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% Common stock, $10 par value $580,000 2,350,000 $500,000 1,750,000 Paid-in capital in excess of par value Preferred Common Retained earnings Total stockholders’ equity 24,000 4,620,000 8,470,000 $16,044,000 — 3,600,000 6,920,000 $12,770,000 a. Compute the number of preferred shares that were issued during 20X6. 580,000/$100= 5800 preferred shares issued. 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? A 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: a. b. c. d. e. f. g. h. Cash inflow on the issuance date Total cash outflow through maturity Total borrowing cost over the life of the bond issue Interest expense for the year ended December 31, 20X1 Amortization for the year ended December 31, 20X1 Unamortized premium as of December 31, 20X1 Unamortized discount as of December 31, 20X1 Bond carrying value as of December 31, 20X1 Case A _______ _______ _______ _______ _______ _______ _______ _______ Case B _______ _______ _______ _______ _______ _______ _______ _______ Case C _______ _______ _______ _______ _______ _______ _______ _______ 3. Definitions of manufacturing concepts Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended: A 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.: A Direct labor Selling expenses Sales Finished goods Jan. 1 $85,000 34,000 300,000 115,000 Dec. 31 131,000 Raw (direct) materials on hand Jan. 1 31,000 Dec. 31 40,000 Administrative expenses $59,000 Work in. process: Jan. 1 Dec. 31 Direct material purchases Depreciation: factory Indirect materials used Indirect labor Factory taxes Factory utilities 29,000 21,000 88,000 18,000 10,000 24,000 8,000 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 A 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 Direct materials Direct labor Factory overhead Selling Administrative Variable Cost Fixed Cost $4.50 6.5 9 — — $— — 50,000 70,000 135,000 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?
