ACCT 221 Final Exam Sum13 1 Final Examination Principles of Accounting lI ACCT 221 Summer 2013 Administrative Notes:  You may use a calculator, your textbook, WileyPLUS resources, and anything posted in our WebTycho classroom.  The exam must be completed and submitted within 4 hours of the time you open the private message that contains your exam.  Type all answers on the Answer Sheet, which is also attached to the Private Message.  Attach your completed Answer Sheet in your assignment folder in WebTycho.  Late submissions will be penalized 10% per hour and any portion of an hour. ACCT 221 Final Exam Sum13 2 Multiple Choice: 2 points each 1. On January 1, 2013, Daniels 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. Levin 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 Sum13 3 3. Motes 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 Motes’ 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 In.

1. ACCT 221 Final Exam Sum13 1
Final Examination
Principles of Accounting lI
ACCT 221
Summer 2013
Administrative Notes:
resources, and
anything posted in our WebTycho classroom.
the time you
open the private message that contains your exam.

2. to
the Private Message.
folder in
WebTycho.
portion of an hour.
ACCT 221 Final Exam Sum13 2
Multiple Choice: 2 points each
1. On January 1, 2013, Daniels 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

3. 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. Levin 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

4. 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 Sum13 3
3. Motes 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 Motes’ 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

5. 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. Talbot, Inc. has the following income statement (in millions):
Wilkinson, 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

6. ACCT 221 Final Exam Sum13 4
5. Mah, 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

7. 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

8. ACCT 221 Final Exam Sum13 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

9. 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.
ACCT 221 Final Exam Sum13 6
Problem 1: 15 points
Here are comparative balance sheets for Doherty Company.
Doherty Company
Comparative Balance Sheets
December 31, 2013
Assets 2013 2012
Cash $ 33,000 $ 10,000

10. 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 $33,000.
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
4. Sales for 2013 were $120,000.

11. Instructions: Prepare a statement of cash flows for 2013 using
the indirect method.
ACCT 221 Final Exam Sum13 7
Doherty Company
Statement of Cash Flows
For the Year Ended December 31, 2013
Adjustments to reconcile net income to net cash provided
by operating activities

12. ACCT 221 Final Exam Sum13 8
Problem 2: 10 points
Nemani Corporation is projecting a cash balance of $31,785 in
its December 31,
2013, balance sheet. Nemani schedule of expected collections
from customers for
the first quarter of 2013 shows total collections of $180,885.
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.
Nemani wants to
maintain a balance of at least $25,000 cash at the end of each
quarter.
Instructions: Complete the cash budget for the first quarter.

13. Nemani Corporation
Cash Budget
For the Quarter Ending March 31, 2013
ACCT 221 Final Exam Sum13 9
Problem 3: 10 points
Elias Corporation has the following cost records for February
2013.

14. Indirect factory labor $ 4,612 Factory utilities $ 401
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 3,633 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
February
2013.
Elias Corporation
Cost of Goods Manufactured Schedule
For the Month Ended June 30, 2013
Manufacturing overhead:

15. ACCT 221 Final Exam Sum13 10
Problem 4: 4 points
Willis Corporation has 72,615 shares of common stock
outstanding. It declares a
$2.20 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.

16. Date Account Description Debit Credit
Problem 5: 10 points
Caballero 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
12,500 of the assembly part at $5.75 per unit. If the offer is
accepted, Caballero will
save all variable costs but no fixed costs.
Instructions: Prepare an analysis showing the total cost savings,
if any,
Caballero will realize by buying the part.
Make Buy
Total annual cost
Caballero Company should _______________ the part because
total annual costs to
make are less than total costs to buy.

17. ACCT 221 Final Exam Sum13 11
Problem 6: 5 points
On July 1, Browning Corporation purchases 550,000 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.
Date Account Description Debit Credit
Problem 7: 4 points
Johnson Company has a unit-selling price of $450, variable
costs per unit of $269,
and fixed costs of $265,580.
Instructions: Compute the break-even point in units using either

18. (a) the
mathematical equation or (b) contribution margin per unit.
Round answer up
to the next whole unit. (Show your work).
ACCT 221 Final Exam Sum13 12
Problem 8: 10 points
Holmes 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 $315,275.
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.
Retain Equipment Replace Equipment

19. Total costs
The equipment should be _______________ because total costs
are lower
than to retain the machine.
Problem 9: 6 points
For Perez Company, variable costs are 68% of sales, and fixed
costs are $215,000.
Management's net income goal is $68,610.
Instructions: Compute the required sales needed to achieve
management's
target net income of $68,610.
ACCT 221 Final Exam Sum13 13
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

20. 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.
Final Examination Principles of Accounting lI ACCT 221
Summer 2013Administrative Notes: