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
 
 
 
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?
 
 
 
 
 
 
 
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

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
_______
_______
_______
 
 
 
 
 
 
 
 
 
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:
 
Total direct materials consumed
Total direct labor
Total prime cost
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 schedule of cost of goods manufactured for the year ended December 31.
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:
 
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?