Question : 51. Phipps Company borrowed $25,000 cash October 1, 2010, and signed : 1228552

Accounting

51. Phipps Company borrowed $25,000 cash on October 1, 2010, and signed a six-month, 8% interest-bearing note payable with interest payable at maturity. Assuming that no adjusting entries have been made during the year, the amount of accrued interest payable to be reported on the December 31, 2010 balance sheet is which of the following?
A. $250
B. $300
C. $500
D. $750

52. Phipps Company borrowed $25,000 cash on October 1, 2010, and signed a six-month, 8% interest-bearing note payable with interest payable at maturity. The amount of interest expense to be reported during 2011 is which of the following?
A. $1,000
B. $300
C. $500
D. $750

2011 interest expense ($500) = Amount borrowed ($25,000) ? Interest rate (8%) ? Number of months borrowed during 2011 relative to a year (3 ? 12)

53. Failure to make a necessary adjusting entry for accrued interest on a note payable would result in which of the following?
A. An understatement of both liabilities and stockholders’ equity.
B. Net income to be overstated and assets to be understated.
C. Net income to be understated and liabilities to be understated.
D. An overstatement of net income, an understatement of liabilities, and an overstatement of stockholders’ equity.

54. The adjusting entry to record accrued interest on a note payable would not result in which of the following?
A. A decrease in net income.
B. A decrease in stockholders’ equity.
C. An increase in liabilities.
D. A decrease in current assets.

55. Which of the following statements is incorrect?
A. The currently maturing portion of long-term debt must be classified as a current liability.
B. The non-current portion of long-term debt will remain reported as a long-term liability.
C. When a company plans to refinance the currently maturing debt on a long-term basis, it must still report the currently maturing debt as a current liability.
D. The currently maturing portion of long-term debt is a current liability if it is due within the longer of one-year or the operating cycle.

56. Purdum Farms borrowed $10 million by signing a five year note on January 1, 2010 and repayments of the principal are payable annually in $2 million installments. Purdum Farms makes the first payment December 31, 2010 and then prepares its balance sheet. What amount will be reported as current and long-term liabilities respectively in connection with the note at December 31, 2010?
A. $2 million in current liabilities and $8 million in long-term liabilities.
B. $2 million in current liabilities and $6 million in long-term liabilities.
C. Zero in current liabilities and $8 million in long-term liabilities.
D. Zero in current liabilities and $10 million in long-term liabilities.

57. How should a contingent liability that is “reasonably possible” but “cannot reasonably be estimated” be reported within the financial statements?
A. It must be recorded and reported as a liability.
B. It does not need to be recorded or reported as a liability.
C. It must only be disclosed as a note to the financial statements.
D. It must be reported as a liability, but not disclosed in a note.

58. Young Company is involved in a lawsuit. When would the lawsuit be recorded as a liability on the balance sheet?
A. When the loss probability is remote and the amount can be reasonably estimated.
B. When the loss is probable and the amount can be reasonably estimated.
C. When the loss probability is reasonably possible and the amount can be reasonably estimated.
D. When the loss is probable regardless of whether the loss can be reasonably estimated.

59. Houston Company is involved in a lawsuit. In which of the following situations is only footnote disclosure of the contingent liability reported within the financial statements?
A. When the loss is remote and the amount cannot be reasonably estimated.
B. When the loss is probable and the amount can be reasonably estimated.
C. When the loss is reasonably possible and the amount can be reasonably estimated.
D. When the loss is remote and the amount can be reasonably estimated.

60. Which of the following statements about contingent liabilities is incorrect?
A. A disclosure note is required when the loss is reasonably possible and the amount cannot be reasonably estimated.
B. A disclosure note is required when the loss is probable and the amount can be reasonably estimated.
C. A disclosure note is required when the loss is reasonably possible and the amount can be reasonably estimated.
D. A disclosure note is required when the loss is remote and the amount can be reasonably estimated.

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July 1, 2023

36.Labor and overhead are often grouped together and referred to as

A.prime costs.

B.conversion costs.

C.total manufacturing costs.

D.equivalent unit costs.

37.Which of the following statements about process costing is true?

A.Total transferred-in cost is equal to the total transferred-out cost during a period.

B.The costs of inventory completed in its final department in the manufacturing process will be transferred to Finished Goods inventory.

C.If a department has transferred-in costs, it means that the inventory accounts were not closed correctly at the end of the last period.

D.None of the answer choices are correct.

38.A cost incurred by the Baking Department that is transferred to the Packaging Department is called a

A.conversion cost by the Baking Department.

B.transferred-out cost by the Packaging Department.

C.equivalent unit cost by the Baking Department.

D.transferred-in cost by the Packaging Department.

39.When direct labor costs are incurred in the Mixing Department, the journal entry to record the transaction includes a

A.debit to Wages Payable.

B.credit to Manufacturing Overhead.

C.credit to Work in Process, Mixing Department.

D.debit to Work in Process, Mixing Department.

40.In a process costing system, manufacturing overhead is added to Work in Process

A.using a predetermined overhead rate or based on actual overhead.

B.only in the final production department.

C.at the same rate as the direct materials are added.

D.only when Work in Process is transferred to Finished Goods.

41.Transferred-in costs are recorded with a journal entry that includes a credit to

A.Raw Materials.

B.Manufacturing Overhead.

C.Work in Process.

D.Finished Goods.

42.Which of the following will never be a component of the cost of Work in Process in a company’s initial production department?

A.Direct material

B.Direct labor

C.Transferred-in costs

D.Manufacturing overhead

43.How are equivalent units calculated in a process costing system?

A.By adding the units started to the equivalent units in beginning and ending inventory

B.By adding the units completed to the equivalent units in ending Work in Process

C.By subtracting the equivalent units in beginning inventory from the total units to account for

D.By adding the units started to the equivalent units in ending inventory

44.In the calculation of the cost per equivalent unit, the denominator

A.is the total work done during the period plus the equivalent units in ending inventory.

B.includes both the number of units completed and the number of equivalent units in ending Work in Process.

C.equals the work done during the period less the work remaining to finish ending inventory.

D.is the work done for the current and preceding departments.

45.The Baking Department began the period with 16,000 units which were 45% complete. During the period, the department received another 78,000 units from the previous department, and at the end of the period, 9,000 units remained which were 40% complete. Conversion costs are added evenly throughout the process and materials are added at the beginning of the process. How much are equivalent units for conversion costs in the Baking Department’s Work in Process inventory at the end of the period?

A.5,400 units

B.3,600 units

C.3,000 units

D.9,000 units