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Acc 206 Week 2 Assignment

1347 words - 6 pages

Week 2 Assignment
ACC 206

1. Analysis of stockholders' equity
1. Preference stock (100 par value) issued during 20X6 = 580,000 – 500,000
= $80,000

Number of preference shares issued during 20X6

= Par value of preferred shares issued / Par value per share of preferred shares
= 80,000 / 100
= 800 shares

2. Common stock (10 par value) sold in 20X6 = 2,350,000 – 1,750,000
= $600,000

Number of common stock sold = 600,000 / 10
= 60,000 shares

Additional paid in ...view middle of the document...

Legal capital is total of par value of all shares issued

Preferred shares at par issued during 20X6 = $80,000
Common stock at par issued during 20X6 = $600,000

Total legal capital = 80,000 + 600,000
= $680,000

Yes , the company’s legal capital increased during 20X6 by $680,000.

2. Bond computations: Straight-line amortization
  | Case A | Case B | Case C |
a.  Cash inflow on the issuance date | 900,000 | 864,000 | 945,000 |
b. Total cash outflow through maturity | 1,620,000 | 1,620,000 | 1,620,000 |
c. Total borrowing cost over the life of the bond issue | 720,000 | 756,000 | 675,000 |
d. Interest expense for the year ended December 31, 20X1 | 60,000 | 63,000 | 56,250 |
e. Amortization for the year ended December 31, 20X1 | 0 | 3,000 | 3,750 |
f. Unamortized premium as of December 31, 20X1 | 0 | 0 | 41250 |
g. Unamortized discount as of December 31, 20X1 | 0 | 33,000 | 0 |
h. Bond carrying value as of December 31, 20X1 | 900,000 | 867,000 | 941,250 |
Computation work:a. | | | |
Cash received in case A = 9000 bonds * 100 = 900,000
Cash received in case B = 9000 bonds * 96 = 864,000
Cash received in case C = 9000 bonds * 105 = 945,000

b. $900,000 X 8% = $72,000 interest per year;
$72,000 X 10 years = $720,000;
$720,000 +$900,000 (principal) = $1,620,000

c.
Case A: 900,000 * 8% *10 = 720,000
Case B: 720,000 + 36,000 = $756,000
Case C: 945,000 - 45000 = $675,000

d.
Interest Expense Case A: ($720,000/10 years) X 10/12 = $60,000
Interest Expense Case B: ($756,000/10 years) X 10/12 = $63,000
Interest Expense Case C: ($675,000/10 years) X 10/12 = $56,250

e.
Amortization for year ended in Case A: $0
Amortization for year ended in Case B: ($36,000/10 years) X 10/12 = $3,000
Amortization for year ended in Case C: ($45,000/10 years) X 10/12 = $3,750

f.
Unamortized premium Case C: $45,000 - $3,750 = $41,250

g.
Unamortized discount Case B: $36,000 - $3,000 = $33,000

h.
Bond carrying value in Case A = $900,000
Bond carrying value in Case B = 900,000 – 33,000 = $867,000
Bond carrying value in Case C = 945,000 + 41250 = $941250

3. Definitions of manufacturing concepts
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
1. Total direct material consumed = Brass
= 75,000

2. Total direct labor = Wages and salaries Machine operators
...

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