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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 !ssignment Submission button.
1. Analysis of stockholders' equity
Star "orporation issued both common and preferred stock during #$%&. 'he stockholders( e)uity sections of the
company(s balance sheets at the end of #$%& and #$%* follow+
206 20!
Preferred stock ,-$$ par value -$. ,*/$$$$ ,*$$$$$
"ommon stock ,-$ par value #0*$$$$ -1*$$$$
Paid2in capital in excess of par value
Preferred #3$$$ 4
"ommon 3&#$$$$ 0&$$$$$
5etained earnings /31$$$$ &6#$$$$
'otal stockholders( e)uity ,-&$33$$$ ,-#11$$$$
a. "ompute the number of preferred shares that were issued during #$%&.
!"0#000$%100& !"00 'referred shares issued.
b. "alculate the average issue price of the common stock sold in #$%&.
c. 7y what amount did the company(s paid2in capital increase during #$%&8
d. 9id Star(s total legal capital increase or decrease during #$%&8 7y what amount8
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2. (ond com'utations) *traight+line amorti,ation
Southlake "orporation issued ,6$$$$$ of /. bonds on :arch - #$%-. 'he bonds pay interest on :arch - and
September - and mature in -$ years. !ssume the independent cases that follow.
Case A4'he bonds are issued at -$$.
Case B4'he bonds are issued at 6&.
Case C4'he bonds are issued at -$*.
Southlake uses the straight2line method of amorti;ation.
Instructions:
"omplete the following table+
"ase ! "ase 7 "ase "
a. "ash inflow on the issuance date <<<<<<< <<<<<<< <<<<<<<
b. 'otal cash outflow through maturity <<<<<<< <<<<<<< <<<<<<<
c. 'otal borrowing cost over the life of the bond issue <<<<<<< <<<<<<< <<<<<<<
d. =nterest expense for the year ended 9ecember 0- #$%- <<<<<<< <<<<<<< <<<<<<<
e. !morti;ation for the year ended 9ecember 0- #$%- <<<<<<< <<<<<<< <<<<<<<
f. >namorti;ed premium as of 9ecember 0- #$%- <<<<<<< <<<<<<< <<<<<<<
g. >namorti;ed discount as of 9ecember 0- #$%- <<<<<<< <<<<<<< <<<<<<<
h. 7ond carrying value as of 9ecember 0- #$%- <<<<<<< <<<<<<< <<<<<<<
-. .efinitions of manufacturing conce'ts
=nterstate :anufacturing produces brass fasteners and incurred the following costs for the year ?ust ended+
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:aterials and supplies used
7rass ,1*$$$
5epair parts -&$$$
:achine lubricants 6$$$
@ages and salaries :achine operators -#/$$$
Production supervisors &3$$$
:aintenance personnel 3-$$$
Ather factory overhead Bariable 0*$$$
Cixed 3&$$$
Sales commissions #$$$$
"ompute+
a. 'otal direct materials consumed
Materials and supplies used Brass $75,000
Machine lubricants 9,000
Direct Material consumed $84,000
b. 'otal direct labor
Wages and salaries Machine operators 128,000
c. 'otal prime cost
= DM + DL = 84000+128000 = 212000
d. 'otal conversion cost
Total conversion cost = Direct Labor + Factory OH
= DL + Prod Supervisor + Variable FOH + Fixed OH
= 128000 + 64000+ 35000+46000 = 273,000
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/. *chedule of cost of goods manufactured# income statement
'he following information was taken from the ledger of Defferson =ndustries =nc.+
9irect labor ,/*$$$ !dministrative expenses ,*6$$$
Selling
expenses
03$$$ @ork in. process+
Sales 0$$$$$ Dan. - #6$$$
Cinished goods 9ec. 0- #-$$$
Dan. - --*$$$
9irect material
purchases
//$$$
9ec. 0- -0-$$$ 9epreciation+ factory -/$$$
5aw (direct) materials on hand =ndirect materials used -$$$$
Dan. - 0-$$$ =ndirect labor #3$$$
9ec. 0- 3$$$$ Cactory taxes /$$$
Cactory utilities --$$$
Prepare the following+
a. ! schedule of cost of goods manufactured for the year ended 9ecember 0-.
b. !n income statement for the year ended 9ecember 0-.
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!. 0anufacturing statements and cost 1eha2ior
'ampa Coundry began operations during the current year manufacturing various products for industrial use. Ane
such product is light2gauge aluminum which the company sells for ,0& per roll. "ost information for the year ?ust
ended follows.
Production and sales totaled #$$$$ rolls and -1$$$ rolls respectively 'here is no work in process. 'ampa carries
its finished goods inventory at the average unit cost of production.
Instructions:
a. 9etermine the cost of the finished goods inventory of light2gauge aluminum.
"ost of producing #$$$$ rolls EFo fo 5olls G(9:H9IHBar CAJ) H Cixed CAJ
E #$$$$G(3.*$H&.*H6) H *$$$$
E ,3*$$$$
So !Bge cost of production E ,3*$$$$K#$$$$ E ,##.*$
Cinished good =nventory E Prod L sales E #$$$$2-1$$$ E 0$$$ rolls
So "ost of Cin good inv E 0$$$G,##.*$ E ,&1*$$
b. Prepare an income statement for the current year ended 9ecember 0-
Income Statement
Sales
36*170
00
$
6,12,000
Less :
Dir Mat
4.5*170
00
$
76,500
Dir lab
6.5*170
00
$
1,10,500
ar !"
#*1700
0
$
1,53,000
Gross
Proft
$
2,72,00
0
Less $i%d
&'st
$
50,000
Gross $
3er 4nit 5aria1le Cost 6i7ed Cost
9irect materials ,3.*$ , 4
9irect labor &.* 4
Cactory overhead 6 *$$$$
Selling 4 1$$$$
!dministrative 4 -0*$$$
A
Income
2,22,00
0
Less S(A
e%)
$
2,05,000
Net
Income
$
17,000
c. An the basis of the information presented+
-. 9oes it appear that the company pays commissions to its sales staff8 Explain.
Fo. Sales is a fixed cost. @e donMt see any variable sales cost. So "ompany doesnMt pay commission
to its sales staff.
#. @hat is the likely effect on the ,3.*$ unit cost of direct materials if next year(s production increases8
@hy8
=t will remain constant.
'his is so because 9irect material cost is a variable cost. Jence 9irect material unit cost will not
change with production volume.