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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:

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CHAPTER2 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:

  1. Jackson Corporation has common stock with a par value of $1 per share.
    1. Royal Corporation has no-par common with a stated value of $5 per share.
    1. French Corporation has no-par common; no stated value has been assigned.

CHAPTER2 EXERCISE 3:

  1. Stock subscriptions: Journal entries
    Investors recently subscribed to 5,000 shares of B&J Travel’s $1 par-value common stock at $10 per share. During the year, the company received 80% of the balances due, which resulted in the issuance of 4,000 shares of stock.
    1. Prepare journal entries to record
      1) the subscriptions to investors.
      2) the receipt of cash from subscribers.
      3) the issuance of shares.
    1. Determine the year-end balance in the Common Stock Subscribed account.
    1. Determine the year-end balance in the Common Stock Subscriptions Receivable account.

CHAPTER2 PROBLEM 3:

  1. Bond computations: Straight-line amortization
    Southlake Corporation issued $900,000 of 8% bonds on March 1, 20X1. The bonds pay interest on March 1 and September 1 and mature in 10 years. Assume the independent cases that follow:
    1. Case A—The bonds are issued at 100.
    1. Case B—The bonds are issued at 96.
    1. Case C—The bonds are issued at 105.

Southlake uses the straight-line method of amortization.

Instructions
Complete the following table:

    Case A Case B Case C
a. Cash inflow on the issuance date ________ ________ ________
b. Total cash outflow through maturity ________ ________ ________
c. Total borrowing cost over the life of the bond issue ________ ________ ________
d. Interest expense for the year ended December 31, 20X1 ________ ________ ________
e. Amortization for the year ended December 31, 20X1 ________ ________ ________
f. Unamortized premium or unamoratized discount as of December 31, 20X1 if any ________ ________ ________
g. Bond carrying value as of December 31, 20X1

CHAPTER3 EXERCISE 4:

  1. Basic manufacturing computations
    Lyon Manufacturing reported total manufacturing costs (direct materials used, direct labor, and factory overhead) of $549,000 for 20X3. Sales and 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.

CHAPTER3 PROBLEM2:

  1. 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 costs were 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 the company’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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