In the excel form, please use the data for NOV-DEC as replacement for Original amount, as NOV-DEC is the starting date of my course REFERENCE QUESTIONS: CHAPTER 2 Exercise 1 Issuance of stock Prepare journal entries to record
In the excel form, please use the data for NOV-DEC as replacement for Original amount, as NOV-DEC is the starting date of my course
REFERENCE QUESTIONS:
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 independentcases:
- Jackson Corporation has common stock with a par value of $1 per share.
- Royal Corporation has no-par common with a stated value of $5 per share.
- 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 |
- Compute the number of preferred shares that were issued during 20X6.
- Calculate the average issue price of the common stock sold in 20X6.
- By what amount did the company’s paid-in capital increase during 20X6?
- 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
- Prepare journal entries to record the company’s transactions.
- Prepare the stockholders’ equity section of the firm’s March 31 balance sheet. The Retained Earnings balance on this date totals $41,000.
- 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
- Prepare a schedule of cost of goods manufactured in good form.
- Prepare an income statement in good form.
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