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ACC 206 chapter 2 and chapter 3 complete solutions correct answers key
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ACC 206 chapter 2 and chapter 3 complete solutions correct answers key

 

 CHAPTER 2

 

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 3

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?

 

Problem 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.

 

 

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 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

 

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 Olympic's manufacturing, sales, and administrative facilities. The costswere 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 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.

 

 

 

 

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ACC 206 chapter 2 and chapter 3 complete solutions correct answers key
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ACC 206 chapter 2 and chapter 3 complete solutions correct answers key CHAPTER 2 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 3 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. C...
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