ACCT 1220 Study Guide - Midterm Guide: Electronic Funds Transfer, Intangible Asset, General Ledger

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rubyhamster299

14 Apr 2017

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Merchandise inventory: is needed to describe the many different items that make up the total inventory. Retailers: merchandising companies that purchase and sell directly to consumers. Wholesalers: merchandising companies that sell to retailers. Manufacturers: companies that produce goods for sale to wholesalers (or others). Raw materials: the basic goods and materials that are on hand and will be used in production but have not yet been sent into production. Work in process: that portion of inventory on which production has started but is not yet complete. Finished goods: inventory is manufactured items that we are completed and ready for sale. Sales revenue/sales: the main source of revenue from the sale of merchandise. Cost of goods sold: the total cost of the merchandise that was sold during the period. This expense is directly related to the revenue that is recognized from the sale of goods. Gross profit: sales revenue less the cost of goods sold.

Related Questions

Dazzle, Inc. produces beads for jewelry making use. Thefollowing information summarizes production operations and salesactivities for June. The journal entry to record June sales is:

Direct materials used	$87,000
Direct labor used	160,000
Predetermined overhead rate(based on direct labor)	155%
Goods transferred to finishedgoods	432,000
Cost of goods sold	444,000
Credit sales	810,000

a.Debit Accounts Receivable $810,000; credit Cost of Goods Sold$810,000.

b.Debit Accounts Receivable $810,000; credit Sales $366,000;credit Finished Goods Inventory $444,000.

c.Debit Cost of Goods Sold $444,000; credit Sales $444,000.

d.Debit Finished Goods Inventory $444,000; debit Sales $810,000;credit Accounts Receivable $810,000; credit Cost of Goods Sold$444,000.

e.Debit Accounts Receivable $810,000; credit Sales $810,000;debit Cost of Goods Sold $444,000; credit Finished Goods Inventory$444,000.

2. A process cost summary is amanagerial accounting report that describes all but which of thefollowing:

a.The gross profit earned on the sale of products.

b.The equivalent units of production by the department.

c.How the costs were assigned to the output.

d.Physical transfers for a department.

e.The costs charged to a department.

3. During January, the productiondepartment of a process operations system completed and transferredto finished goods a total of 78,000 units. At the end of January,9,000 additional units were in process in the production departmentand were 65% complete with respect to labor. The beginninginventory included labor cost of $37,100 and the productiondepartment incurred direct labor cost of $294,300 during January.Compute the direct labor cost per equivalent unit for thedepartment using the weighted-average method.

a.$6.34.

b.$3.77.

c.$3.51.

d.$4.25.

e.$3.95.

4.Which of the following is thebest explanation for why it is necessary to calculate equivalentunits of production in a process costing environment?

a.In most manufacturing environments, it is not possible toconduct a physical count of units.

b.Companies often use a combination of a process costing and joborder costing systems.

c.In most process costing systems, direct materials are added atthe beginning of the process while conversion costs are addedevenly throughout the manufacturing process.

d.All of the work to make a unit 100% complete and ready to moveto the next stage of production or to finished goods inventory maynot have been completed in a single time period.

e.In most cases, there is no difference between physical unitsand equivalent units of production.

5.The following refers to unitsprocessed by a breakfast cereal maker in August. Compute the totalequivalent units of production with respect to conversion for Julyusing the weighted-average inventory method.

	Tons of Product	Percentof Conversion Added
Beginning Work in Process	230,000	60%
Goods started	570,000	100%
Goods completed	620,000	100%
Ending Work in Process	180,000	70%

a.758,000

b.800,000

c.620,000

d.746,000

e.884,000

6.During December, the productiondepartment of a process operations system completed and transferredto finished goods a total of 65,000 units of product. At the end ofMarch, 15,000 additional units were in process in the productiondepartment and were 80% complete with respect to materials. Thebeginning inventory included materials cost of $57,500 and theproduction department incurred direct materials cost of $183,000during December. Compute the direct materials cost per equivalentunit for the department using the weighted-averagemethod.

a.$3.70.

b.$2.38.

c.$2.82.

d.$3.12.

e.$4.79.

sapphireminnow379

Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. It started only two jobs during MarchâJob P and Job Q. Job P was completed and sold by the end of the March and Job Q was incomplete at the end of the March. The company uses a plantwide predetermined overhead rate based on direct labor-hours. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):


Estimated total fixed manufacturing overhead	$	13,200
Estimated variable manufacturing overhead per direct labor-hour	$	1.20
Estimated total direct labor-hours to be worked		3,300
Total actual manufacturing overhead costs incurred	$	17,000
Direct Materials Job P: $17,500 Job Q: $9,300 Direct Labor Cost Job P: $43,200 Job Q: $11,700 Actual direct labor hours worked Job P: 2,400 Job Q: 650 -Prepare the journal entry to apply manufacturing overhead costs to production -Assume the ending raw materials inventory is $2,300 and the company does not use any indirect materials. Prepare a schedule of cost of goods manufactured. -Prepare the journal entry to transfer costs from Work in Process to Finished Goods. -

Prepare a completed Work in Process T-account including the beginning and ending balances and all debits and credits posted to the account.

-Prepare a schedule of cost of goods sold.

-Prepare the journal entry to transfer costs from Finished Goods to Cost of Goods Sold

-What is the amount of underapplied or overapplied overhead?

Prepare the journal entry to close the amount of underapplied or overapplied overhead to Cost of Goods Sold.

-Assume that Job P includes 20 units that each sell for $4,500 and that the companyâs selling and administrative expenses in March were $10,000. Prepare an absorption costing income statement for March.

pinkmallard135

Case 1-1 You are the new chief financial officer for Redlands Manufacturing, Inc. The firm that you have just joined has recently paid substantial penalties to settle claims related to fraudulent financial reporting practices. The Board of Directors has also created an Office of Ethics and Compliance in response to the scandals. Francis Bacon, the chief of the newly created ethics office, recently dropped by your office for some insights about accounting and fraudulent financial reporting. The chief ethicist stated that he has a background in philosophy, but he lacks understanding of the accounting discipline. He identifies the tactics that the company employed when it essentially cooked its books. Bacon stated that Redlands employed some devious practices that were obviously unethical, but that he lacked the accounting vocabulary to articulate their financial statement consequences. He essentially wanted to understand why specific practices violated accounting standards, and sought your help with this matter. Bacon began by stating, âI have identified five types of arrangements that Redlands engaged in over the period in question. Each type of activity has a clever sounding name. Here is my list:â Channel Stuffing. Redlands shipped manufactured goods to certain retailers, in certain instances regardless of whether or not the retailers ordered the products. Our firm recognized revenues upon shipment of these non-ordered items, which usually took place towards the end of the year. We informally agreed to take back the merchandise if the retailer could not sell it. It was kind of a wink and a nod deal. Redlands did not recognize an allowance for the merchandise that its retailers could return. Vendor Dinging. Our firm told many of its suppliers that they were shipped a disproportionately large number of raw materials that did not conform to contracted specifications. Consequently, Redlands unilaterally decreased its cash payments to those vendors. Most of the suppliers did not dispute our claims and merely reduced our obligation to them. Of course, many of those materials were of acceptable quality and we used them in manufacturing our products. Capitalizing Revenue Expenditures. Redlands placed numerous recurring business costs on its balance sheet as long-term assets, rather than charging the full cost of the item as an expense in the current reporting period. Our firm then recognized only a portion of those questionable assetsâ cost as a current expense, which we called depreciation. These costs, such as salaries expense, had no future benefit beyond the current reporting period. Special Purpose Entities (SPEs). Redlands Manufacturing shielded debt (liabilities) from its balance sheet with these types of arrangements. Our firm contracted with ostensibly independent companies in business ventures that were debt financed. The other companies, not Redlands, reported the debt on their balance sheets. Our SPE partners, however, consisted of businesses established by Redlands executives. Bacon told you that he was preparing to make his initial address to the Board of Directors concerning staff training which should insure that the firm does not engage in the above practices, or any other ones like them. He wants you to explain to him how such unethical practices violate accounting conventions, and how they inflated the financial appearance of the firm. Required: Write a memorandum to Francis Bacon explaining how each practice violates generally accepted accounting principles, and how each type of transaction might affect reported income, financial position, and cash flows.

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ACCT 1220 Study Guide - Midterm Guide: Electronic Funds Transfer, Intangible Asset, General Ledger

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