# accounting-Star Corporation issued both common and preferred stock during

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## Description

Star Corporation issued both common and preferred stock during 2006. The stockholders’ equity sections of the company’s balance sheets at the end of 2006 and 2005 follow:

2006 2005
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 par value
Preferred 24,000 â€”
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 2006.
b. Calculate the average issue price of the common stock sold in 2006.
c. By what amount did the company’s paid-in capital increase during 2006?
d. Did Star’s total legal capital increase or decrease during 20X6? By what amount?

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.
â€¢ Case Aâ€”The bonds are issued at 100.
â€¢ Case Bâ€”The bonds are issued at 96.
â€¢ Case Câ€”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 as of December 31, 20X1 _______ _______ _______
g. Unamortized discount as of December 31, 20X1 _______ _______ _______
h. Bond carrying value as of December 31, 20X1 _______ _______ _______

. Definitions of manufacturing concepts
Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended:
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

Compute:
a. Total direct materials consumed
b. Total direct labor
c. Total prime cost
d. Total conversion cost

4. Schedule of cost of goods manufactured, income statement
The following information was taken from the ledger of Jefferson Industries, Inc.:
Direct labor \$85,000 Administrative expenses \$59,000
Selling expenses 34,000 Work in. process:
Sales 300,000 Jan. 1 29,000
Finished goods Dec. 31 21,000
Jan. 1 115,000 Direct material purchases 88,000
Dec. 31 131,000 Depreciation: factory 18,000
Raw (direct) materials on hand Indirect materials used 10,000
Jan. 1 31,000 Indirect labor 24,000
Dec. 31 40,000 Factory taxes 8,000
Factory utilities 11,000
Prepare the following:
a. A schedule of cost of goods manufactured for the year ended December 31.
b. An income statement for the year ended December 31.

5. Manufacturing statements and cost behavior
Tampa Foundry began operations during the current year, manufacturing various products for industrial use. One such product is light-gauge aluminum, which the company sells for \$36 per roll. Cost information for the year just ended follows.
Per Unit Variable Cost Fixed Cost
Direct materials \$4.50 \$ â€”
Direct labor 6.5 â€”
Selling â€” 70,000