Reference no: EM131821193

Assignment

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 common; no stated value has been assigned.

Exercise 2: Analysis of stockholders' equity

Star Corporation issued both common and preferred stock during 20X6. The stockholders' equity sections of the company's balance sheets atthe end of 20X6 and 20X5 follow:

	20X6	20X5
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 parvalue
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 20X6.
b. Calculate the average issue price of the common stock sold in 20X6.
c. By what amount did the company's paid-in capital increase during 20X6?
d. Did Star's total legal capital increase or decrease during 20X6? By what amount?

Exercise 3: Issuance of stock

Ventures Inc. was formed on January 1 to invest in artwork. The company is authorized to issue 10,000 shares of $1 par-value common stockand 1,000 shares of 10%, $50 par-value cumulative preferred stock. The following selected transactions occurred during the first quarter ofoperation:

Jan. 3 Sold 5,000 shares of common stock to the corporation'sfounders at $30 per share.
19 Sold 600 shares of preferred stock at $58 per share.

Feb. 4 Issued 100 common shares to an attorney for $3,300 of legalwork related to corporate start-up and formation.

11 Issued 2,000 shares of common stock to Pierre LaTour inexchange for a painting appraised at $75,000. The art originallycost LaTour $30,000.

Instructions

a. Prepare journal entries to record the company's transactions.

b. Prepare the stockholders' equity section of the firm's March 31 balance sheet. The Retained Earnings balance on this date totals $41,000.

c. The president of Ventures believes that organization costs should be expensed immediately. Briefly explain why the president's view isincorrect.

Exercise 4: Basic manufacturing computations

Lyon Manufacturing reported total manufacturing costs (direct materials used, direct labor, and factory overhead) of $549,000 for 20X3. Salesand operating expenses were $759,200 and $142,500, respectively. The following information appeared on company balance sheets:

	For the Year Ended
	12/31/X3	12/31/X2
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 20X3.

Exercise 5

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

1. Utilities, taxes, insurance, and depreciation are incurred jointly by Olympic's manufacturing, sales, and administrative facilities. The costswere as follows:

Utilities	$40,000
Taxes	25,000
Insurance	10,000
Depreciation	36,000

2. The first three costs are allocated proportionately on the basis of square feet occupied by the three functional areas. A review of thecompany'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.