ACC 206 Week 2 Exercise Assignment…

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    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?

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