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ACC 206 Week 2 Assignment

Chapter Two and Three Problems


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Chapter Two and Three Problems
Please complete the following 7
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.
Chapter 2 Exercise 1
1. Issuance of stock
Prepare journal entries to record
the issuance of 100,000 shares of
common stock at $20 per share
for each of the following
independent cases:
a.
Jackson Corporation has
common stock with a par value of
$1 per share.
b.
Royal Corporation has nopar common with a stated value
of $5 per share.
c.
French Corporation has nopar common; no stated value has
been assigned

Chapter 2 Exercise 3

3. 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?

Chapter 2 Problem 1

1. Bond computations: Straightline 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 AThe bonds are


issued at 100.

Case BThe bonds are


issued at 96.

Case CThe bonds are


issued at 105.

Southlake uses the straight-line


method of amortization.

Instructions:
Complete the following table:

Case A Case B Case C


a. 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, 20X1 _______
_______ _______
e. Amortization for the year ended
December 31, 20X1 _______ _______
_______
f. Unamortized premium as of
December 31, 20X1 _______ _______
_______
g. Unamortized discount as of
December 31, 20X1 _______ _______
_______

h. Bond carrying value as of


December 31, 20X1 _______ _______
_______

Chapter 3 Exercise 1
1. Product costs and period costs
The costs that follow were
extracted from the accounting
records of several different
manufacturers:
1.
Weekly wages of an
equipment maintenance worker
2.
Marketing costs of a soft
drink bottler
3.
Cost of sheet metal in a
Honda automobile
4.
Cost of president's
subscription to Fortune magazine

5.
Monthly operating costs of
pollution control equipment used
in a steel mill
6.
Weekly wages of a
seamstress employed by a jeans
maker
7.
Cost of compact discs (CDs)
for newly recorded releases of
Rush, Billy Joel, and Bryan Adams
a.
Determine which of these
costs are product costs and which
are period costs.
b.
For the product costs only,
determine those that are easily
traced to the finished product and
those that are not.

Chapter 3 Exercise 2
2. 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

Chapter 3 Exercise 5
5. 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.

Chapter 3 Problem 3

3. 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 lightgauge 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?