On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $83,390

On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $83,390 in assets to launch the business. On October 31, the company’s records show the following items and amounts.

Cash      $              12,670                   Cash dividends $              2,000

Accounts receivable                       13,320                   Consulting revenues                      13,320

Office supplies                 2,720                     Rent expense                    2,950

Land                      45,910                   Salaries expense                              6,290

Office equipment                            17,350                   Telephone expense                       830

Accounts payable                            7,970                     Miscellaneous expenses                              640

Common stock                 83,390                                                  

Using the above information prepare an October statement of retained earnings for Ernst Consulting.

Using the above information prepare an October 31 balance sheet for Ernst Consulting.

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If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be

If a company uses $1,300 of its cash to purchase supplies, the effect on the accounting equation would be:

assets decrease $1,300 and equity decreases $1,300.

one asset increases $1,300 and another asset decreases $1,300, causing no effect.

assets decrease $1,300 and equity increases $1,300.

assets increase $1,300 and liabilities increase $1,300.

assets increase $1,300 and liabilities decrease $1,300.

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HH Consulting & Design provided $800 of consulting work and $100 of design work to the same

HH Consulting & Design provided $800 of consulting work and $100 of design work to the same client. It billed the client for the total amount and is expecting to collect from the customer next month. Which of the following general journal entries will HH Consulting & Design make to record this transaction?

Cash      900          

Consulting Revenue                       800

Design Revenue                               100

Accounts Receivable      900          

Consulting Revenue                       800

Design Revenue                               100

Cash      900          

Consulting Revenue                       800

Design Revenue                               100

Accounts Payable            900          

Design Revenue                               100

Consulting Revenue                       800

Design Revenue               100          

Consulting Revenue       800          

Accounts Receivable                      900

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On October 15, a company received $15,000 cash as a customer's down payment on a consulting

On October 15, a company received $15,000 cash as a customer's down payment on a consulting contract. The amount was credited to Unearned Consulting Revenue. By October 31, 10% of the services required by the contract were completed. The company will record consulting revenue of $1,500 from this contract for October.

True

False

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ABC Catering received $800 cash from a customer for catering services to be provided in the

ABC Catering received $800 cash from a customer for catering services to be provided in the following month. Given the choices below, determine the general journal entry that ABC Catering will make to record this transaction.

Cash	800
Unearned Catering Revenue		800

Cash	800
Catering Revenue		800

Accounts Receivable	800
Catering Revenue		800

Cash	800
Accounts Receivable		800

Unearned Catering Revenue	800
Catering Revenue		800

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External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles

External auditors examine financial statements to verify that they are prepared according to generally accepted accounting principles.

True

False

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Bergamo Bay's computer system generated the following trial balance on December 31, 2017

Bergamo Bay's computer system generated the following trial balance on December 31, 2017. The company’s manager knows something is wrong with the trial balance because it does not show any balance for Work in Process Inventory but does show a balance for the Factory Overhead account. In addition, the accrued factory payroll (Factory Payroll Payable) has not been recorded.

                                Debit                                     Credit     

Cash      $              170,000                                                                  

Accounts receivable                       75,000                                                    

Raw materials inventory                               80,000                                                    

Work in process inventory                           0                                                               

Finished goods inventory                             15,000                                                    

Prepaid rent                       3,000                                                      

Accounts payable                                                            $              17,000    

Notes payable                                                                   25,000    

Common stock                                                                 50,000    

Retained earnings                                                                           271,000                  

Sales                                                                      373,000                  

Cost of goods sold                           218,000                                                                  

Factory overhead                            115,000                                                                  

Operating expenses                       60,000                                                    

Totals    $              736,000                                 $              736,000                  

After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.

Materials requisition 21-3010:                    $              10,200   direct materials to Job 402

Materials requisition 21-3011:                    $              18,600   direct materials to Job 404

Materials requisition 21-3012:                    $              5,600     indirect materials

Labor time ticket 6052:                 $              36,000   direct labor to Job 402

Labor time ticket 6053:                 $              23,800   direct labor to Job 404

Labor time ticket 6054:                 $              8,200     indirect labor

Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 200% of direct labor cost.

Problem 2-2A Part 1

    Direct materials costs to Work in Process Inventory.

    Direct labor costs to Work in Process Inventory.

    Overhead costs to Work in Process Inventory.

    Indirect materials costs to the Factory Overhead account.

    Indirect labor costs to the Factory Overhead account.

Required:

1. Prepare journal entries to assign the above costs.

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Marcelino Co.'s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $500,000

Marcelino Co.'s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $363,000. Overhead costs incurred in April are: indirect materials, $50,000; indirect labor, $23,000; factory rent, $32,000; factory utilities, $19,000; and factory equipment depreciation, $51,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $635,000 cash in April. Costs of the three jobs worked on in April follow.

                Job 306                 Job 307                 Job 308                  

Balances on March 31                                                                                                                                                                                     

Direct materials                                $              29,000                                   $              35,000                                                                    

Direct labor                                         20,000                                                   18,000                                                                    

Applied overhead                                            10,000                                                   9,000                                                                      

Costs during April                                                                                                                                                                                              

Direct materials                                                135,000                                                                 220,000                                                 $                 100,000                  

Direct labor                                         85,000                                                   150,000                                                                 105,000                  

Applied overhead                                            ?                                                              ?                                                              ?               

Status on April 30             Finished (sold) Finished (unsold)                             In process

    Materials purchases (on credit).

    Direct materials used in production.

    Direct labor paid and assigned to Work in Process Inventory.

    Indirect labor paid and assigned to Factory Overhead.

    Overhead costs applied to Work in Process Inventory.

    Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)

    Transfer of Jobs 306 and 307 to Finished Goods Inventory.

    Cost of goods sold for Job 306.

    Revenue from the sale of Job 306.

    Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

Prepare journal entries for the month of April to record the above transactions.

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Marcelino Co.'s March 31 inventory of raw materials is $80,000. Raw materials purchases in April

Marcelino Co.'s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $363,000. Overhead costs incurred in April are: indirect materials, $50,000; indirect labor, $23,000; factory rent, $32,000; factory utilities, $19,000; and factory equipment depreciation, $51,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $635,000 cash in April. Costs of the three jobs worked on in April follow.

                Job 306                 Job 307                 Job 308                  

Balances on March 31                                                                                                                                                                                     

Direct materials                                $              29,000                                   $              35,000                                                                    

Direct labor                                         20,000                                                   18,000                                                                    

Applied overhead                                            10,000                                                   9,000                                                                      

Costs during April                                                                                                                                                                                              

Direct materials                                                135,000                                                                 220,000                                                 $                 100,000                  

Direct labor                                         85,000                                                   150,000                                                                 105,000                  

Applied overhead                                            ?                                                              ?                                                              ?               

Status on April 30             Finished (sold) Finished (unsold)                             In process

Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead), and the total cost assigned to each job (including the balances from March 31).

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Hansel Corporation has requested bids from several architects to design its new corporate headquarters

Hansel Corporation has requested bids from several architects to design its new corporate headquarters. Frey Architects is one of the firms bidding on the job. Frey estimates that the job will require the following direct labor.

Labor     Estimated Hours                               Hourly Rate

Architects                            150                                                         $              300          

Staff                      300                                                                         75            

Clerical                 500                                                                         20            

 

Frey applies overhead to jobs at 175% of direct labor cost. Frey would like to earn at least $80,000 profit on the architectural job. Based on past experience and market research, it estimates that the competition will bid between $285,000 and $350,000 for the job.

1. What is Frey’s estimated cost of the architectural job?

2. What is Frey’s Estimated selling price?

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In December 2016, Infodeo established its predetermined overhead rate for movies produced during

In December 2016, Infodeo established its predetermined overhead rate for movies produced during 2017 by using the following cost predictions: overhead costs, $1,680,000, and direct labor costs, $480,000. At year-end 2017, the company’s records show that actual overhead costs for the year are $1,652,000. Actual direct labor cost had been assigned to jobs as follows

Movies completed and released               $              425,000                  

Movies still in production                             50,000    

Total actual direct labor cost        $              475,000                  

1. Determine the predetermined overhead rate for 2017.

2&3. Enter the overhead costs incurred and the amounts applied during the year using the predetermined overhead rate and determine whether overhead is overapplied or underapplied.

4. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold.

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The following information pertains to the Frameworks Corporation for May

The following information pertains to the Frameworks Corporation for May. Calculate the cost of goods sold for the period:                                                 

Beginning Finished Goods Inventory       $              34,500    

Ending Finished Goods Inventory                             33,000    

Cost of Goods Manufactured                     141,800 

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The following information relates to the manufacturing operations of the Abbra Publishing Company for the year

The following information relates to the manufacturing operations of the Abbra Publishing Company for the year:

                Beginning                            Ending

Raw materials inventory               $              560,000                                 $              623,000

The raw materials used in manufacturing during the year totaled $1,083,000. Raw materials purchased during the year amount to:

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The following calendar year-end information is taken from the December 31, 2017, adjusted trial balance and other records of Leone Company

The following calendar year-end information is taken from the December 31, 2017, adjusted trial balance and other records of Leone Company.

                                                                                                                 

Advertising expense      $              28,750                   Direct labor         $              675,480                  

Depreciation expense—Office equipment                           7,250                     Income taxes expense                 233,725                  

Depreciation expense—Selling equipment                          8,600                     Indirect labor                     56,875    

Depreciation expense—Factory equipment                        33,550                   Miscellaneous production costs                                  8,425      

Factory supervision                         102,600                                 Office salaries expense                                 63,000    

Factory supplies used                    7,350                     Raw materials purchases                              925,000                  

Factory utilities                                 33,000                   Rent expense—Office space                      22,000    

Inventories                                                         Rent expense—Selling space                     26,100    

Raw materials, December 31, 2016                           166,850                                 Rent expense—Factory building                                 76,800    

Raw materials, December 31, 2017                           182,000                                 Maintenance expense—Factory equipment                         35,400    

Work in process, December 31, 2016                       15,700                   Sales                      4,462,500              

Work in process, December 31, 2017                       19,380                   Sales salaries expense                   392,560                  

Finished goods, December 31, 2016                         167,350                                                                                  

Finished goods, December 31, 2017                         136,490        


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The following calendar year-end information is taken from the December 31, 2017

The following calendar year-end information is taken from the December 31, 2017, adjusted trial balance and other records of Leone Company.                                         

Advertising expense      $              28,750    

Depreciation expense—Office equipment                           7,250      

Depreciation expense—Selling equipment                          8,600      

Depreciation expense—Factory equipment                        33,550    

Factory supervision                         102,600                  

Factory supplies used                    7,350      

Factory utilities                                 33,000    

Direct labor                         675,480                  

Indirect labor                     56,875    

Miscellaneous production costs                                8,425      

Office salaries expense                                 63,000    

Raw materials purchases                              925,000                  

Rent expense—Office space                      22,000    

Rent expense—Selling space                     26,100    

Rent expense—Factory building                               76,800    

Maintenance expense—Factory equipment                       35,400    

Sales                      4,462,500              

Sales salaries expense                   392,560                  

Required:

Classify each of the costs as either a product or period cost. Then, classify each of the product costs as either direct materials, direct labor, or factory overhead and each of the period costs as either selling or general and administrative expenses.

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Listed here are the total costs associated with the 2017 production of 1,000 drum sets manufactured by TrueBeat

Listed here are the total costs associated with the 2017 production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $500 each.

                Costs

1.            Plastic for casing—$17,000

2.            Wages of assembly workers—$82,000

3.            Property taxes on factory—$5,000

4.            Accounting staff salaries—$35,000

5.            Drum stands (1,000 stands purchased)—$26,000

6.            Rent cost of equipment for sales staff—$10,000

7.            Upper management salaries—$125,000

8.            Annual flat fee for factory maintenance service—$10,000

9.            Sales commissions—$15 per unit

10.          Machinery depreciation, straight-line—$40,000

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Georgia Pacific, a manufacturer, incurs the following costs. (1) Classify each cost as either a product

Georgia Pacific, a manufacturer, incurs the following costs. (1) Classify each cost as either a product or a period cost. If a product cost, identify it as direct materials, direct labor, or factory overhead, and then as a prime and/or conversion cost. (2) Classify each product cost as either a direct cost or an indirect cost using the product as the cost object.

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TechPro offers instructional courses in e-commerce website design

TechPro offers instructional courses in e-commerce website design. The company holds classes in a building that it owns.

Identify each of TechPro’s costs below as (a) variable or fixed and (b) direct or indirect by selecting the appropriate dropdowns. Assume the cost object is an individual class.

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Select each concept with its best description by selecting its letter in the dropdowns

Select each concept with its best description by selecting its letter in the dropdowns.

    Focuses on quality throughout the production process.

    Flexible product designs can be modified to accommodate customer choices.

    Every manager and employee constantly looks for ways to improve company operations.

    Reports on financial, social, and environmental performance.

    Inventory is acquired or produced only as needed..

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A cell phone company offers two different plans. Plan A costs $80 per month for unlimited talk

A cell phone company offers two different plans. Plan A costs $80 per month for unlimited talk and text. Plan B costs $0.20 per minute plus $0.10 per text message sent. You need to purchase a plan for your 14-year-old sister. Your sister currently uses 1,700 minutes and sends 1,600 texts each month.

(1) What is your sister’s total cost under each of the two plans?

(2) Suppose your sister doubles her monthly usage to 3,400 minutes and sends 3,200 texts. What is your sister’s total cost under each of the two plans?

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On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed

On October 1, Ebony Ernst organized Ernst Consulting; on October 3, the owner contributed $83,390 in assets to launch the business. On October 31, the company’s records show the following items and amounts.

    

Cash	$	12,670		Cash dividends	$	2,000
Accounts receivable		13,320		Consulting revenues		13,320
Office supplies		2,720		Rent expense		2,950
Land		45,910		Salaries expense		6,290
Office equipment		17,350		Telephone expense		830
Accounts payable		7,970		Miscellaneous expenses		640
Common stock		83,390

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Gabi Gram started The Gram Co., a new business that began operations on May 1. The Gram Co

Gabi Gram started The Gram Co., a new business that began operations on May 1. The Gram Co. completed the following transactions during its first month of operations.  

May                      1                             G. Gram invested $42,000 cash in the company in exchange for its common stock.

                                1                             The company rented a furnished office and paid $2,400 cash for May’s rent.

                                3                             The company purchased $1,880 of office equipment on credit.

                                5                             The company paid $740 cash for this month’s cleaning services.

                                8                             The company provided consulting services for a client and immediately collected $5,500 cash.

                                12                          The company provided $2,900 of consulting services for a client on credit.

                                15                          The company paid $710 cash for an assistant’s salary for the first half of this month.

                                20                          The company received $2,900 cash payment for the services provided on May 12.

                                22                          The company provided $3,300 of consulting services on credit.

                                25                          The company received $3,300 cash payment for the services provided on May 22.

                                26                          The company paid $1,880 cash for the office equipment purchased on May 3.

                                27                          The company purchased $75 of advertising in this month’s (May) local paper on credit; cash payment is due June 1.

                                28                          The company paid $710 cash for an assistant’s salary for the second half of this month.

                                30                          The company paid $300 cash for this month’s telephone bill.

                                30                          The company paid $270 cash for this month’s utilities.

                                31                          The company paid $1,600 cash in dividends to the owner (sole shareholder).

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