ACC_206_Week_Two_Assignment_WP

  

ACC 206 Week Two Assignment

Please complete the following exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.

1. Analysis of stockholders' equity 

Star Corporation issued both common and preferred stock during 20X6. The stockholders' equity sections of the company's balance sheets at the end of 20X6 and 20X5 follow:

   

20X6 

20X5 

 

Preferred stock,   $100 par value, 10% 

$580,000 

$500,000 

 

Common stock, $10   par value 

2,350,000

1,750,000

      

Paid-in capital in   excess of par value 

 

Preferred 

24,000

— 

 

Common 

4,620,000

3,600,000

 

Retained earnings 

8,470,000

6,920,000

 

Total stockholders'   equity 

$16,044,000 

$12,770,000 

a. Compute the number of preferred shares that were issued during 20X6. 

b. Calculate the average issue price of the common stock sold in 20X6. 

c. By what amount did the company's paid-in capital increase during 20X6? 

d. Did Star's total legal capital increase or decrease during 20X6? By what amount? 

2. Bond computations: Straight-line amortization 

Southlake Corporation issued $900,000 of 8% bonds on March 1, 20X1. The bonds pay interest on March 1 and September 1 and mature in 10 years. Assume the independent cases that follow. 

· Case A—The bonds are issued at 100. 

· Case B—The bonds are issued at 96. 

· Case C—The bonds are issued at 105. 

Southlake uses the straight-line method of amortization. 

Instructions: 

  

Complete the following table:

  

Case A

Case B

Case C

 

1. Cash inflow on the issuance date

_______

_______

_______

 

1. Total        cash outflow through maturity

_______

_______

_______

 

1. Total        borrowing cost over the life of the bond issue 

_______

_______

_______

 

1. Interest        expense for the year ended December 31, 20X1 

_______

_______

_______

 

1. Amortization        for the year ended December 31, 20X1 

_______

_______

_______

 

1. Unamortized        premium as of December 31, 20X1 

_______

_______

_______

 

1. Unamortized        discount as of December 31, 20X1 

_______

_______

_______

 

1. Bond        carrying value as of December 31, 20X1 

_______

_______

_______

3. Definitions of manufacturing concepts
Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended: 

Materials and supplies used 

Brass $75,000 

Repair parts 16,000 

Machine lubricants  9,000 

Wages and salaries Machine operators  128,000

Production supervisors  64,000 

Maintenance personnel  41,000 

Other factory overhead Variable  35,000 

Fixed  46,000 

Sales commissions 20,000 

Compute:

a. Total direct materials consumed

b. Total direct labor

c. Total prime cost

d. Total conversion cost

4. Schedule of cost of goods manufactured, income statement 

The following information was taken from the ledger of Jefferson Industries, Inc.:

  

Direct labor

$85,000 

Administrative   expenses

$59,000 

 

Selling expenses

34,000

Work in. process:

 

Sales

300,000

Jan. 1

29,000

 

Finished goods

Dec. 31

21,000

 

Jan. 1

115,000

Direct material   purchases

88,000

 

Dec. 31

131,000

Depreciation:   factory

18,000

 

Raw (direct)   materials on hand

Indirect materials   used

10,000

 

Jan. 1

31,000

Indirect labor

24,000

 

Dec. 31

40,000

Factory taxes

8,000

    

Factory utilities

11,000

Prepare the following: 

a. A schedule of cost of goods manufactured for the year ended December 31. 

b. An income statement for the year ended December 31.

 5. Manufacturing statements and cost behavior 

Tampa Foundry began operations during the current year, manufacturing various products for industrial use. One such product is light-gauge aluminum, which the company sells for $36 per roll. Cost information for the year just ended follows.

  

Per Unit 

Variable Cost 

Fixed Cost 

 

Direct materials 

$4.50 

$ — 

 

Direct labor 

6.5

— 

 

Factory overhead 

9

50,000

 

Selling 

— 

70,000

 

Administrative 

— 

135,000

Production and sales totaled 20,000 rolls and 17,000 rolls, respectively There is no work in process. Tampa carries its finished goods inventory at the average unit cost of production. 

Instructions: 

a. Determine the cost of the finished goods inventory of light-gauge aluminum. 

b. Prepare an income statement for the current year ended December 31 

c. On the basis of the information presented: 

1. Does it appear that the company pays commissions to its sales staff? Explain. 

2. What is the likely effect on the $4.50 unit cost of direct materials if next year's production increases? Why?