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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
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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