Deck 27: Manufacturing Accounting: The Work Sheet and Financial Statements

Question 1

To close operating expenses at the end of the year, Income Summary is credited.

Answer 1

False

Question 2

The estimated amount of uncollectible accounts is adjusted on the work sheet by debiting Allowance for Bad Debts and crediting Bad Debt Expense.

Answer 2

False

Question 3

Factory Overhead has a zero balance after all adjustments, so it is not necessary to close the account at the end of the accounting period.

Answer 3

False

Question 4

With a perpetual inventory system, the movement of goods from materials to work in process to finished goods to cost of goods sold is recorded as the movement occurs.

Question 5

The entry to apply factory overhead to work in process ending inventory includes a debit to Work in Process Inventory and a credit to Factory Overhead.

Question 6

To record an adjustment for income tax for the period, Corporate Income Tax is debited and Income Tax Expense is credited.

Question 7

Factory building insurance expense is part of factory overhead.

Question 8

Underapplied overhead is adjusted on the work sheet by debiting Overapplied Overhead and crediting Work in Process Inventory.

Question 9

Manufacturing company and merchandising company work sheets are prepared using the same five steps.

Question 10

The income statement of a manufacturer is commonly supported by a schedule of cost of goods manufactured.

Question 11

In a corporation, the stockholders' equity section contains information regarding capital stock, paid-in capital in excess of par, and retained earnings.

Question 12

All of the data for the statement of retained earnings is taken from the Balance Sheet columns of the work sheet.

Question 13

Overapplied overhead is adjusted on the work sheet by debiting Overapplied Overhead and crediting Work in Process Inventory.

Question 14

Factory overhead must be applied to work in process at the end of the year, even though those jobs are not yet finished.

Question 15

Debits in the factory overhead account represent the overhead applied to production.

Question 16

A manufacturing company's work sheet includes three inventory accounts.

Question 17

The amount of expired factory equipment insurance is adjusted on the work sheet by debiting Equipment Insurance Expense.

Question 18

Manufacturing companies will include three inventory accounts in the liability section of the balance sheet.

Question 19

The amount of interest due on notes and bonds payable owed by the company is adjusted on the work sheet by debiting Interest Expense and crediting Accrued Interest Payable.

Question 20

Both the debit and the credit balances in Factory Overhead are closed to Income Summary.

Question 21

If factory overhead applied is less than the adjusted debit balance of Factory Overhead, the difference is known as underapplied overhead.

Question 22

The amount of interest due on notes and bonds payable owed by the company is adjusted by

A) debiting Interest Payable and crediting Cost of Goods Sold.
B) debiting Interest Payable and crediting Interest Expense.
C) debiting Interest Expense and crediting Interest Payable.
D) debiting Interest Expense and crediting Cost of Goods Sold.

Question 23

Which of the following statements is NOT true of manufacturing company accounting?

A) Materials inventory represents the raw materials purchased by the company to use in the production of its product(s).
B) Inventories are divided into three separate accounts.
C) Factory overhead debits represent the overhead that has been applied to production.
D) Factory overhead shows both a debit and a credit balance on the work sheet.

Question 24

In a periodic inventory system, costs of goods sold are computed through an adjustment process at the end of the period.

Question 25

The adjusting entry to apply factory overhead to the work in process ending inventory includes

A) debiting Finished Goods Inventory and crediting Factory Overhead.
B) debiting Work in Process Inventory and crediting Factory Overhead.
C) debiting Factory Overhead and crediting Work in Process Inventory.
D) debiting Factory Overhead and crediting Finished Goods Inventory.

Question 26

The difference between the debits and credits for each pair of columns in the Income Statement and Balance Sheet sections of the work sheet represents net income or net loss.

Question 27

To close Income Summary at the end of the year, Retained Earnings is credited for the amount of net income.

Question 28

Both debit and credit balances of Factory Overhead are shown in the Adjusted Trial Balance columns of the work sheet; however, neither of these amounts is extended to the Income Statement or to the Balance Sheet columns.

Question 29

The adjustment for corporate income tax should be reversed.

Question 30

All of the data for the income statement is obtained from the Income Statement columns of the work sheet.

Question 31

Which of the following accounts on the manufacturing company work sheet is NOT an asset account?

A) work in process inventory
B) factory overhead
C) prepaid insurance
D) finished goods inventory

Question 32

Debits in the factory overhead account represent the actual overhead costs incurred.

Question 33

The supplementary schedule of cost of goods sold is unique to a manufacturing company.

Question 34

If factory overhead applied is more than the adjusted debit balance of Factory Overhead, the difference is known as underapplied overhead.

Question 35

The entry to close Cost of Goods Sold at the end of the year includes a debit to Income Summary.

Question 36

Factory overhead is applied at a predetermined rate when a job is completed.

Question 37

In a perpetual inventory system, costs of goods sold are accumulated in the cost of goods sold account as sales occur during the year.

Question 38

In a perpetual inventory system, the inventory accounts reflects ending balances.

Question 39

On a work sheet for a manufacturing company, Factory Overhead shows both a debit and a credit balance.

Question 40

Overhead must be applied to work in process at year end.

Question 41

In the factory overhead account, the debit represents the

A) actual overhead cost incurred.
B) estimated overhead cost incurred.
C) actual overhead to be applied to production.
D) estimated overhead to be applied to production.

Question 42

The balance of retained earnings at the beginning of the year was $475,000, and the balance at the end of the year was $550,000. Cash dividends declared during the year were $35,000. The amount of net income for the year was

A) $75,000.
B) $515,000.
C) $110,000.
D) $80,000.

Question 43

Source data for direct labor comes from the

A) materials inventory in the general ledger,
B) work in process inventory in the general ledger.
C) Adjusted Trial Balance columns of the work sheet.
D) Income Statement columns of the work sheet.

Question 44

The entry to close Cost of Goods Sold includes

A) debiting Income summary and crediting Cost of Goods Sold.
B) debiting Cost of Goods Sold and crediting Income Summary.
C) debiting Retained Earnings and crediting Cost of Goods Sold.
D) debiting Cost of Goods Sold and crediting Retained Earnings.

Question 45

The amount of uncollectible accounts is adjusted by

A) debiting Factory Overhead and crediting Accounts Receivable.
B) debiting Bad Debt Expense and crediting Factory Overhead Applied.
C) debiting Factory Overhead and crediting Allowance for Bad Debts.
D) debiting Bad Debt Expense and crediting Allowance for Bad Debts.

Question 46

The adjustment to increase Income Tax Expense includes

A) debiting Factory Overhead and crediting Income Tax Payable.
B) debiting Income Tax Payable and crediting Income Tax Payable.
C) debiting Income Tax Expense and crediting Factory Overhead.
D) debiting Income Tax Expense and crediting Income Tax Payable.

Question 47

Which of the following steps are involved in closing the temporary accounts of a manufacturing business?

A) The balance of Factory Overhead is credited to Income Summary.
B) The balances of operating expense accounts are credited to Income Summary.
C) The balance of Cost of Goods Sold is credited to Income Summary.
D) The balance of Retained Earnings is credited to Income Summary.

Question 48

The amount of expired factory equipment insurance is adjusted by

A) debiting Factory Overhead and crediting Prepaid Insurance.
B) debiting Equipment Insurance Expense and crediting Factory Overhead.
C) debiting Prepaid Insurance and crediting Equipment Insurance Expense.
D) debiting Prepaid Insurance and crediting Accounts Payable.

Question 49

If factory overhead applied is less than the adjusted debit balance of Factory Overhead, the difference is known as

A) underapplied overhead.
B) cost of goods sold.
C) overabsorbed overhead.
D) overapplied overhead.

Question 50

Source data for work in process at the beginning of the accounting period comes from the

A) materials inventory in the general ledger.
B) work in process inventory in the general ledger.
C) Adjusted Trial Balance columns of the work sheet.
D) Income Statement columns of the work sheet.

Question 51

Source data for the work in process inventory as of the end of the accounting period comes from the

A) materials inventory in the general ledger.
B) work in process inventory in the general ledger.
C) Balance Sheet columns of the work sheet.
D) Income Statement columns of the work sheet.

Question 52

The depreciation of factory equipment is adjusted by

A) debiting Depreciation Expense and crediting Factory Equipment.
B) debiting Factory Overhead and crediting Accumulated Depreciation-Factory Equipment.
C) debiting Accumulated Depreciation-Factory Equipment and crediting Factory Overhead.
D) debiting Accumulated Depreciation-Factory Equipment and crediting Depreciation Expense.

Question 53

If factory overhead applied is more than the adjusted debit balance of Factory Overhead, the difference is known as

A) underapplied overhead.
B) overapplied overhead.
C) organization costs.
D) adjusted work in process.

Question 54

Which of the following adjustments is NOT made to Factory Overhead on the work sheet?

A) factory equipment insurance
B) factory building insurance
C) office supplies
D) factory supplies

Question 55

If the estimated amount of uncollectible accounts at the end of the year (based on the aging method) was $3,675.32 and Allowance for Bad Debts had a credit balance of $860, the necessary adjustment would include

A) debiting Allowance for Bad Debts, $3,675.32.
B) crediting Allowance for Bad Debts, $3,675.32.
C) debiting Bad Debt Expense, $2,815.32.
D) crediting Bad Debt Expense, $2,815.32.

Question 56

The entry to close operating expenses includes

A) debiting Operating Expenses.
B) debiting Income Summary.
C) debiting Retained Earnings.
D) debiting Cost of Goods Sold.

Question 57

Factory supplies used during the year is adjusted by

A) debiting Factory Supplies and crediting Factory Supplies Expense.
B) debiting Factory Supplies Expense and crediting Factory Supplies.
C) debiting Office Supplies Expense and crediting Factory Supplies Payable.
D) debiting Factory Overhead and crediting Factory Supplies.

Question 58

Which of the following accounts is not closed at the end of the accounting period?

A) Factory Overhead
B) Allowance for Bad Debts
C) Cost of Goods Sold
D) Income Summary

Question 59

The entry to close Income Summary for a loss would include

A) a credit to Income Summary.
B) a credit to Retained Earnings.
C) a debit to Capital Stock.
D) a debit to Income Summary.

Question 60

Source data for the beginning materials inventory comes from the

A) materials inventory in the general ledger.
B) work in process inventory in the general ledger.
C) Adjusted Trial Balance columns of the work sheet.
D) Income Statement columns of the work sheet.

Question 61

Santiago Company has provided data for the year-end adjustments as follows: ​
Required:
Prepare the year-end adjusting entries in general journal form.

Question 62

From the data below for the Sorta Company, prepare the closing entries for the year ended December 31, 20--.

Question 63

From the adjusting entries below, prepare the reversing entry(ies) that would be needed on January 1.

Question 64

Prepare the year-end adjusting entries in general journal form for Dombrowski Corporation. Information for the year-end adjustments is as follows: ​

Question 65

From the data below for Wong Company, prepare the closing entries for the year ended December 31.

Question 66

From the adjusting entries below, prepare the reversing entry(ies) that would be needed for January 1.