall season; nuts not used will be given to the free store. Even if it is not profitable to do so, TJ’s president has indicated that the orders already received must be satisfied.
Perform an analysis of TJ’s product mix problem, and prepare a report for TJ’s president that summarizes your finding. Be sure to include information and analysis on the following:
1. The cost per pound of the nuts included in the Regular, Deluxe, and Holiday mixes.
2. The optimal product mix and the total profit contribution.
3. Recommendations regarding how the total profit contribution can be increased if additional quantities of nuts can be purchased.
4. A recommendation as to whether TJ’s should purchase an additional 1,000 pounds of almonds for $1,000 from a supplier who overbought.
5. Recommendations on how profit contribution could be increased (if at all) if TJ’s does not satisfy all existing orders.
"	

finance problems

Question
	The Diamond Glitter Company is in the process of preparing its financial statements for 2012. Assume that no entries for depreciation have been recorded in 2012. The following information related to depreciation of fixed assets is provided to you.

1. The company purchased equipment on January 2, 2009, for $165,000. At that time, the equipment had an estimated useful life of 7 years with a $25,000 salvage value. The equipment is depreciated on a straight-line basis. On January 2, 2012, as a result of additional information, the company determined that the equipment has a remaining useful life of 3 years with a $15,000 salvage value.

2. During 2012, the company changed from the double-declining-balance method for its building to the straight-line method. The building originally cost $625,000. It had a useful life of 10 years and a salvage value of $50,000. The following computations present depreciation on both bases for 2010 and 2011.
2011	2010	
Straight-line	 $ 57,500 $ 57,500
Declining-balance	 $ 92,000 $ 115,000

3. The company purchased a machine on July 1, 2010, at a cost of $450,000. The machine has a salvage value of $25,000 and a useful life of 10 years. The company's bookkeeper recorded straight-line depreciation in 2010 and 2011 but failed to consider the salvage value. Ignore Tax effect.

4. The company has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows.
December 31, 2011	 $ 5,400
December 31, 2012	 $ 4,600

5. In reviewing the December 31, 2011, inventory, the company discovered errors in its inventory-taking procedures that have caused inventories for the last 3 years to be incorrect, as follows. The company has already made an entry that established the incorrect December 31, 2012, inventory amount.
December 31, 2010	Understated	 $ 32,000
December 31, 2011	Understated	 $ 51,000
December 31, 2012	Overstated	 $ 9,500

6. At December 31, 2012, the company decided to change to the straight -line method depreciation method on its retail display equipment from double-declining-balance. The equipment had an original cost of $250000 when purchased on January 1, 2011. It has a salvage value of 0 and a 8-year useful life. Depreciation expense recorded prior to 2012 under the double-declining-balance method was $62500. The company has already recorded 2012 depreciation expense of $46875 using the double-declining-balance method.

7. Before the current year, the company accounted for its income from long-term construction contracts on the completed-contract basis. Early this year, the company changed to the percentage-of-completion basis for accounting purposes but continues to use the completed-contract method for tax purposes. Income for the current year has been recorded using the new method. Prior year tax effects must be considered. The following information is available.
Pretax Income	
Percentage-of-Completion	Completed-Contract
Prior to 2012	$320,000 $180,000
2012	$140,000 $120,000

Required:	
Prepare the journal entries necessary at December 31, 2012, to record the corrections and changes made to date related to the information provided. The books are still open for 2012. The income tax rate is 35%. The company has not yet recorded its 2012 income tax expense and payable amounts so current-year tax effects may be ignored.	

Bird House Unlimited, Inc._BUDGETS

Question
	

 
 
 
 
 

 
The budget director for Bird House Unlimited, Inc., has gathered
 the following data for use in developing the budgeted income statement for
 November 20XX.

 

 
Estimated
 sales for November
 

 

 

 

 

 


 

 
Bird House
 

 
29,000
 
units
 
at
 
$33
 
per unit
 


 

 
Bird Feeder
 

 
25,000
 
units
 
at
 
$37
 
per unit
 


 

 

 

 

 

 

 

 

 


 

 
Direct materials
 

 

 

 

 

 

 


 

 
Estimated
 inventories at November 1(beginning)
 

 

 

 

 

 


 

 
Wood
 

 
2600
 
feet
 

 

 

 


 

 
Plastic
 

 
3200
 
pounds
 

 

 

 


 

 
Estimated
 inventories at November 30th(ending)
 

 

 

 

 

 


 

 
Wood
 

 
3500
 
feet
 

 

 

 


 

 
Plastic
 

 
2800
 
pounds
 

 

 

 


 

 

 

 

 

 

 

 

 


 

 
Direct
 materials used in production:
 

 

 

 

 

 


 

 
In the
 manufacture of a Bird House:
 

 

 

 

 

 


 

 
Wood
 

 
0.80
 
feet per unit of product
 

 

 


 

 
Plastic
 

 
0.50
 
pounds per unit of product
 

 


 

 

 

 

 

 

 

 

 


 

 
In the
 manufacture of a Bird Feeder:
 

 

 

 

 

 


 

 
Wood
 

 
1.20
 
feet per unit of product
 

 

 


 

 
Plastic
 

 
0.75
 
pounds per unit of product
 

 


 

 

 

 

 

 

 

 

 


 

 
Estimated
 cost of direct materials
 

 

 

 

 

 


 

 
Wood
 

 
$6.00
 
per feet
 

 

 

 


 

 
Plastic
 

 
$0.90
 
per pound
 

 

 

 


 

 

 

 

 

 

 

 

 


 

 
Work
 in process-given in total of the 2 products
 

 

 

 

 

 


 

 
Estimated
 inventories at November 1(beginning)
 
$2,000
 

 

 

 

 


 

 
Estimated
 inventories at November 30th(ending)
 
$3,000
 

 

 

 

 


 

 

 

 

 

 

 

 

 


 

 
Finished Goods
 

 

 

 

 

 

 


 

 
Estimated
 inventories at November 1(beginning)
 

 

 

 

 

 


 

 
Bird House
 

 
4,000
 
units
 
at
 
$13
 
per unit
 


 

 
Bird Feeder
 

 
2,500
 
units
 
at
 
$14
 
per unit
 


 

 

 

 

 

 

 

 

 


 

 
Estimated
 inventories at November 30th(ending)
 

 

 

 

 

 


 

 
Bird House
 

 
5,000
 
units
 
at
 
$13
 
per unit
 


 

 
Bird Feeder
 

 
2,000
 
units
 
at
 
$14
 
per unit
 


 

 

 

 

 

 

 

 

 


 

 
Direct Labor Requirements:
 

 

 

 

 

 

 


 

 
Bird House
 

 

 

 

 

 

 


 

 

 
Fabrication Department
 

 
0.25
 
hour
 
at
 
$15
 
per hour

 

 

 
Assembly Department
 

 
0.3
 
hour
 
at
 
$12
 
per hour

 

 
Bird Feeder
 

 

 

 

 

 

 


 

 

 
Fabrication Department
 

 
0.45
 
hour
 
at
 
$15
 
per hour

 

 

 
Assembly Department
 

 
0.35
 
hour
 
at
 
$12
 
per hour

 

 

 

 

 

 

 

 

 


 

 
Estimated
 Manufacturing Overhead Costs for November
 

 

 

 

 

 


 

 
Indirect Factory Wages
 

 
$2,000
 

 

 

 

 


 

 
Depreciation
 of Plant and Equipment
 
1,000
 

 

 

 

 


 

 
Power and Light
 

 
4,000
 

 

 

 

 


 

 
Insurance and property tax
 

 
3,000
 

 

 

 

 


 

 

 

 

 

 

 

 

 


 

 
Estimated
 operating expenses for November
 

 

 

 

 

 


 

 
Sales salaries expense
 

 
$2,000
 

 

 

 

 


 

 
Advertising expense
 

 
10,000
 

 

 

 

 


 

 
Office salaries expense
 

 
5,000
 

 

 

 

 


 

 
Depreciation
 expense-office equipment
 
4,000
 

 

 

 

 


 

 
Telephone expense-selling
 

 
5,000
 

 

 

 

 


 

 
Telephone
 expense-administrative
 
2,000
 

 

 

 

 


 

 
Travel expense-selling
 

 
2,000
 

 

 

 

 


 

 
Office supplies expense
 

 
3,000
 

 

 

 

 


 

 
Miscellaneous
 Administrative expense
 
6,000
 

 

 

 

 


 

 

 

 

 

 

 

 

 


 

 
Estimated
 other income and expense for November
 

 

 

 

 

 


 

 
Interest Revenue
 

 
$14,000
 

 

 

 

 


 

 
Interest Expense
 

 
10,000
 

 

 

 

 


 

 

 

 

 

 

 

 

 


 

 
Estimated tax rate
 

 
30%
 

 

 

 

 

	

Accounting_MCQs_Cash flow Statement

Question
	

Accounting_MCQs_Cash flow Statement
Question 1
Use the following to answer questions 1-4:
The financial statements of Wines, Inc., provide the following information for the current year
 
 12-31 jan 1
Accounts Receivable
210,000
180,000
Inventory
200,000
190,000
Prepaid Expenses
14,000
10,000
Accts Pay for mdse
176,000
161,000
Accrued Expenses Payable
13,000
19,000
Net Sales
2,900,000
COGS
1,500,000
Oper Expenses incl depreciation of $40,000
300,000
1.Refer to the above data. Compute the amount of cash
 1. Refer to the above data. Compute the amount of cash received from customers during the current year.
NET SALES LESS INCREASE IN ACCTS REC.
 
 Answer
1. 
1. 
1.  A) $2,900,000.
1. 
1. 
1. B) $2,690,000.
1. 
1. 
1. C) $2,870,000.
1. 
1. 
1. D) Some other amount.
 . 
2.144 points 
Question 2
1.   2. Refer to the above data. Compute the amount of Wine's cash payments for purchases of merchandise during the current year.
A) 1,500,000
B) 1,495,000
C) 1,505,000
D)  Other Amount
D)
D)2.144 points 
Question 3
1. 
1.  3. Refer to the above data. Compute the amount of Wine's cash payments for operating expenses.
1.
1. 
1. 
1.Answer
1. 
1. 
1. A) $260,000.
1. 
1. 
1. B) $270,000
1. 
1. 
1. C) $250,000.
1. 
1. 
1. D) Some other amount.
 . 
2.144 points 
Question 4
1. 
1.  4. Refer to the above data. Wine's net cash flow from operating activities for the current year is:
1.
1. 
1. 
1. 
1.
1.Answer
1. 
1. 
1. A) $1,105,000.
1. 
1. 
1. B) $1,375,000.
1. 
1. 
1. C) $1,495,000.
1. 
1. 
1. D) Some other amount.
 . 
Question 5
1. 
1. Use the following to answer questions 5-8:
1.
1.An analysis of Elmont Corporation's Investment in Marketable Securities account during 2005 disclosed the following:
1.
 Debit entries $150,000
Credit entries $230,000
 . 
Elmont's 2005 income statement included a $30,000 gain on sale of marketable securities and $20,000 dividend income from marketable securities. All payments and proceeds relating to marketable securities transactions were in cash.
 5. Refer to the above data. The amount of cash paid by Elmont Corporation in 2005 for the purchase of marketable securities was:
A) 230,000
B) 150,000
C) 180,000
D) 190,000 
D) 
D) 6. Refer to the above data. The cash proceeds received by Elmont Corporation in 2005 for the sale of marketable securities was:
E)  A) 150,000
F) B)  200,000
G) C) 230,000
H) D) 260,000
 
 
 . 
2.144 points 
Question 7
1. 
1.  7. Refer to the above data. How should the transactions involving marketable securities be classified in Elmont's statement of cash flows for 2005?
1.
1. 
1. 
1.
1.Answer
1. 
1. 
1. A) The purchase of marketable securities, sales of marketable securities, and receipt of dividends are all classified as investing activities.
1. 
1. 
1. B) The purchase and the sale of marketable securities are classified as investing activities; the receipt of dividends is classified as an operating activity.
1. 
1. 
1. C) The purchase of marketable securities is classified as an investing activity; the sale of marketable securities is classified as a financing activity; the receipt of dividends is classified as an operating activity.
1. 
1. 
1. D) The purchase and the sale of marketable securities are classified as investing activities; the receipt of dividends is classified as a financing activity.
 .
2.144 points 
Question 8
1. 
1.  8. Refer to the above data. Based solely on the above information, Elmont's net cash flow from investing activities for 2005 is:
1.
2. 
2. A) $80,000 net cash used by investing activities
3. B) $80,000 net cash provided by investing activities
4.  C) $110,000 net cash provided by investing activities
5. D) $230,000 net cash provided by investing activities 
5. 
5. . 
2.144 points 
Question 9
1. 
1. Use the following to answer questions 9-12:
1.
1.
1.
1.An analysis of changes in selected balance sheet accounts of Gotham Corporation shows the following for the current year:
1.
2. Plant and Equipment accounts
Debit entries to asset accounts = 210,000
Credit entries to asset accounts = 320,000
Debit entries to accumulated depreciation accounts
(resulting from sale of plant assets) = 30,000
Credit entries to accumulated depreciation accounts
(representing depreciation for the current year = 80,000
Gotham's income statement for the current year includes a $4,000 gain on disposal of plant assets. All payments and proceeds relating to purchase or sale of plant assets were in cash.
9. Refer to the above data. The amount of cash paid by Gotham to acquire plant assets during the current year was:
A) $130,000 B) $210,000 C) $320,000 D) Some other amount
  . 
Question 10
1. 
1.  10. Refer to the above data. Total cash proceeds received by Gotham from sales of plant assets during the current year amounted to:


2. A) $324,000 B) $294,000 C) $316,000 D) Some other amount 
2.
2. Question 11
1. 
1.  11. Refer to the above data. How should purchases, sales, and depreciation of plant assets be classified in Gotham's statement of cash flows for the current year? (Assume the direct method is used by Gotham.)
1.
1. 
1.
1.Answer
1. 
1. 
1.  A) Purchases of plant assets are classified as investing activities; sales of plant assets are classified as financing activities; depreciation is classified as an operating activity.
1. 
1. 
1. B) Purchases of plant assets and depreciation are classified as investing activities; sales of plant assets are classified as financing activities.
1. 
1. 
1. C) Purchases and sales of plant assets are classified as investing activities; depreciation does not appear as an operating, financing, or invest
ing activity.
1. 
1. 
1. D) Since plant assets are used to generate income from operations, purchases, sales, and depreciation of plant assets are all classified as operating activities.
 . 
2.144 points 
Question 12
1. 
1.  12. Refer to the above data. Based solely on the data provided above, Gotham's net cash flow from investing activities for the current year is:


 
1.Answer
1. 
1. 
1. A) $110,000 net cash provided by investing activities.
1. 
1. 
1. B) $110,000 net cash used by investing activities.
1. 
1. 
1. C) $84,000 net cash provided by investing activities.
1. 
1. 
1. D) $504,000 net cash provided by investing activities.
 . 
2.144 points 
Question 13
1. 
1. Use the following to answer questions 13-15:
1.
1.
1.
1.During 2006, the cash flows related to Dodge Data, Inc.’s lending and borrowing activities are summarized as follows:
1.Invest Oper Finan
1. Cash lent to borrowersLESS
1. $85,000
1. Payment to retire(LESS) bonds payable.
2. 
2. 
1. 175,000
1. Proceeds from borrowing at bank (note payable)....................
1.
1. 105,000
1. Interest received from borrowers...........................................
1.
1. 15,000
1. Interest payments made on bonds payable.LESS.............................
1.
1. 20,000
 . 
 13. Refer to the above data. On the basis of the above information alone, what is Dodge Data's net cash flow from financing activities?
 
 
Answer
1. 
1. 
1. A) $70,000 net cash used for financing activities.
1. 
1. 
1. B) $260,000 net cash used for financing activities.
1. 
1. 
1. C) $155,000 net cash used for financing activities.
1. 
1. 
1. D) $245,000 net cash used for financing activities.


 . 
2.144 points 
Question 14
1. 
1.  14. Refer to the above data. If Dodge Data's income statement for 2006 reports interest expense of $12,000, then:
1.
1. 
1. 
1.
1.
1.Answer
1. 
1. 
1. A) Interest payable decreased by $8,000 in 2006.
1. 
1. 
1. B) Interest payable increased by $8,000 in 2006.
1. 
1. 
1. C) Interest payable at the end of 2006 amounts to $8,000.
1. 
1. 
1. D) Either the amount reported in the income statement or the interest payment shown above must be incorrect.
 . 
2.144 points 
Question 15
1. 
1.  15. Refer to the above data. If interest receivable was $3,000 at December 31, 2005, and is $5,000 at the end of 2006, interest revenue reported in Dodge Data's income statement for 2006 must have been:
1.
1. 
1. 
1.
1. 
1.
1.Answer
1. 
1. 
1.  A) $8,000.
1. 
1. 
1. B) $10,000.
1. 
1. 
1. C) $17,000.
1. 
1. 
1. D) Some other amount.
 . 
2.144 points 
Question 16
1. 
1.  16. Acme Company uses the indirect method to prepare its statement of cash flows. The following information has been gathered for the current period:
1.
2. Gain on Sale of land = $45,000
3. Net Income – 162,000
4. Depreciation Expense = 74,000
5. Cash Received from sale of land = 160,000
6. Decrease in inventory = 10,000
7. Increase in accounts receivable = 5,000
8. Increase in accounts payable= 11,000
 On the basis of the above information only, Acme Company's statement of cash flows shows net cash flow from operating activities to be:
 A 185,000
 B 307,000
 C 207,000
 D 367,000
 
	

TURNEY COMPANY_Production Budget

Question
	Turney Company produces and sells automobile
batteries, the heavy-duty HD-240. The 2012 sales budget is as follows.

Quarter
HD-240

1
5,000

2
7,000

3
8,000

4
10,000

The
January 1, 2012, inventory of HD-240 is 2,500 units. Management desires an
ending inventory each quarter equal to 50% of the next quarter's sales. Sales
in the first quarter of 2013 are expected to be 30% higher than sales in the
same quarter in 2012.



Complete
quarterly production budgets for each quarter and in total for 2012.



TURNEY
COMPANY

Production
Budget

For
the Year Ending December 31, 2012

Product HD-240

 Quarter

 1 2 3 4 Year

Add:

Total required units

Less:

Required production units


	

Green Lantern Company_Statement of cash flows

Question
	1ACCT 4111Fall 2013 ACCT 4111 Section: 010Extra Credit AssignmentInstructions:1. Prepare a cash flow statement using the information below. Use BOTH the direct and indirect method to prepare the Operating Activities section (i.e., I expect to see 2 Operating Activities sections, 1 Investing, and 1 Financing).2. Each cash flow item in the statement should be appropriately labeled (use the naming conventions used on the text).3. Show all calculations / work used to prepare the 3 different sections of the cash flow statement (this should be on a separate sheet). You will not receive credit for the assignment if you do not show all work for each number.4. Work should be neat and clearly labeled so that I can follow the calculations corresponding to the cash flow item within the cash flow statement sections.5. Be sure to clearly label and cross-reference each cash flow item on the statement to the calculations that correspond to that cash flow item. E.g., if you have “cash received from customers” in your cash flow statement, label this item as “A” or “1” in the margin and also label the calculations that correspond to this number as “A” or “1” on your calculations worksheet. In this way, I can easily find the calculations you performed for each item on your cash flow statement.6. Appropriately label the cash flow statement and the related sections – follow the format used in the text.7. This is not a group assignment. Individual work is expected. No points will be given if submitted assignment is not your own work.Points: Total of 10 Points? Points are allocated as follows:? 4 points for the Operating Activities – direct? 2 points for the Operating Activities – indirect? 2 points for the Investing Activities, and? 2 points for the Financing Activities? As agreed, points will NOT be awarded for partially correct work in each section. Each section must be accurately completed in its entirety to receive the allocated points (including showing related calculations or T accounts).Due Date: No Exceptions? This assignment is due no later than 6am on Tuesday, November 26, 2013.? There are no exceptions. Late submissions will not be accepted.2Assignment SubmissionSelect 1 of 2 Ways to submit assignment:1. The assignment may be submitted via email. Scanned images that are clearly legible and submitted in PDF format will be accepted. Work in MSExcel or MSWord will also be accepted – with clearly labeled pages/tabs (as appropriate).2. Hardcopy slipped under my office door in RCB 5th Floor room 515 by the due date. Please notify me ahead of time by email me if you choose this option. Note that access is restricted to the RCB building after 7pm daily.AssignmentIn addition to the financial statements presented on the next pages, also find the notes below. Use information as necessary from the notes and the financial statements to construct the cash flow statement for the company for the year ending December 31, 2012Notes:1. All equipment/furniture purchases are made using cash. There were no disposals during the year.2. Land that originally cost $14,000 was sold for $9,800.3. Short-term investments are not classified as a cash equivalent and are non-trade related. Any purchases or sales are made in cash.4. Long-term notes payable and bonds payable are shown in the balance sheet at their face value and indicate repayments or issuances as appropriate.5. Cash dividends were paid to shareholders during the year.32012 2011AssetsCurrent AssetsCash $ 58.8 $ 42.0Accounts Receivable $ 102.2 $ 105.0Short-term Investments $ 56.0 $ 21.0Inventory $ 105.0 $ 98.0Total Current Assets $ 322.0 $ 266.0Property Plant and EquipmentLand $ 70.0 $ 84.0Equipment and Furniture $ 770.0 $ 560.0Less: Accumulated Depreciation $ (161.0) $ 609.0 $ (105.0) $ 455.0Net Property Plant and Equipment $ 679.0 $ 539.0Total Assets $ 1,001.0 $ 805.0LiabilitiesCurrent LiabilitiesAccounts Payable $ 39.2 $ 49.0Salaries Payable $ 2.8 $ 7.0Interest Payable $ 7.0 $ 4.2Income Tax Payable $ 12.6 $ 16.8Total Current Liabilities $ 61.6 $ 77.0Long-term LiabilitiesNotes Payable $ - $ 42.0Bonds Payable $ 224.0 $ 140.0Total Long-term Liabilities $ 224.0 $ 182.0Shareholders' EquityCommon Stock $ 350.0 $ 280.0Paid in Capital - excess of par $ 176.4 $ 140.0Retained Earnings $ 189.0 $ 126.0Total Shareholders' Equity $ 715.4 $ 546.0Total Liabilities and Shareholders' Equity $ 1,001.0 $ 805.0Green Lantern CompanyBalance SheetDecember 31, 2012 and 2011($ in 000s)4RevenuesSales Revenue $ 532.0ExpensesCost of Goods Sold $ 182.0Salaries Expense $ 63.0Depreciation Expense $ 56.0Interest Expense $ 16.8Loss on Sale of Land $ 4.2Income Tax Expense $ 98.0 $ (420.0)Net Income $ 112.0Green Lantern CompanyIncome StatementFor Year Ended December 31, 2012($ in 000s)	

Cravat Sales Company_Master Budget with Supporting Schedules

Question
	CASE 8–29 Master Budget with Supporting Schedules [LO2, LO4, LO8, LO9, LO10]

You have just been hired as a management trainee by Cravat Sales Company, a nationwide distributor of a designer’s silk ties. The company has an exclusive franchise on the distribution of the ties, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the management team. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting
April 1. You are anxious to make a favorable impression on the president and have assembled the information below.
The company desires a minimum ending cash balance each month of $10,000. The ties are sold to retailers for $8 each. Recent and forecasted sales in units are as follows:
January (actual) . . . . . . . . . . . . . . . 20,000
February (actual) . . . . . . . . . . . . . . 24,000
March (actual) . . . . . . . . . . . . . . . . 28,000
April . . . . . . . . . . . . . . . . . . . . . . . . . 35,000
May . . . . . . . . . . . . . . . . . . . . . . . . 45,000
June . . . . . . . . . . . . . . . . . 60,000
July . . . . . . . . . . . . . . . . . . 40,000
August . . . . . . . . . . . . . . . 36,000
September . . . . . . . . . . . . 32,000
382 Chapter 8
The large buildup in sales before and during June is due to Father’s Day. Ending inventories are supposed to equal 90% of the next month’s sales in units. The ties cost the company $5 each.
Purchases are paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25% of a month’s sales are collected by month-end. An additional 50% is collected in the following month, and the remaining 25% is collected in the second month following sale. Bad debts have been negligible.
The company’s monthly selling and administrative expenses are given below:
Variable:
Sales commissions . . . . . . $1 per tie
Fixed:
Wages and salaries . . . . . . $22,000
Utilities . . . . . . . . . . . . . . . $14,000
Insurance . . . . . . . . . . . . . $1,200
Depreciation . . . . . . . . . . . $1,500
Miscellaneous . . . . . . . . . . $3,000
All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. Land will be purchased during May for $25,000 cash. The company declares dividends of $12,000 each quarter, payable in the first month of the following quarter. The company’s balance sheet at March 31 is given below:
Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,000
Accounts receivable ($48,000 February sales;
$168,000 March sales) . . . . . . . . . . . . . . . . . . . . . . 216,000
Inventory (31,500 units) . . . . . . . . . . . . . . . . . . . . . . . 157,500
Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,400
Fixed assets, net of depreciation . . . . . . . . . . . . . . . . 172,700
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $574,600

Liabilities and Stockholders’ Equity
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 85,750
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 176,850
Total liabilities and stockholders’ equity . . . . . . . . . . . $574,600

The company has an agreement with a bank that allows it to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $40,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and
as much of the loan as possible (in increments of $1,000), while still retaining at least $10,000 in cash.
Required:
Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets:
1. a. A sales budget by month and in total.
b. A schedule of expected cash collections from sales, by month and in total.
c. A merchandise purchases budget in units and in dollars. Show the budget by month and in total.
d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.
2. A cash budget. Show the budget by month and in total.
3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach.
4. A budgeted balance sheet as of June 30.	

PA MT HW 3 – MULTIPLE CHOICE AND T/F (All 100 Questions Solved)

Question
	
PA MT HW 3 - MULTIPLE CHOICE AND T/F
100 QUESTIONS T/F AND M/C


 

I-TRUE/FALSE. Write, on the answer sheet above, 'T' if the statement is true and 'F' if the statement is false. 



II- For the Multiple choice questions, please select the letter that better answers the question and write it

answer sheet.



1) The cost of razing a building on a parcel of land to build a new building is added to the cost of the

land.



2) Treating a cost which should be an expense as a capital expenditure will make a company's net

income higher.



3) Expenditures which extend the life of an asset or increase its productive capacity should be

expensed.



4) Normal expenditures for repairs and maintenance should be capitalized. 



5) Which of the following is included in the cost of land?



A) The cost of paving B) The cost of fencing C) The cost of outdoor lighting D) The cost of clearing the land



6) The cost of excavating a basement for a new building is added to the price of the land. 



7) The cost of land includes the cost of removing unwanted buildings. 



8) An asset impairment will be reflected by an increase in the book value of an asset, as shown on the

balance sheet.



9) A loss on the sale of a plant asset is recorded when the sales price exceeds the book value. 



10) Which of the following items should be depleted?



A) Intangible property B) Natural resources C) Land D) Tangible property, plant, and equipment, other than land



11) Which of the following is the expense resulting from a decline in the utility of a natural resource?



A) Obsolescence B) Depreciation C) Depletion D) Amortization



12) Which of the following accounting methods is the method used to compute depletion?



A) Units-of-production B) Straight-line C) First-In, First-Out D) Declining-balance



13) Navajo Mining Company purchased a mine in 2013 for $3,400,000. It was estimated that the mine

contained 200,000 tons of ore and that the mine would be worthless after all of the ore was

extracted. The company extracted 25,000 tons of ore in 2013 and 30,000 tons of ore in 2014.

What is depletion expense for 2013?

A) $425,000 B) $510,000 C) $340,000 D) $680,000



14) Which would NOT be accounted for by the depletion method?

A) Oil reserves B) Coal reserves C) Land D) Timber reserves



15) A mine is purchased for $4,000,000. There will be a salvage value of $300,000 when the land is

restored after mining is completed. The mine has an estimated 250,000 tons of coal. What is the

depletable cost per ton of coal?



A) $13.33

B) $14.80

C) $16.00

D) Cannot be determined from given information



16) Depletion would be used for all of the following EXCEPT:



A) oil and gas. B) timber. C) merchandise inventory. D) minerals.



17) If assets are junked before being fully depreciated, there is a loss equal to the book value of the

asset.



18) A loss occurs on the exchange of a plant asset if the market value of the new asset received is

greater than the total amount given up in the exchange.



19) A gain on disposal of an asset is recorded when cash received is less than book value. 



20) When an asset is fully depreciated, the salvage value must be written off. 



21) When an asset is fully depreciated, no further depreciation expense is recorded. 



22) Which of the following is NOT considered a plant asset?



A) Building B) Land C) Equipment D) Copyright



23) Which of the following is the amount capitalized as goodwill?



A) The excess of the cost of an acquired company over the sum of the book value of its assets

B) The excess of the cost of an acquired company over the sum of the market value of its assets

C) The excess of the cost of an acquired company over the sum of the book value of its net assets

D) The excess of the cost of an acquired company over the sum of the market value of its net

assets



24) Which of the following types of expenses result from a decline in the utility of an intangible asset?

A) Depreciation B) Obsolescence C) Amortization D) Depletion



25) Azimuth Company purchases a small business for $500,000. The market value of the business's

assets are $850,000, and the market value of the liabilities are $400,000. How much goodwill

should Azimuth record?



A) $50,000 B) None C) $450,000 D) $500,000



26) If a company incurs an expense, but treats it as an asset, net income would be understated. 



27) If a note payable has installments due within a year, the entire note is treated as a current liability. 



28) Amounts owed for products or services purchased on account are contingent liabilities. 



29) Unearned revenue is an obligation to provide goods or services to the customer. 



30) Notes payable are considered short-term if they are due within the current operating cycle.



31) Which of the following is an amount for products or services purchased on account?



A) Accrued expense B) Estimated warranty payable C) Unearned revenue D) Accounts payable



32) Which of the following is a characteristic of a current liability?

A) A current liability is a liability that is due within one year or one operating cycle, whichever is

longer.

B) A current liability is a liability that is due within 30 days.

C) A current liability is a liability that is due within 10 days.

D) A current liability is a liability that is due in longer than a one-year period, or one operating

cycle.



33) Which of the following occurs when a company records accrued interest expense on a note

payable?

A) Note payable is credited. B) Cash is debited. C) Interest payable is credited. D) Interest expense is credited.



34) In which of the following periods should the estimated warranty liability be debited?



A) The period when the product is shipped to the customer

B) The period when the product is sold

C) The period when cash is collected for the sale of the product

D) The period when cash is paid to repair or replace the product



35) Which of the following is the proper treatment for a liability that exists, but the exact amount of

which is not known?

A) The liability should be ignored.

B) The liability should be reported in the notes to the financial statements.

C) The liability should be treated as a contingent liability.

D) The amount of the liability should be estimated and recorded.



36) Tractor World offers warranties on all their tractors. They estimate warranty expense at 2.4% of

sales. At the beginning of 2013, the Estimated warranty payable account had a credit balance of

$900. During the year, Tractor World had $285,000 of sales, and had to pay out $5,100 in warranty

payments. At the end of the year, how much Warranty expense was reported on the income

statement?



A) $6,840 B) $5,100 C) $4,200 D) $2,640



37) A certain contingent liability was evaluated at year-end, and considered to have a reasonable

possibility of becoming an actual liability. If the accountant decided NOT to report it on the

balance sheet or in the notes to the financial statement, what effect would this have on the financial

reporting of the company?



A) The net income of the company would be understated.

B) The information about the transaction would be inadequately disclosed in the notes.

C) The liabilities on the balance sheet would be understated.

D) There would be no effect.



38) Which of the following is NOT an exact liability?

A) Accounts payable B) Income tax payable C) Warranty payable D) FICA tax payable



39) Gross pay is the total amount of salary, wages, commissions, and bonuses earned by an employee

during a pay period.



40) The old age, survivors, and disability insurance portion of FICA taxes is imposed on all of an

individual employee's earnings.



41) Payroll tax expense includes the employer's portion of FICA taxes, state unemployment taxes, and

federal unemployment taxes.



42) FICA tax is a tax which is paid by the employer only and is not deducted from the employee's pay.



43) The Statewide Sales Company has gross pay for March of $45,000. The first journal entry in the

payroll cycle to record salary expense would include a credit to Cash for $45,000.



44) Which of the following is included in the entry to record the employer's payroll taxes?



A) A credit to Payroll tax expense

B) A credit to FICA tax payable

C) A debit to State unemployment tax payable

D) A credit to Salary payable to employees



45) Dan Jones and Pat Smith are the only two employees of Lone Star Company. In January, 2012,

Dan's gross pay was $4,400 and Pat's gross pay was $5,200. All earnings are subject to FICA taxes

of 7.65%.

Which of the following would be included in the entry to record the salary expense for January?



A) A credit to Salary expense for $734.40

B) A credit to FICA tax payable for $734.40

C) A debit to FICA tax payable for $734.40

D) A debit to Salary payable to employees for $734.40



46) The Statewide Sales Company has gross pay for March of $45,000. Which of the following would

be included in the first journal entry in the payroll cycle to record salary expense?



A) Debit Cash B) Debit Salary payable C) Debit Salary expense D) Credit Salary expense



47) Art Parrish, the sole employee of Parrish Sales, has gross salary for March of $4,000. The entire

amount is under the OASDI limit of $106,800, and thus subject to FICA. He is also subject to federal

income tax at a rate of 18%. Art has a deduction of $320 for health insurance and $80 for United

Way. The second entry in the payroll cycle to record the disbursement of his net pay should

include which of the following?



A) Debit Cash B) Credit to Payable to the United Way C) Credit to Salary payable D) Debit FICA tax payable



TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

48) The current portion of notes payable is the principal amount that will be paid within one year of

the balance sheet date.



49) Installment payments for mortgages are normally paid once per year. 



50) Bonds are long-term liabilities issued to multiple lenders, usually in increments of $1,000. 



51) The company will repay the principal amount of the bond on the maturity date. 



52) If a bond is issued at a discount, it will sell for more than face value.



53) Installment payments for mortgages typically contain both an amount for principal repayment and

an amount for interest.



54) The current portion of notes payable must be reported on the balance sheet combined with the

long-term portion under long-term liabilities.



55) The balance in the Bonds payable account is a credit of $50,000. The balance in the Discount on

bonds payable account is a debit of $1,500. The bond carrying amount is $51,500.



56) Interest payable would normally be shown on the balance sheet in current liabilities. 



57) The time value of money is based on the concept that money earns interest over time. 



MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

58) Using the present value tables, please compute the present value of an annuity which pays $2,000

per year for 10 years, discounted at 7%.



A) $14,048 B) $19,240 C) $16,440 D) $18,180



59) On January 1, 2014, Partridge Company issued $50,000 of 6-year bonds with a stated rate of 3%.

The market rate at time of issue was 4%, so the bonds were discounted and sold for $47,331.

Partridge uses the effective-interest rate of amortization for bond discount. Semiannual interest

payments are made on June 30 and December 31 of each year. How much interest expense will be

recorded when the first interest payment is made? (Please round to the nearest whole dollar.)



A) $750 B) $2,000 C) $947 D) $167



60) The main reason companies retire bonds prior to their maturity date is to relieve the pressure of

paying semiannual interest payments.



61) If a company wishes to retire bonds early, they may call the bonds if the bonds are callable, but

they may not purchase them on the open market.



62) Compute the present value of a bond:

The principal amount is $50,000, the stated rate is 3%, and the term of the bond is 6 years. The

bond pays interest semiannually. At the time of issue, the market rate is 4%. Please compute the

present value of the bond at market rate using the present value tables.



A) $7,931 B) $39,400 C) $47,331 D) $59,000



63) The formation of a corporation is generally less complicated than the formation of a partnership. 



64) Different classes and types of stock carry different degrees of risk for the shareholder. 



65) When a company records the year-end closing entries, the first step is to close the Revenues to

Retained earnings.



66) Declaring and paying dividends causes a decrease in both assets and equity. 



67) If a company has a strong rate of return on common stockholders' equity, that is an indication of

strong profitability.



68) The rate of return on total assets and the rate of return on common stockholders' equity are used to

evaluate the:



A) ability to pay current liabilities with current assets.

B) profitability of the business.

C) cash flow of the business.

D) liquidity of the business.



69) Reed Company reports the following information for the year 2013:

Net income $46,000

Preferred dividends 12,000

Common equity, Jan 1 800,000

Common equity, Dec 31 900,000

Please calculate the rate of return on common stockholders' equity. Please round to 3 decimal

places.

A) 0.014 B) 0.054 C) 0.040 D) 0.043



70) Normally, a company's book income and tax income should be the same.



71) Which one of the following describes financial leverage?



A) To earn more income on borrowed money than the related interest expense

B) To finance with equity capital

C) To pay off all long-term debt in order to reduce interest expense

D) To offer discounts to customers for early payment of invoices



72) Origami Company is considering a new project and needs to raise $800,000 of capital. Their

after-tax net income would be $75,000 if they do not implement the new project. If the new project

is implemented, it will add an additional $50,000 of profits before tax and interest. Origami's

income tax rate is 40%. If they use debt financing, the interest will be at 5%. Origami has 25,000

shares of common stock outstanding and no preferred stock.

If Origami decides to implement the project using debt financing, what will be the earnings per

share amount? (Please round to the nearest cent.)


A) $3.24 B) $3.40 C) $4.14 D) $4.20



73) Origami Company is considering a new project and needs to raise $800,000 of capital. Their

after-tax net income would be $75,000 if they do not implement the new project. If the new project

is implemented, it will add an additional $50,000 of profits before tax and interest. Origami's

income tax rate is 40%. If they use debt financing, the interest will be at 5%. Origami has 25,000

shares of common stock outstanding, and no preferred stock. They would have to issue an

additional 10,000 shares of common stock to finance the project with equity capital.

If Origami decides to implement the project using equity financing, what will be the earnings per

share amount? (Please round to the nearest cent.)



A) $3.00 B) $3.24 C) $4.14 D) $3.40



74) Deferred tax can either be an asset or a liability. 



75) Origami Company is considering a new project and needs to raise $800,000 of capital. Their

after-tax net income would be $75,000 if they do not implement the new project. If the new project

is implemented, it will add an additional $50,000 of profits before tax and interest. Origami's

income tax rate is 40%. If they use debt financing, the interest will be at 5%. Origami has 25,000

shares of common stock outstanding and no preferred stock. They would have to issue an

additional 10,000 shares of common stock to finance the project with equity capital.

If Origami decides to use equity financing, their earnings per share will be higher than if they use

debt.



76) A company's income tax expense is calculated on the basis of book income, but the income tax

payable amount is based on the:



A) amount of dividends paid to shareholders.

B) amount of payroll tax that has not been paid yet.

C) sales tax rate applied to sales revenues.

D) amount of taxable income, as calculated on the income tax return.



77) Which of the following factors may cause a difference between book income and taxable income?



A) The company has a deposit in transit at year-end.

B) The company uses straight-line depreciation for books and accelerated depreciation for tax.

C) The company sells stock right before the end of the year.

D) The company pays its federal income taxes quarterly as opposed to annually.



78) If a company has a strong rate of return on total assets, that shows that they can easily pay off their

current liabilities with their current assets.



79) If a company has a strong rate of return on common stockholders' equity, that is an indication of

good cash flow.



80) Which of the following measures a company's success in using assets to earn income?



A) Days sales in receivables B) The rate of return on stockholders' equity C) Inventory turnover D) The rate of return on total assets



81) Paying dividends causes a decrease in total paid-in capital. 



82) If preferred stock is non-cumulative, then the company does NOT need to pay dividends that were

passed in previous years.



83) If preferred stock is cumulative, then the company does NOT need to pay dividends that were

passed in previous years.



84) A dividend's declaration date is the date the board of directors announces the intention to pay the

dividend.



85) When a company records the year-end closing entries, the Income summary balance, before it is

closed to Retained earnings, should be equal to the Net income or Net loss for the year.



86) A net loss for the year increases the balance in Retained earnings.



87) Ajax Company was founded in 2009. Its yearly earnings are shown here:



2012: Net income of $4,000

2013: Net income of $23,000

2014: Net income of $2,000

2015: Net loss of $30,000



No dividends were paid. At the end of the year 2015, Ajax would have a Retained earnings deficit

of $1,000.



88) Corporations must issue common stock, but may or may not decide to issue preferred stock. 



89) All forms and classes of stock carry voting rights.



90) Every corporation issues preferred stock. 



91) A corporation is a separate legal entity formed under the laws of a particular state. 



92) Stockholders of a corporation have unlimited liability for the corporation's debt. 



93) Rules of GAAP require that bond premiums or discounts be amortized using the straight-line

method.



94) If the difference between the effective-interest method of amortizing bond discount and the

straight-line method is immaterial, then GAAP permits use of the straight-line method.



95) The time value of money is related to which of the following concepts?



A) Money loses value over time as it is spent.

B) Money can buy extra time.

C) Money earns interest over time and grows in value.

D) Money loses its purchasing power because of inflation.



96) FICA tax payable would normally be shown on the balance sheet in long-term liabilities. 



97) Accounts payable is always shown on the balance sheet in current liabilities.



98) The balance in the Bonds payable account is a credit of $50,000. The balance in the Discount on

bonds payable is a debit of $1,500. The balance sheet will report the bond balance as $48,500.



99) The balance in the Bonds payable account is a credit of $50,000. The balance in the Premium on

bonds payable account is a credit of $900. The bond carrying amount is $50,900.



100) Deferred tax would normally arise from which of the following situations?



A) When a company makes a different choice for its tax return versus its book net income

B) When a company pays income tax quarterly versus yearly

C) When a company withholds income tax from its employees' payroll

D) When a company pays off all of its debts at the end of the year