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ACC 206 Week 2 Assignment Chapter 2 and 3 Problems and Exercises, DQs

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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 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
 
 
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
 
a.       Compute the number of preferred shares that were issued during 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 during 19X6?
d.      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
  1.  Cash inflow on the issuance date
_______
_______
_______
  1. Total cash outflow through maturity
_______
_______
_______
  1. Total borrowing cost over the life of the bond issue
_______
_______
_______
  1. Interest expense for the year ended December 31, 19X1
_______
_______
_______
  1. Amortization for the year ended December 31, 19X1
_______
_______
_______
  1. Unamortized premium as of December 31, 19X1
_______
_______
_______
  1. Unamortized discount as of December 31, 19X1
_______
_______
_______
  1. 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:
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 light-gauge 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?
 
 
DQ 1
Stock Features.  What is callable preferred stock? Why do corporations issue such stock? Given the different features that are associated with stock (callable, cumulative, preferred, etc.), what type of stock would you want to buy personally and why?
 
Guided Response:
Review your peers’ posts. Respond to at least two of your classmates, letting them know if you agree with their type of desired stock and whether your answer would change (and why) based on: 
  1. a.       Different economic conditions  
  2. b.      Stage of the company (if the company is in a growth phase versus a mature state). 
 
DQ 2
Role of Management Accounting.  Review the roles of management accounting within a company. What is the most important role of management accounting? How is that different than financial accounting?
 
Guided Response:
Review your peers’ posts. Respond to at least two of your classmates, and provide at least two areas that management accountants focus on that your classmates didn’t include

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