ACC 206 Week 2 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.
- 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:
|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|
|Total stockholders’ equity||$16,044,000||$12,770,000|
- Compute the number of preferred shares that were issued during 20X6.
- Calculate the average issue price of the common stock sold in 20X6.
- By what amount did the company’s paid-in capital increase during 20X6?
- Did Star’s total legal capital increase or decrease during 20X6? By what amount?
- 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.
|Complete the following table:|
|Case A||Case B||Case C|
- Definitions of manufacturing concepts
Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended:
Materials and supplies used
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
Sales commissions 20,000
- Total direct materials consumed
- Total direct labor
- Total prime cost
- Total conversion cost
- 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:|
|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|
Prepare the following:
- A schedule of cost of goods manufactured for the year ended December 31.
- An income statement for the year ended December 31.
- 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||$4.50||$ —|
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.
- Determine the cost of the finished goods inventory of light-gauge aluminum.
- Prepare an income statement for the current year ended December 31
- On the basis of the information presented:
- Does it appear that the company pays commissions to its sales staff? Explain.
- What is the likely effect on the $4.50 unit cost of direct materials if next year’s production increases? Why?
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