61. Wilmington Company reported pretax income of $25,000 during 2010 and $30,000 during 2011. Later it was discovered that the ending inventory for 2010 was understated by $2,000 (and not corrected in 2011). What is the correct pretax income for each year?     A. Option A B. Option B C. Option C D. Option D 2010 Net income ($27,000) = Reported pretax income ($25,000) + Understatement of ending inventory […]

  Objective 10.5   1) An inaccurate cost function with a slope coefficient that is estimated too low may most likely result in: A) predicting total costs that are too high B) initiating cost cutting measures when they are unnecessary C) evaluating a weak manager as having strong performance D) promoting a product that is actually more profitable than budgeted   2) An inaccurate cost […]

  111. A fixed asset with a cost of $30,000 and accumulated depreciation of $28,500 is sold for $3,500. What is the amount of the gain or loss on disposal of the fixed asset?  A. $2,000 loss B. $1,500 loss C. $3,500 gain D. $2,000 gain 112. The Bacon Company acquired new machinery with a price of $15,200 by trading in similar old machinery and paying $12,700.  The old machinery originally […]

  51. On January 1, 2010, Tonika Corporation issued a four-year, $10,000, 7% bond. The interest is payable annually each December 31. The issue price was $9,668 based on an 8% effective interest rate. Assuming effective-interest amortization is used, how much is the interest expense on the income statement for the year ended December 31, 2010 (to the nearest dollar)?  A. $677 B. $883 C. $773 D. $700 2010 interest […]

  98.A private not-for-profit organization received a gift of $460,000 with purpose restrictions in 2013.  In 2014 funds were expended for the purpose outlined in the gift, however, it was not possible to determine whether the restricted funds or unrestricted funds were used.  The presumption should be: A)The restricted funds would have been used first. B)The unrestricted funds would have been used first. C)The restricted […]

  11) What is the net present value of the investment, assuming the required rate of return is 18%? Would the hospital want to purchase the new machine? A) $33,910; yes B) $(46,650); no C) $(46,650); yes D) $50,800; yes 12) In using the net present value method, only projects with a zero or positive net present value are acceptable because ________. A) the return […]

  28) On January 1, 2011, Sea the World Cruises, Inc. issued $100,000 worth of 8%, 10-year bonds at 88. The market rate of interest at the time of issue was 10%. Interest will be paid semiannually on June 30 and December 31. Sea the World Cruises uses the effective interest method for amortizing any bond discounts or premiums. Part A: For each item listed […]

    78.Interest that has accrued during the accounting period on a note payable requires an adjusting entry consisting of:    A. A debit to Interest Expense and a credit to Cash.   B. A debit to Notes Payable and a credit to Interest Payable.   C. A debit to an asset and a credit to a liability.   D. A debit to Interest Expense and a credit to Interest […]

  25) What is the fixed cost per year and the variable cost per hour, respectively, for the Cassette Department using the dual-rate method, assuming that the allocation bases are capacity for fixed costs and actual usage for variable costs? A) $720,000 and $480 B) $720,000 and $600 C) $765,958 rounded and $480 D) $765,958 rounded and $600 E) $900,000 and $600 26) What are […]

    81. Grey Division’s departmental income is:A.  $163,000B.  $211,000C.  $241,000D.  $52,000E.  $173,000                 Reference: 22_03 Bridgestreet, Inc. has three operating departments: Cutting, Assembling, and Finishing. Cutting has 5,000 employees and occupies 15,000 square feet. Assembling has 4,000 employees and occupies 12,000 square feet. Finishing has 1,000 employees and occupies 23,000 square feet. Indirect factory costs for the […]