Homework answers / question archive / Ashford University - ACC 206   Week Two Assignment   Markeith Knotts   ACC206: Principles of Accounting 2   Instructor: Brent Beyer       Chapter Two   Exercise 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

Ashford University - ACC 206   Week Two Assignment   Markeith Knotts   ACC206: Principles of Accounting 2   Instructor: Brent Beyer       Chapter Two   Exercise 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

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Ashford University - ACC 206

 

Week Two Assignment

 

Markeith Knotts

 

ACC206: Principles of Accounting 2

 

Instructor: Brent Beyer

 

 

 

Chapter Two

 

Exercise 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 no-par common with a stated value of $5 per share.

           

c. French Corporation has no-par comon; no stated value has been assigned.

          

 

 

Exercise 3. Analysis of stockholdrs' equity

 

Star Corporation issued both common and preferred stock during 2006. The stockholders' equity sections of the company's balance sheets at the end of 2006 and 2005 follow:

 

 

                                                                        2006                                        2005               

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                                $16,044,00                              $12,770.000

                                                                       

a. Compute the number of preferred shares that were issued during 2006.

 

b. Calculate the average issue price of the common stock sold in 2006.

 

 

c. By what amount did the company's paid-in capital increase during 2006?

 

 

d. Did Star's total legal capital increase or decrease during 2006? By what amount?

 

 

 

Problem 1: Bond computations: Straight-line amortization

 

Southlake Corporation issued $900,000 of 8% bonds on March 1, 2001. 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           

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, 2001

e. Amortization for the year ended               

    December 31, 2001

f. Unamortized premium or unamortized        

    discount as of December 31, 2001 if any

g. Bond carrying value as of                                         

    December 31, 2001

 

 

Chapter 3

Exercise 4: Basic manufacturing computations

Lyon Manufacturing reported total manufacturing costs (direct materials used, direct labor, and factory overhead) of $549,000 for 2003. Sales and operating expenses were $759,200 and $142,500, respectively. The following information appeared on company balance sheets:

 

                                                                        For the Year Ended

                                                            12/31/03                      12/31/02         

Finished goods                                    $150,000                     $153,700

Work in process                                   86,400                         74,100

 

Compute cost of goods manufactured, cost of goods sold, and net income for 2003.

 

 

 

Problem 2: Straightforward manufacturing statements

The following information was extracted from the accounting records of Olympic Company for the year just ended:

 

 

Sales                                                                $628,000

Work in process, Jan. 1                                   56,700

Advertising expense                                        23,500

Direct material purchases                                231,500

Finished goods, Dec. 31                                  67,800

Indirect materials used                         12,300

Direct labor                                                     85,600

Direct materials, Jan. 1                                    45,500

Finished goods, Jan. 1                         55,900

Direct materials, Dec. 31                                 38,200

Sales staff salaries                                            33,300

Work in process, Dec. 31                                47,400

Indirect labor                                                   50,700

 

Utilities, taxes, insurance, and depreciation are incurred jointly by Olympics manufacturing, sales, and administrative facilities. The costs were as follows:

 

Utilities                                                $40,000

Taxes                                                   25,000

Insurance                                             10,000

Depreciation                                        36,000

 

The first three costs are allocated proportionately on the basis of square feet occupied by the three functional areas. A review of the company's facilities revealed the following percentages would be appropriate: manufacturing, 50%; sales, 30%; and administrative, 20%. Depreciation is allocated 70, 20, and 10%, respectively.

 

Instructions

 

a. Prepare a schedule of cost of goods manufactured in good form.

 

b. Prepare an income statement in good form.