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Question 1:

On December 31, 2014, Frick Incorporated, had the following balances (all balances are normal):

The following events occurred during 2014 and were not recorded:

            a. On January 1, Frick declared a 5% stock dividend on its common stock when the market value of the common stock was $15 per share. Stock dividends were distributed on January 31 to shareholders as of January 25.

            b. On February 15, Frick reacquired 1,000 shares of common stock for $20 each.

            c. On March 31, Frick reissued 250 shares of treasury stock for $25 each.

            d. On July 1, Frick reissued 500 shares of treasury stock for $16 each.

            e. On October 1, Frick declared full year dividends for preferred stock and $1.50 cash dividends for outstanding shares and paid shareholders on October 15.

            f. One December 15, Frick split common stock 2 shares for 1.

            g. Net Income for 2014 was $275,000.

Requirements:

a. Prepare journal entries for the transactions listed above.

b. Prepare a Stockholders’ section of a classified balance sheet as of December 31, 2014.

Question 2:

On January 1, 2014, Frick Company purchased 10,000 shares of the stock of Floozy, and did obtain significant influence.  The investment is intended as a long-term investment.  The stock was purchased for $90,000, and represents a 30% ownership stake.  Floozy made $25,000 of net income in 2014, and paid dividends of $10,000.  The price of Floozy’s stock increased from $10 per share at the beginning of the year, to $12 per share at the end of the year. 

 Requirements:

a. Prepare the January 1 & December 31 general journal entries for Frick Company.

b. How much should the Frick Company report on the balance sheet for the investment in Floozy as the end of 2014

 Question 3:

The following is selected information from Flip Company for the fiscal years ended December 31, 2014: Flip Company had net income of $1,225,000.  Depreciation was $500,000, purchases of plant assets were $1,250,000, and disposals of plant assets for $500,000 resulted in a $50,000 gain.  Stock was issued in exchange for an outstanding note payable of $725,000.  Accounts receivable decreased by $25,000.  Accounts payable decreased by $40,000.  Dividends of $300,000 were paid to shareholders.  Flip Company had interest expense of $50,000. Cash balance on January 1, 2014 was $250,000. 

Requirements: Prepare Flip Company’s statement of cash flows for the year ended December 31, 2014 using the indirect method.

 Question 4:

Frick Corporation had the following bond transactions during the fiscal year 2014:

            a. On January 1: issued ten (10), $1,000 bonds at 102.  The 5-year bonds, is dated January 1, 2014. The contract interest rate is 6%.  Straight-line amortization method is used. Interest is payable semi-annual on January 1 and July 1.

            b. On July 1: Frick Corporation issued $500,000 of 10%, 10-year bonds.  The bonds dated January 1, 2014 were issued at 88.5, and pay interest on July 1 and January 1.  Effective interest rate method is used for these bonds is 12%.

            c. On October 1: issued 10-year bonds $10,000 face value bonds, for $10,853 cash. The bonds have a stated rate of 8%, but an effective rate of 6%.  Effective-interest method is used. Interest is payable on October 1 and April 1.

Requirements: Prepare all general journal entries for the three bonds issued and any interest accruals and payments for the fiscal year 2014. (Round all calculations to nearest whole dollar.)

 Question 5:

Flip had sales of $10,000 (100 units at $100 per).  Manufacturing costs consisted of direct labor $1,500, direct materials $1,400, variable factory overhead $1,000, and fixed factory overhead $500.  The company did not maintain any inventories, so total cost of goods sold was $4,400.  Selling expenses totaled $1,600 ($600 variable and $1,000 fixed), and administrative expenses totaled $1,500 ($500 variable and $1,000 fixed).  Operating income was $2,500. Round all final answers to nearest dollar or whole number. 

 Requirements:

            a. What is the breakeven point in sales dollars and in units if the fixed factory overhead increased by $1,700?

            b. What is the breakeven point in sales dollars and in units if costs remain as originally projected?

            c. What would be the operating income be if sales units increased by 25%

 Question 6:

he Hernandez Company budgeted for an output of 50,000 units.  Budgeted amounts were as follows:  direct material, $100,000; direct labor, $50,000; variable factory overhead, $75,000; and fixed factory overhead, $100,000.  Actual units produced amounted to 60,000.  Actual costs incurred amounted to $110,000 for direct materials, $60,000 for direct labor, $100,000 for variable factory overhead, and $97,000 for fixed factory overhead. 

Requirements:

1. Assuming a static budget, how much was the variance between total budgeted production costs and total actual production costs?

2. Assuming a flexible budget, how much was the variance between total budgeted production costs and total actual production costs?

    

   Question 7:

   Part I

   Kolton uses a single raw material in its production process.  The material has a standard price of $10 per pound.  During November the company purchased and used 15,000 pounds of material.  The actual price paid for this material was $9.90 per pound.  The standard quantity required per finished product is 8 pounds.  Kolton produced 1,900 finished units of the final product in November. 

1. How much was the material price variance for November?

2. How much was the material usage variance for November?

    

   Part II

   Vanzant produced 1,000 units of output. The production process normally requires 2 hours of labor per unit of output.  The standard labor rate is $10 per hour but Vanzant paid $11 per hour.  Actual hours needed to complete the production process were 1,900. 

1. How much was the labor efficiency variance?

2. How much was the labor rate variance?