Tierney Construction, Inc Direct Labor Cost Incurred During the Period Amounted to 2

question 52

Multiple Choice

Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files: $\begin{array}{lr}\text { Cost of goods sold } & \$ 80,000 \\\text { Work in process inventory, January 1, 2016 } & 18,500 \\\text { Work in process inventory, December 31, 2016 } & 14,500 \\\text { Selling and Administrative Expenses } & 16,000 \\\text { Net Income } & 30,000\\\text { Factory overhead } & 20,000 \\\text { Direct materials inventory, January 1, 2016 } & 26,000 \\\text { Direct materials inventory, December 31, 2016 } & 14,000 \\\text { Cost of goods manufactured } & 98,000 \\\text { Finished goods inventory, January 1, 2016 } & 31,000\end{array}$ Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The CFO of Tierney Construction, Inc. has asked you to recalculate the following accounts and to report to him by the end of tomorrow.
What should be the amount in the finished goods inventory at December 31, 2016?

• A)$55,500.
• B)$35,000.
• C)$43,000.
• D)$49,000.

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Definitions:

Executive Change

The process or event of a change in the leadership or management team within an organization, which can have significant impacts on the strategic direction and performance of the company.

Bad Debt Expense

An expense account reflecting the estimated amount of receivables that are not expected to be collected due to customer defaults.

Loan Receivables

Claims or financial assets arising from money lent to borrowers by an entity.

Loan Loss Provision

An expense set aside as an allowance for bad loans (customer defaults or terms renegotiation), reflecting expected losses on the balance sheet.