Acc206 Principles of Accounting: Week 2 Assignment (Chapters 2 and 3 Problems) - 2013 Version

Note: This tutorial DOES NOT INCLUDE the Institute of Management Accounting (IMA) question. Again, please COMPARE and CHECK if your requirements are the same as the ones outlined below.

Acc206 Principles of Accounting
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:
Jackson Corporation has common stock with a par value of $1 per share.
Royal Corporation has no-par common with a stated value of $5 D share.
French Corporation has no-par common; no stated value has been as signed
Chapter 2 Exercise 3
3. Analysis of stockholders' equity
Star Corporation issued both common and preferred stock during 19X6. The stockholders' equity sections of the company's balance sheets at the end of 19X6 and 19X5 follow.
19X6
19X5
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
Compute the number of preferred shares that were issued during 19X6.
Calculate the average issue price of the common stock sold in 19X6.
By what amount did the company's paid-in capital increase during 19X6?
Did Star's total legal capital increase or decrease during 19X6? By what amount?

Chapter 2 Problem 1
1. Bond computations: Straight-line amortization
Southlake Corporation issued $900,000 of 8% bonds on March 1, 19X1. 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
Cash inflow on the issuance date
_______
_______
_______
Total cash outflow through maturity
_______
_______
_______
Total borrowing cost over the life of the bond issue
_______
_______
_______
Interest expense for the year ended December 31, 19X1
_______
_______
_______
Amortization for the year ended December 31, 19X1
_______
_______
_______
Unamortized premium as of December 31, 19X1
_______
_______
_______
Unamortized discount as of December 31, 19X1
_______
_______
_______
Bond carrying value as of December 31, 19X1
_______
_______
_______

Chapter 3 Exercise 1
1. Product costs and period costs
The costs that follow were extracted from the accounting records of several different manufacturers:
Weekly wages of an equipment maintenance worker
Marketing costs of a soft drink bottler
Cost of sheet metal in a Honda automobile
Cost of president's subscription to Fortune magazine
Monthly operating costs of pollution control equipment used in a steel mill
Weekly wages of a seamstress employed by a jeans maker
Cost of compact discs (CDs) for newly recorded releases of Rush, Billy Joel, and Bryan Adams
Determine which of these costs are product costs and which are period costs.
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:
Total direct materials consumed
Total direct labor
Total prime cost
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 schedule of cost of goods manufactured for the year ended December 31.
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:
Determine the cost of the finished goods inventory of light-gauge aluminum.
Prepare an income statement for the current year ended December 31
On the basis of the information presented:
Does it appear that the company pays commissions to its sales staff? Explain.
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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