Task1.
Issuance of stock
Make journal entries to record the issuance of 100,000 shares of common stock at $20 per share for every of the following independent cases:
a. Jackson Corporation has common stock with a par value of $1 per share.
b. Royal Corporation has no-par common with a stated value of $5 D share.
c. French Corporation has no-par common; no stated value has been as signed
Task2.
Analysis of stockholders' equity
Star Corporation issued both common and preferred stock throughout 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
a. Calculate the number of preferred shares that were issued throughout 19X6.
b. Calculate the average issue price of the common stock sold in 19X6.
c. By what amount did the company's paid-in capital increase throughout 19X6?
d. Did Star's total legal capital increase or decrease throughout 19X6? By what amount?
Task3.
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. Suppose 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 employs the straight-line method of amortization.
Instructions:
Fill the following table:
Case A Case C Case B
a. Cash inflow on the issuance date
b. Total cash out-flow through maturity
c. Total borrowing cost over the life of the bond issue
d. Interest expense for the year ended December 31, 19X1
e. Amortization for the year ended December 31, 19X1
f. Unamortized premium as of December 31, 19X1
g. Unamortized discount as of December 31, 19X1
h. Bond carrying value as of December 31, 19X1
Task4.
Product costs and period costs
The costs that follow were extracted from accounting records of various 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. Find out which of these costs is product costs and which are period costs.
b. For the product costs only, find out those which are simply traced to finished product and those that are not.
Task5.
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
Calculate:
a. Total direct materials consumed
b. Total direct labour
c. Total prime cost
d. Total conversion cost
Task6.
Schedule of cost of goods manufactured, income statement
The following information was taken from 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.
Task7.
Manufacturing statements and cost behaviour
Tampa Foundry began operations throughout the current year, manufacturing several products for industrial use. One such product is light-gauge aluminium, that 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. Find out the cost of the finished goods inventory of light-gauge aluminum.
b. Make an income statement for the current year ended December 31
c. On the basis of the information presented:
1. Does it seem which the company pays commissions to its sales staff? Describe.
2. What is the likely effect on the $4.50 unit cost of direct materials if next year's production raises? Why?