41. The most likely explanation for the following journal entry would be:
A) performed a service and immediately received the cash
B) performed a service and billed the customer
C) performed a service for a customer who had paid for the service ahead of time
D) recorded the receipt of cash from a customer for services previously performed
Use the following information for questions 42 and 43.
Hepburn Corporation’s sales price is $30 per unit. Unit sales information is presented below:
March (Actual) April (Estimated) May (Estimated)
Cash sales 10,000 12,000 13,000
Credit sales 30,000 40,000 45,000
Management estimates that 5% of credit sales are uncollectible, 30 % are collected in the month of sale, and 65% in the following month. The March 31 ending inventory is 5,500 units, and Hepburn wants to have 10% of the next month’s sales in ending inventory.
42. What are Hepburn Corporation’s expected sales revenue and cash receipts for April?
Sales Revenue Cash Receipts
A) $1,560,000 $1,305,000
B) $1,560,000 $945,000
C) $1,200,000 $945,000
D) $960,000 $870,000
43. How many units should Hepburn produce during April?
44. Net income is found on which of the following two financial statements?
A) Balance Sheet and Income Statement
B) Statement of Shareholders Equity and Balance Sheet
C) Statement of Cash Flows and Balance Sheet
D) Income Statement and Statement of Shareholders Equity
45. What is a perpetual inventory system?
A) A system that keeps a continuous record of the cost of inventory on hand and the cost of inventory sold.
B) A system that determines the inventory at the end of each accounting period by physically counting it.
C) A system that records cash on hand.
D) None of the above.
46. Memory Time Picture Frame Co. manufactures picture frames and incurs many different types of costs. The cost of the glass for the picture frames, assuming it is significant to the overall cost, would be a:
A) direct material cost
B) direct labor cost
C) manufacturing overhead cost
D) selling and administrative cost
47. Lyco Company is a service firm. The company showed the following activities for the current month:
• Provided services for a client who will pay $82,000 next month.
• Provided services for a client and received $30,000 cash.
• Received a $10,000 advance payment for services to be provided next month.
• Used $7,000 of office supplies to provide services.
• Employees were owed $25,000 for work performed in the current month.
What is the accrual basis income for the current month?
48. Fostoria Corporation began the current period with $21,975 of direct materials, purchased $97,950 of direct materials and $8,230 of indirect materials during the period and ended the period with $30,205 of direct materials. The total amount of direct materials put into production during the current period was:
49. J & C Electronics, Inc. gathered the following direct materials cost information for the month of July:
Standard Quantity Allowed for production 34,700 gallons
Quantity used in production 33,900 gallons
Actual price per gallon purchased $8.50
Standard price per gallon $8.85
The direct materials usage variance is:
A) $ 4,250U
B) $ 4,425F
50. Anthony Company sold merchandise on account to a customer at a price of $5,000. The merchandise had cost Anthony $4,200. The terms of the sales were 3/10, n/30. If the customer paid within the discount period, by how much did this transaction increase Anthony’s net income?
C) $ 650
D) $ 300