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Accounting Problems

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Please help with the following problems.

1. Communication of economic events is the part of the accounting process that involves
a. identifying economic events.
b. quantifying transactions into dollars and cents.
c. preparing accounting reports.
d. recording and classifying information.

2. Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction?
a. The appointment of a new CPA firm to perform an audit.
b. The purchase of a new computer.
c. The sale of store equipment.
d. Payment of income taxes.

3. Which of the following would not be considered an internal user of accounting data for the XYZ Company?
a. President of the company
b. Production manager
c. Merchandise inventory clerk
d. President of the employees' labor union

4. Generally accepted accounting principles are
a. income tax regulations of the Internal Revenue Service.
b. standards that indicate how to report economic events.
c. theories that are based on physical laws of the universe.
d. principles that have been proven correct by academic researchers.

5. The cost of an asset and its fair market value are
a. never the same.
b. the same when the asset is sold.
c. irrelevant when the asset is used by the business in its operations.
d. the same on the date of acquisition.

6. The left side of an account is
a. blank.
b. a description of the account.
c. the debit side.
d. the balance of the account.

7. Credits
a. decrease both assets and liabilities.
b. decrease assets and increase liabilities.
c. increase both assets and liabilities.
d. increase assets and decrease liabilities.

8. The normal balance of any account is the
a. left side.
b. right side.
c. side which increases that account.
d. side which decreases that account.

9. An accountant has debited an asset account for $1,000 and credited a liability account for $500. Which of the following would be an incorrect way to complete the recording of the transaction?
a. Credit an asset account for $500.
b. Credit another liability account for $500.
c. Credit an stockholders' equity account for $500.
d. Debit an stockholders' equity account for $500.

10. At January 1, 2008, Burton Industries reported stockholders' equity of $130,000. During 2008, The Company had a net loss of $30,000 and paid dividends of $20,000. At December 31, 2008, the amount of stockholders' equity is
a. $130,000.
b. $140,000.
c. $100,000.
d. $80,000.

11. An accounting time period that is one year in length, but does not begin on January 1, is referred to as
a. a fiscal year.
b. an interim period.
c. the time period assumption.
d. a reporting period.

12. The revenue recognition principle dictates that revenue should be recognized in the accounting records
a. when cash is received.
b. when it is earned.
c. at the end of the month.
d. in the period that income taxes are paid.

13. The matching principle matches
a. customers with businesses.
b. expenses with revenues.
c. assets with liabilities.
d. creditors with businesses.

14. Assuming that there is a net loss for the period, debits equal credits in all but which section of the worksheet?
a. Income statement columns
b. Adjustments columns
c. Trial balance columns
d. Adjusted trial balance columns

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1. Communication of economic events is the part of the accounting process that involves
a. identifying economic events.
b. quantifying transactions into dollars and cents.
c. preparing accounting reports.
d. recording and classifying information.

Answer: C

2. Which of the following events cannot be quantified into dollars and cents and recorded as an accounting transaction?
a. The appointment of a new CPA firm to perform an audit.
b. The purchase of a new computer.
c. The sale of store equipment.
d. Payment of income taxes.

Answer: A

3. Which of the following would not be considered an internal user of accounting data for the XYZ Company?
a. President of the company
b. Production manager
c. Merchandise inventory clerk
d. President of the employees' labor union

Answer: D

4. Generally accepted accounting principles ...

Solution Summary

This solution is comprised of a detailed explanation to answer what communication of economic events is the part of the accounting process that involves.

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Accounting Problems: Varying Predetermined Overhead Rates and Javadi Company

(See attached file for full problem description)

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EXERCISE 2-10 Varying Predetermined Overhead Rates (LO3, LO5)
Javadi Company makes a composting bin that is subject to wide seasonal variations in demand. Unit Product costs are computed on a quarterly basis by dividing each quarter's manufacturing costs ( materials, labor, and overhead) by the quarter's production in units. The company estimated costs, by quarter, for the coming year are given below:

__________________Quarter_____________________
First Second Third Fourth
Direct Materials $240,000 $120,000 $60,000 $180,000
Direct labor 96,000 48,000 24,000 72,000
Manufacturing costs 228,000 204,000 192,000 216,000
Total manufacturing costs $564,000 $372,000 $276,000 $468,000

Number of units to be produced 80,000 40,000 20,000 60,000
Estimated unit product cost $7.05 $9.30 $13.80 $7.80

Management finds the variation in the unit product costs to be confusing and difficult to work with. It has been suggested that the problem lies with manufacturing overhead, since it is the largest element of cost. Accordingly, you have been asked to find more appropriate way of assigning manufacturing overhead cost to units of product. After some analysis, you have determined that the company's overhead costs are mostly fixed and therefore show little sensitivity to changes in the level of production.

Required:
1. The company uses a job - order costing system. How would you recommend that manufacturing overhead cost be assigned to production? Be specific, and show computations.
2. Recompute the company's unit costs in accordance with your recommendations in (1) above.

Chapter 3

EXERCISE 3-9 Assigning Overhead to Products in ABC (LO3)
Refer to the data in Exercise 3-8 for Sultan Company. The activities during the year were distributed across the company's four products as follows:

Actual Product Product Product Product
Activity Cost Pool Activity A B C D
Labor related 25,000 DLHs 6,000 10,000 4,000 5,000
Purchase orders 200 orders 60 30 20 90
Parts management 110 parts type 30 25 40 15
Board etching 1,800 boards 500 900 400 0
General Factory 22,000 MHs 3,000 8,000 5,000 6,000

Chapter 4
Required:
Compute the amount of overhead cost applied to each product during the year.

PROBLEM 4-17 Comprehensive Process Costing Problem - Weighted -Average
Method (LO1, LO2, LO3, LO4, LO5)

Techno Co. produces a special kind of tool that is widely used by construction. The tool is produced in two processes: bending and drilling. Raw materials are introduced at various points in the Bending Department; labor and overhead costs are incurred evenly through the bending operation. The bent output is then transferred to the Drilling Department.
The following incomplete Work in Process account has been provided for the Bending Department for May:

Work in Process - Bending Department
May 1 inventory (12,000 units; materials 80%
complete; labor and overhead 60%
complete) 45,369
May costs dded:
Raw materials (270,000 units) 394,210
Direct labor 638,144
Overhead 493,584

? Completed and transferred
To drilling ( ? Units)
May 31 inventory (9,000; materials
90% complete; labor
and overhead 60% complete) ?

The May 1 work in process inventory in the Bending Department consists of the following cost elements: raw materials, $13,385; direct labor, $18,880; and overhead, $13,104. Costs incurred during May in the Drilling Department were: materials used, $100,800; direct labor, $250,600; and overhead cost applied to production, $189,000.
The company accounts for units and costs using the weighted-average method.

Required:
1. Prepare journal entries to record the costs incurred in both the Bending Department and the Drilling Department during May. Key your entries to the items (a) through (g) below.
a. Raw materials were issued for use in production.
b. Direct labor costs were incurred.
c. Manufacturing overhead costs for the entire factory were incurred, $685,000. (Credit Accounts Payable.)
d. Manufacturing overhead cost was applied to production using a predetermined overhead rate.
e. Units that were complete as to processing in the Bending Department were transferred to eh Drilling Department, $1,536,990.
f. Units that were complete as to processing in the Drilling Department were transferred to Finished Good, $1,650,000.
g. Completed units were sold on account, $2,700,000. the Cost of Goods Sold was $1,600,000.
2. Post the journal entries from (1) above T-accounts. The following account balances existed at the beginning of May. (the beginning balance in the Bending Department's Work in Process account is given above.)

Raw Materials $500,000
Work in Process-Drilling Department $10,000
Finished Goods $110,000
After posting the entries to the T-accounts, find the ending balance in the inventory accounts and the manufacturing overhead accounts.

3. Prepare a production report for the Bending Department for May.

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