Use the Following Information for the Next 4 Questions

question 57

Multiple Choice

Use the following information for the next 4 questions.
(CPA) Johnson Manufacturing Company buys Fluron for $0.80 per gallon. At the end of processing in Department 1, Fluron splits off into products Alphon, Cryon, and Runon. Alphon is sold at the split-off point, with no further processing. Cryon and Runon require further processing before they can be sold; Cryon is processed in Department 2 and Runon is processed in Department 3. Following is a summary of costs and other related data for the year ended June 30, 20x5. There were no inventories on hand at July 1, 20x4, and there was no Fluron on hand at June 30, 20x5. All gallons on hand at June 30, 20x5 were complete as to processing. Johnson uses the net realizable value method of allocating joint costs.
-For allocating joint costs, the net realizable value of Alphon for the year ended June 30, 20x5 would be

• A) $30,000
• B) $45,000
• C) $21,000
• D) $6,000

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Definitions:

Stock Dividend

A dividend payment made in the form of additional shares rather than cash, increasing the number of shares owned by shareholders.

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Contributed Capital

Funds raised by a company in exchange for its shares, representing the equity capital contributed by the shareholders.

Cumulative Preferred Stock

A type of preferred stock where dividends accumulate if not paid in a given period, and must be paid out before common shareholders can receive dividends.