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Midterm%20A%20SP09%20Final0 - 1 Franklin Consulting Company...

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Unformatted text preview: 1. Franklin Consulting Company maintains its records on a cash basis. During 20015 the following cash-flows were recorded: Cash received from customers $500,000, and cash paid for salaries, utilities, and advertising, $200,000, $50,000 and $50,000 respectively. 1r'ou determine that customers owed the company $5 0,000 and $25,000 at the beginning of the year and end-of year respectively. The oompany owed salaries totaling $50,000 at the beginning of the year and did not owe any salaries at the end of' the year. Determine the accrual net income for the year. fig 51 A. $200,000 E. $225,000 {In P“ C. $125,000 {156 J» or. $275,000 {N \l {5* E. None of the above at; 2. 1Which of the following inventories would a oompany ordinarily hold for sale? A. Raw materials. E. Work in process. C. Work in process and finished goods. D. Raw materials and finished goods. E. Finished goods. 5. Adam's Apples opened business on January 1, 20015, and paid for two insurance policies effective that date. The liability policy was $5,000 for a single year of coverage. and the crop damage policy was $45,000 for a three-year term. 1|What dollar amount of insurance expense 3: pre-paid insurance will Adam's report on its 121’312000 financial statements? A. $20,000 of insurance expense— balance sheet $15,000 prepaid insurance- income statement B. $50,000 of insurance expense— income statement $20,000 prepaid insurance— balance sheet C. $15,000 of insurance expense- income statement $5,000 of prepaid insurance on the balance sheet D. $50,000 of insurance expense- balance sheet $30,000 contra revenue— income statement E. $20,000 of insurance expense on the income statement $30,000 of prepaid insurance on the balance sheet 4. '5'. An employee accidentally overstated the year’s advertising expense by $5l},flfll}. Which of the following correctly depicts the effect of this error? A. IIIIost of goods manufactured will be overstated by $5fl.flflfl. E. ICost of goods sold will be overstated by Emil-Dill. C. Both cost of goods manufactured and cost of goods sold will be overstated by ssonon. D. Cost of goods sold will be overstated by $5t},flflt}, and cost of goods manufactrrred will be understated by Sfififlm. E. None of the above. CNH started Eflflfi with $IDD,DDD of merchandise on hand and the inventory account . During 2W6, $5M,“ in merchandise was purchased on account with credit terms of Eli} M45 and shipping terms of f.o.b. destination. The vendor pro-paid the freight charges of $1 llflflfl. CNH did not return any of the order and the invoice was paid such that the purchase discount was taken. CNH reported cost of goods sold totaling $190,flflfl. What is the dollar amount of beginning inventory reported at lilr‘Zilil’r"? A. steeper} n. sesame c. essence o. smarter} 5. salaries Marie works in the accounts payable department. She recently prepared a check request to pay a vendor’s invoice after matching the invoice against the related purchase order. Which of the following statements is most true? A. Manes actions demon strate the strongest possible internal control over the payment process. E. Marieis actions weakened the internal control for her company. C. Marie*s actions weakened the internal control for the vendor. D. The bank should not honor lvlarie's check. E. By performing this comparison Marie has eliminated the risk of fraudulent financial reporting [as it relates to the purchasing and disbursement cycle). How would the regular hourly wages paid to a factory equipment operator be classified? A. Product cost- manufacturing overhead E. Pro-duct cost- indirect labor C. Period Cost— Operating Expense D. Product Cost- direct labor E. Period Cost- indirect cost of operations 8. 9. The total production cost charged to a job is composed of: A. direct material and direct labor. E. direct material. direct labor. manufacturing overhead, and outlays for selling costs. C. direct material, direct labor, and applied manufacnning overhead. D. direct material, direct labor, manufacturing overhead, and outlays for both selling and administrative costs. E. direct material, direct labor, and actual manufacturing overhead. Depreciation incurred in a panienlar period: A. ICould initially be recorded on the balance sheet and then subsequently moved to the income statement. E. Both A and E C. Will always be recorded with a debit to depreciation expense. B. Is always considered a period cost. E. Could be a product cost or a period cost depending on the use of the asset and the type of business. 10. The following accounts were taken from Splendid Corporation's accrual basis adjusted trial balance for 11. the year ended 130119003. Please asstuue that all accounts have normal balances. Please use this information to answer questions 10 through 18. Accounts Receivable l00,000 Salaries Expense $5,000 Cash 25,000 Unnamed Rent income 115,000 Depreciation Expense-Building 25,000 Building I 50,000 Salaries Payable L000 lCost of Goods Sold 50,000 Accumulated DcprcciatiorthIdg 50,000 Accounts Payable T4,000 Finished Goods 25000 Sales Revenue 250.000 1|What is the dollar amount of the net income that Splendid reported for the year ended 1200140008? a. $25,000 a. $50,000 {3. $75,000 D. $100,000 E. $125,000 1What is the dollar amount of gross profit reported by Splendid for the year ended 128 lf2008‘? a. $50,000 a. $100,000 0. 0150000 I). $200,000 a. $225,000 12. Please assume that Splendid started the year with a $50,000 balance in Accounts Receivable. 1|i'ifhat was the amount of cash collected on customer accounts during 2008‘? a. $50,000 a. $150,000 (3. $200,000 0. $250,000 E. $300,000 13. Please assume that Splendid started the year with $50,000 of finished goods. “first was the cost-of-goods manufactured for the year ended 133130003? A. $25,000 E. $50,000 C. $15,000 D. $100,000 E. The answer cannot be determined from the information provided. 14. [in which financial statement would the gross profit he reported? A. Balance Sheet B. Income Statement 1:. Statement of Retained Earnings D. Foomote disclosure only E. It would not be reported on any of the four basic financial statements. 15. Please assume that in addition to the information already provided, Splendid reported the following account balances in its Statement of Stockholders Equity: misses Iaolooos Retained Earnings 25.000 I00.000 Capital Stock 50,000 50,000 What was the amount of dividends declared during the year {if any}? A. $25,000 B. $50,000 C. $15,000 0. $125,000 E. No dividends were declared during 2000. 16. in the facts provided, (i) "salaries expense" has a lflfilflflflfl balance of $T5,flflfl and {ii} salaries payable has a $l,flfli} balance. 1?. 1|Which of the following below choices respectively identifies the effect of closing entries on the above two accounts ("+“ = increase at. "—" = decrease}. A. {i} +$T5,flfli} (ii) +1 ,flflfl E. {i} No change (ii) - Lilfli] C. {i} —$?5,{}DU {ii} - LUUU D. {i} -$?5,{}[}fl {ii} No Change E. Stockholders equity will decrease by $14300 as a result of the closing entries made to these particular accounts. In the facts of the problem you were told that Splendid owed $l,t}i}i} of salaries as of December 31st. Please assume that the employees of Splendid work Monday through Friday and are paid every other Friday. On payday, Splendid paid 32.5% of wages for the two week pay period ending on that day. Given Splendid's year-end accrual of $l,flflfl, on what dayr of the week did December 31st fall? Monday Tuesday Wednesday 18. 1What entry would Splendid record on payday (Le. in January} to record the payroll? A. Deb-it Credit Salaries Expense 2,500 Cash 2.50s E. Debit Credit Salary Expense 2.500 Salary Payable 1.000 Cash 1.500 C. Deb-it Credit Salary Expense 1.000 Salary Payable 1.500 Cash 2.500 D. Deb-it Credit Salary Expense 1.500 Salary Payable 1,000 Cash 2.500 E. The salaries were accrued at Dec. 3 lst as such no entry would be needed in January. 19. Which of the following manufacturers would most likely use joh~order costing? A. Chemical manufacturers. E. Microchip processors. (3. Custom-furniture manufacturers. D. Gasoline refiners. E. Fertilizer manufacturers. 20. The recognition of an asset could be accompanied by which of the following? A. an increase in expense B. an increase in liabilities C. a decrease in revenue D. a decrease in liabilities E. None of the above 21. On September 20, 2006, Precision Electric Ililorntrany purchased $20,000 of stereo equipment for resale on credit, subject to the terms If 15, nf30. The company records all purchases using the gtoss method. Which of the Following entries would be made to record the payment, assuming that the company paid for these goods on September 20th? A. Debit Credit Merchandise Invmtory 20,000 Cash 20,000 E. Deb-it Credit Accounts Payable 20.000 Cash 20,000 E. Debit Credit Accounts Payable 20,000 Merchandise Inventory 3,000 Cash 11000 D. Debit Credit Accounts Payable 20,000 Merchandise Invmhmr 200 Cash 19,300 E. Debit Credit Cash 19,300 Sales Discounts 100 Sales Revenue 20,000 22. Which of the following items is typically n_ot reflected in the final recorded value of merchandise inventory? A. The final invoice price. E. Purchase discounts taken. C. Sales taxes D. Freight Cost paid by the buyer, goods shipped FOE-SP E. All ofthe above are typically included. 23. 24. in l'vlayr of 2006, Raymond Financial Services became involved in a tax dispute with the IRS. At December 31, 20015, the tax attorney for Raymond indicated that an unfavorable outcome to the dispute was probable. The additional taxes were estimated to be $T?0,000 but could be as high as $1,110,000. After the year-end, but before the 2000 financial statements were issued, Raymond accepted an IRS senlement offer of $000,000. Raymond should have reported an seemed liability on its December 31, 20015, balance sheet of: A. $ T300010. E. $ 900,000. C. $ 910,000. D. $1,130,000. E. No accrual was necessary. For the year just ended, Cole Corporation's manufacturing costs (raw materials used, direct labor, and manufacturing overhead} totaled $1,500,000. Beginning and ending work—in—proeess inventories were $00,000 and $90,000, respectively. Cole's balance sheet also revealed respective beginning and ending finished-goods inventories of $250,000 and $180,000. [in the basis of this information, how much would the company report as cost of goods manufactured {CGM} and cost of goods sold [CC-S}? a. cost, s1,4311,111111; cos, $1,4so,11111}. E. CGM, $1,4T0,000; cos, $1,541},111:11:1. 1:. CGM, $1, 531:1 ,ouo; cos, $1, 15111}, 11111}. n. com, 51, 5411, 1111111; cos, $1, 4’11}, 11111}. E. cost, $1, woos-11; cos, $1, 41111, 111111. Continued on next page! 25. Huxtable charges manufacturing overhead to products by using a predetertnined application rate, computed on the basis of machine hours. The following data pertain to the current year: Budgeted Direct Labor $335,000 Actual Direct Labor $300,000 Budgeted Direct Materials $300,000 Actual Direct Materials $250,000 Budgeted Manufacturing flvcrhcad $500,000 Actual Manufacturing l[Ilverhcad $400,000 Budgeted Machine Hours 10.000 Actual Machine Hours 9.000 FIJI-IR $50 Based on the above information, which of the following statements are true? A. antable's current period mannfacttn‘ing costs totaled $1,115,000 B. Huxtable's cost of goods manufactured equals $1,000,000 C. Huxtable overapplied manufacturing overhead by $100,000 D. antable will make the following entry to write off the overfunder applied overhead for the year: Deb-it Credit Manufacmring Warhead 50,000 Cost of Goods Sold 50,000 E. antahle will make the following entry to write off the overiunder applied overhead for the year: Debit Credit Cost of Goods Sold 50,000 Manufacturing Overhead 50,000 20. Which of the following statements is true? A. A company must first identify risks before deciding on it‘s overall objectives. El. Implementation of internal control procedures should be seriously considered to mitigate risks identified as having a "high materiality risk" but only if the benefit of the control procedure outweighs the cost. C. Risks are designed in response to company objectives D. Control procedures should be designed and implemented for every risk identified as potentially threatening key company objectives. E. None of the above are true 2?. Judi.r has recently hired a nanny for her 8 month old son. Her son has just started walking and she is VET}? concerned that the Nanny might not watch him closely.r and that he will fall down the stairs in their town home. Which oF the Following controls would best help Jud};r detect if the nanny is not carefiilly watching her child while she is away.r at work? A. The use ofht'dden security cameras {"nann}r cam“) B. Performing a thorough background check on the Nanny before hiring her. C. Changing the terms of her homeownet‘s insurance such that it covers aocidents caused by the negligence of a caregiver. D. Installing locked safety gates at the top and bottom of all stalrwells. E. A and H 1B ...
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