Star Corporation issued both common and preferred stock during 20X6. The stockholders’ equity sections of the company’s balance sheets at the 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 par value 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 a. Compute the number of preferred shares that were issued during 20X6. b. Calculate the average issue price of the common stock sold in 20X6. c. By what amount did the company’s paid-in capital increase during 20X6? d. Did Star’s total legal capital increase or decrease during 20X6? By what amount?2. 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. • Case A—The bonds are issued at 100. • Case B—The bonds are issued at 96. • 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 as of December 31, 20X1 _______ _______ _______ g. Unamortized discount as of December 31, 20X1 _______ _______ _______ h. Bond carrying value as of December 31, 20X1 _______ _______ _______3. Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended:Materials and supplies usedBrass $75,000Repair parts 16,000Machine lubricants 9,000Wages and salaries Machine operators 128,000Production supervisors 64,000Maintenance personnel 41,000Other factory overhead Variable 35,000Fixed 46,000Sales commissions 20,000Compute:a. Total direct materials consumedb. Total direct laborc. Total prime costd. Total conversion cost4.The following information was taken from the ledger of Jefferson Industries, Inc.:Direct labor $85,000 Administrative expenses $59,000Selling expenses 34,000 Work in. process:Sales 300,000 Jan. 1 29,000Finished goods Dec. 31 21,000Jan. 1 115,000 Direct material purchases 88,000Dec. 31 131,000 Depreciation: factory 18,000Raw (direct) materials on hand Indirect materials used 10,000Jan. 1 31,000 Indirect labor 24,000Dec. 31 40,000 Factory taxes 8,000Factory utilities 11,000Prepare 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 behaviorTampa 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 CostDirect materials $4.50 $ —Direct labor 6.5 —Factory overhead 9 50,000Selling — 70,000Administrative — 135,000Production and sales totaled 20,000 rolls and 17,000 rolls, respectively There is no work in process. Tampa carries its finished goods inventory at the average unit cost of production.Instructions:a. Determine the cost of the finished goods inventory of light-gauge aluminum.b. Prepare an income statement for the current year ended December 31c. On the basis of the information presented:1. Does it appear that the company pays commissions to its sales staff? Explain.2. What is the likely effect on the $4.50 unit cost of direct materials if next year’s production increases? Why?

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