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# ACC 206 Week 2 Assignment Chapter 2 and 3 Problems

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ACC 206 Week 2 Assignment Chapter 2 and 3 Problems 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 â€” 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 Aâ€”The bonds are issued at 100. Case Bâ€”The bonds are issued at 96. Case Câ€”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 _______ _______ _______ 2. Total cash outflow through maturity _______ _______ _______ 3. Total borrowing cost over the life of the bond issue _______ _______ _______ 4. Interest expense for the year ended December 31, 20X1 _______ _______ _______ 5. Amortization for the year ended December 31, 20X1 _______ _______ _______ 6. Unamortized premium as of December 31, 20X1 _______ _______ _______ 7. Unamortized discount as of December 31, 20X1 _______ _______ _______ 8. Bond carrying value as of December 31, 20X1 _______ _______ _______ 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 \$ â€” Direct labor 6.5 â€” Factory overhead 9 50,000 Selling â€” 70,000 Administrative â€” 1

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