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Bliny Corporation makes a product with the following standard costs for direct material and direct labor:
Direct material: 2.00 meters at $3.25 per meter$6.50 Direct labor: 0.40 hours at $12.00 per hour$4.80
During the most recent month, 5,000 units were produced. The costs associated with the month’s production of this product were as follows:
Material purchased: 12,000 meters at $3.15 per meter$37,800 Material used in production: 10,500 meters — Direct labor: 1,975 hours at $12.20 per hour$24,095
The standard cost variances for direct material and direct labor are:
Materials price variance: 12,000 meters at $0.10 per meter F$1,200 F Materials quantity variance: 500 meters at $3.25 per meter U$1,625 U Labor rate variance: 1,975 hours at $0.20 per hour U$395 U Labor efficiency variance: 25 hours at $12.00 per hour F$300 F
Prepare the journal entry to record the purchase of materials on account for the month.
Prepare the journal entry to record the use of materials for the month.
Prepare the journal entry to record the incurrence of direct labor cost for the month.
During 2014, its first year of operations, Galileo Company purchased two available-for-sale investments as follows:
Assume that as of December 31, 2014, the Hawking Inc. stock had a market value of $50 per share, and the Pavlov Co. stock had a market value of$24 per share. Galileo Company had net income of $300,000, and paid no dividends for the year ended December 31, 2014. All of the available-for-sale investments are classified as current assets.
b. Prepare the Stockholders’ Equity section of the balance sheet to reflect the earnings and unrealized gain (loss) for the available-for-sale investments.
Roy Akins was the accounting manager at Zelco, Inc., a tire manufacturer, and he played golf with Hugh Stallings, the CEO, who was something of a celebrity in the community. The CEO stood to earn a substantial bonus if Zelco increased net income by year-end. Roy was eager to get into Hugh’s elite social circle; he boasted to Hugh that he knew some accounting tricks that could increase company income by simply revising a few journal entries for rental payments on storage units. At the end of the year, Roy changed the debits from “rent expense” to “prepaid rent” on several entries. Later, Hugh got his bonus, and the deviations were never discovered. How did the change in the journal entries affect the net income of the company at year-end?