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ACC 206 Week Two Assignment (Updated October 2013)

# ACC 206 Week Two Assignment (Updated October 2013)

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06/09/2014

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Week 2 Assignment

Week Two Problems. Please complete the exercises below in either Excel or a Word document (but mustbe single document). You must show your work where appropriate (leaving the calculations within Excelcells is acceptable). Save the document, and submit it in the appropriate week using the AssignmentSubmission button.1. Analysis of stockholders' equityStar Corporation issued both common and preferred stock during 20X8. The stockholders' equity sectionsof the company's balance sheets at the end of 20X8 and 20X7 follow.20X820X7Preferred stock, \$100 par value, 10% \$600,000 \$500,000Common stock, \$10 par value 2,350,000 1,550,000Paid -in capital in excess of par valuePreferred 24,000
Common 4,620,000 3,600,000Retained earnings 8,470,000 6,920,000Total stockholders' equity \$16,064,000 \$12,570,000a. Compute the number of preferred shares that were issued during 20X8.b. Calculate the average issue price of the common stock sold in 20X8.c. By what amount did the company's paid-in capital increase during 20X8?d. Did Star's total legal capital increase or decrease during 20X8? By what amount?

2. Bond computations: Straight-line amortizationSouthlake Corporation issued \$800,000 of 7% bonds on March 1, 20X8. The bonds pay interest on March1 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 Ca. Cash inflow on the issuance date _______ _______ _______ b. Total cash outflow through maturity _______ _______ _______ c. Total borrowing cost over the life of the bond issue _______ _______ _______ d. Interest expense for the year ended December 31, 20X8 _______ _______ _______ e. Amortization for the year ended December 31, 20X8 _______ _______ _______ f. Unamortized premium as of December 31, 20X8 _______ _______ _______ g. Unamortized discount as of December 31, 20X8 _______ _______ _______ h. Bond carrying value as of December 31, 20X8 _______ _______ _______ 3. Definitions of manufacturing conceptsInterstate Manufacturing produces brass fasteners and incurred the following costs for the year justended:Materials and supplies usedBrass \$80,000Repair parts 18,000

Machine lubricants 8,000Wages and salaries Machine operators 140,000Production supervisors 62,000Maintenance personnel 39,000Other factory overhead Variable 29,000Fixed 48,000Sales commissions 20,000Compute:a. Total direct materials consumedb. Total direct labor c. Total prime costd. Total conversion cost4. Schedule of cost of goods manufactured, income statementThe following information was taken from the ledger of Jefferson Industries, Inc.:Direct labor \$75,000 Administrative expenses \$63,000Selling expenses 36,000 Work in. processSales 310,000 Jan. 1 32,000Finished goods Dec. 31 21,000Jan. 1 115,000 Direct material purchases 87,000Dec. 31 131,000 Depreciation: factory 21,000Raw (direct) materials on hand Indirect materials used 11,000Jan. 1 31,000 Indirect labor 26,000

Dec. 31 40,000 Factory taxes 8,000Factory utilities 12,000