{"id":49516,"date":"2018-02-20T23:50:30","date_gmt":"2018-02-20T23:50:30","guid":{"rendered":"https:\/\/writemyessayfree.com\/star-corporation-issued-both-common-and-preferred-stock-during-20x6-the-stockholders-equity-sections-of-the"},"modified":"2017-08-16T12:23:05","modified_gmt":"2017-08-16T12:23:05","slug":"star-corporation-issued-both-common-and-preferred-stock-during-20x6-the-stockholders-equity-sections-of-the","status":"publish","type":"post","link":"https:\/\/www.benedictsol.com\/blogs\/star-corporation-issued-both-common-and-preferred-stock-during-20x6-the-stockholders-equity-sections-of-the\/","title":{"rendered":"Star Corporation issued both common and preferred stock during 20X6. The stockholders&#8217; equity sections of the"},"content":{"rendered":"<p><b>Chapter Two and Three Problems<\/b><\/p>\n<p><b>1. Issuance of stock <\/b><\/p>\n<p>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:<\/p>\n<ol>\n<li>Jackson Corporation has common stock with a par value of $1 per share.<\/li>\n<li>Royal Corporation has no-par common with a stated value of $5 per share.<\/li>\n<li>French Corporation has no-par common; no stated value has been assigned<\/li>\n<\/ol>\n<p><b>2. Analysis of stockholders&#8217; equity <\/b><\/p>\n<p>Star Corporation issued both common and preferred stock during 20X6. The stockholders&#8217; equity sections of the company&#8217;s balance sheets at the end of 20X6 and 20X5 follow.<\/p>\n<p>&nbsp;<\/p>\n<p><b>20X6 <\/b><\/p>\n<p><b>20X5 <\/b><\/p>\n<p>Preferred stock, $100 par value, 10%<\/p>\n<p>$580,000<\/p>\n<p>$500,000<\/p>\n<p>Common stock, $10 par value<\/p>\n<p>2,350,000<\/p>\n<p>1,750,000<\/p>\n<p>&nbsp;&nbsp;&nbsp;<\/p>\n<p>Paid-in capital in excess of par value<\/p>\n<p>&nbsp;&nbsp;<\/p>\n<p>Preferred<\/p>\n<p>24,000<\/p>\n<p>\u2014<\/p>\n<p>Common<\/p>\n<p>4,620,000<\/p>\n<p>3,600,000<\/p>\n<p>Retained earnings<\/p>\n<p>8,470,000<\/p>\n<p>6,920,000<\/p>\n<p>Total stockholders&#8217; equity<\/p>\n<p>$16,044,000<\/p>\n<p>$12,770,000<\/p>\n<ol>\n<li>Compute the number of preferred shares that were issued during 20X6.<\/li>\n<li>Calculate the average issue price of the common stock sold in 20X6.<\/li>\n<li>By what amount did the company&#8217;s paid-in capital increase during 20X6?<\/li>\n<li>Did Star&#8217;s total legal capital increase or decrease during 20X6? By what amount?<\/li>\n<\/ol>\n<p><b>3. <\/b><b>Bond computations: Straight-line amortization<\/b><\/p>\n<p>Southlake Corporation issued $900,000 of 8% bonds on March 1, 20X1. The bonds pay interest on March 1 and September 1 and mature in 10 years. Assume the independent cases that follow.<\/p>\n<ul>\n<li>Case A\u2014The bonds are issued at 100.<\/li>\n<li>Case B\u2014The bonds are issued at 96.<\/li>\n<li>Case C\u2014The bonds are issued at 105.<\/li>\n<\/ul>\n<p>Southlake uses the straight-line method of amortization.<\/p>\n<p><b>Instructions: <\/b><\/p>\n<p>Complete the following table:<\/p>\n<p>&nbsp;&nbsp;&nbsp;&nbsp;<\/p>\n<p>Case A<\/p>\n<p>Case B<\/p>\n<p>Case C<\/p>\n<ol>\n<li>Cash inflow on the issuance date<\/li>\n<\/ol>\n<p>_______<\/p>\n<p>_______<\/p>\n<p>_______<\/p>\n<ol>\n<li>Total cash outflow through maturity<\/li>\n<\/ol>\n<p>_______<\/p>\n<p>_______<\/p>\n<p>_______<\/p>\n<ol>\n<li>Total borrowing cost over the life of the bond issue<\/li>\n<\/ol>\n<p>_______<\/p>\n<p>_______<\/p>\n<p>_______<\/p>\n<ol>\n<li>Interest expense for the year ended December 31, 20X1<\/li>\n<\/ol>\n<p>_______<\/p>\n<p>_______<\/p>\n<p>_______<\/p>\n<ol>\n<li>Amortization for the year ended December 31, 20X1<\/li>\n<\/ol>\n<p>_______<\/p>\n<p>_______<\/p>\n<p>_______<\/p>\n<ol>\n<li>Unamortized premium as of December 31, 20X1<\/li>\n<\/ol>\n<p>_______<\/p>\n<p>_______<\/p>\n<p>_______<\/p>\n<ol>\n<li>Unamortized discount as of December 31, 20X1<\/li>\n<\/ol>\n<p>_______<\/p>\n<p>_______<\/p>\n<p>_______<\/p>\n<ol>\n<li>Bond carrying value as of December 31, 20X1<\/li>\n<\/ol>\n<p>_______<\/p>\n<p>_______<\/p>\n<p>_______<\/p>\n<p><b>4. <\/b><b>Product costs and period costs <\/b><\/p>\n<p>The costs that follow were extracted from the accounting records of several different manufacturers:<\/p>\n<ol>\n<li>Weekly wages of an equipment maintenance worker<\/li>\n<li>Marketing costs of a soft drink bottler<\/li>\n<li>Cost of sheet metal in a Honda automobile<\/li>\n<li>Cost of president&#8217;s subscription to Fortune magazine <\/li>\n<li>Monthly operating costs of pollution control equipment used in a steel mill<\/li>\n<li>Weekly wages of a seamstress employed by a jeans maker<\/li>\n<li>Cost of compact discs (CDs) for newly recorded releases of Rush, Billy Joel, and Bryan Adams\n<ol>\n<li>Determine which of these costs are product costs and which are period costs.<\/li>\n<li>For the product costs only, determine those that are easily traced to the finished product and those that are not.<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<p><b>5. Definitions of manufacturing concepts<\/b> <\/p>\n<p> Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended:<\/p>\n<p>Materials and supplies used<\/p>\n<p>Brass $75,000<\/p>\n<p>Repair parts 16,000<\/p>\n<p>Machine lubricants 9,000<\/p>\n<p>Wages and salaries Machine operators 128,000<\/p>\n<p>Production supervisors 64,000<\/p>\n<p>Maintenance personnel 41,000<\/p>\n<p>Other factory overhead Variable 35,000<\/p>\n<p>Fixed 46,000<\/p>\n<p>Sales commissions 20,000<\/p>\n<p><b>Compute:<\/b><\/p>\n<ol>\n<li>Total direct materials consumed<\/li>\n<li>Total direct labor<\/li>\n<li>Total prime cost<\/li>\n<li>Total conversion cost<\/li>\n<\/ol>\n<p><b>6. Schedule <\/b><b>of cost of goods manufactured, income statement <\/b><\/p>\n<p>The following information was taken from the ledger of Jefferson Industries, Inc.:<\/p>\n<p>Direct labor<\/p>\n<p>$85,000<\/p>\n<p>&nbsp;<\/p>\n<p>Administrative expenses<\/p>\n<p>$59,000<\/p>\n<p>Selling expenses<\/p>\n<p>34,000<\/p>\n<p>&nbsp;<\/p>\n<p>Work in. process<\/p>\n<p>&nbsp;<\/p>\n<p>Sales<\/p>\n<p>300,000<\/p>\n<p>&nbsp;<\/p>\n<p>Jan. 1<\/p>\n<p>29,000<\/p>\n<p>Finished goods<\/p>\n<p>&nbsp;&nbsp;<\/p>\n<p>Dec. 31<\/p>\n<p>21,000<\/p>\n<p>Jan. 1<\/p>\n<p>115,000<\/p>\n<p>&nbsp;<\/p>\n<p>Direct material purchases<\/p>\n<p>88,000<\/p>\n<p>Dec. 31<\/p>\n<p>131,000<\/p>\n<p>&nbsp;<\/p>\n<p>Depreciation: factory<\/p>\n<p>18,000<\/p>\n<p>Raw (direct) materials on hand<\/p>\n<p>Indirect materials used<\/p>\n<p>10,000<\/p>\n<p>Jan. 1<\/p>\n<p>31,000<\/p>\n<p>&nbsp;<\/p>\n<p>Indirect labor<\/p>\n<p>24,000<\/p>\n<p>Dec. 31<\/p>\n<p>40,000<\/p>\n<p>&nbsp;<\/p>\n<p>Factory taxes<\/p>\n<p>8,000<\/p>\n<p>&nbsp;&nbsp;&nbsp;<\/p>\n<p>Factory utilities<\/p>\n<p>11,000<\/p>\n<p><b>Prepare the following: <\/b><\/p>\n<ol>\n<li>A schedule of cost of goods manufactured for the year ended December 31.<\/li>\n<li>An income statement for the year ended December 31.<\/li>\n<\/ol>\n<p><b>7. Manufacturing statements and cost behavior<\/b><\/p>\n<p>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.<\/p>\n<p><b>Per Unit <\/b><\/p>\n<p><b>Variable Cost <\/b><\/p>\n<p><b>Fixed Cost <\/b><\/p>\n<p>Direct materials<\/p>\n<p>$4.50<\/p>\n<p>$ \u2014<\/p>\n<p>Direct labor<\/p>\n<p>6.5<\/p>\n<p>\u2014<\/p>\n<p>Factory overhead<\/p>\n<p>9<\/p>\n<p>50,000<\/p>\n<p>Selling<\/p>\n<p>\u2014<\/p>\n<p>70,000<\/p>\n<p>Administrative<\/p>\n<p>\u2014<\/p>\n<p>135,000<\/p>\n<p>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.<\/p>\n<p><b>Instructions: <\/b><\/p>\n<ol>\n<li>Determine the cost of the finished goods inventory of light-gauge aluminum.<\/li>\n<li>Prepare an income statement for the current year ended December 31<\/li>\n<li>On the basis of the information presented:\n<ol>\n<li>Does it appear that the company pays commissions to its sales staff? Explain.<\/li>\n<li>What is the likely effect on the $4.50 unit cost of direct materials if next year&#8217;s production increases? Why?<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>Chapter Two and Three Problems 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 <a href=\"https:\/\/www.benedictsol.com\/blogs\/star-corporation-issued-both-common-and-preferred-stock-during-20x6-the-stockholders-equity-sections-of-the\/\" class=\"read-more\">Read More &#8230;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-49516","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/49516","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=49516"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/49516\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=49516"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=49516"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=49516"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}