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Vargas Corporation

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A. Vargas Corporation is authorized to issue 20,000 shares of $50 par value, 10% Preferred stock and 125,000 shares of $3 par value common stock. On January 1, 2012, the ledger contained the following stockholders' equity balances.

Preferred Stock (10,000 shares) $500,000
Paid-in Capital in Excess of Par Value-Preferred 75,000
Common Stock (70,000 shares) 210,000
Paid-in Capital in Excess of Par Value-Common 700,000
Retained Earnings 300,000
During 2012, the following transactions occurred.
Feb. 1 Issued 2,000 shares of preferred stock for land having a fair market value of $125,000.
Mar. 1 Issued 1,000 shares of preferred stock for cash at $65 per share.
July 1 Issued 16,000 shares of common stock for cash at $7 per share.
Sept. 1 Issued 400 shares of preferred stock for a patent. The asking price of the patent was $30,000. Market values were preferred stock $70 and patent indeterminable.
Dec. 1 Issued 8,000 shares of common stock for cash at $7.50 per share.
Dec. 31 Net income for the year was $260,000. No dividends were declared.

Journalize the transactions and the closing entry for net income.

Date Account/Description Debit Credit
Feb. 1

Mar. 1

July 1

Sept. 1

Dec. 1

Dec. 31

B. Enter the beginning balances in the accounts, and post the journal entries to the stockholders' equity accounts. (Use J2 for the posting reference.)

Preferred Stock
Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance ï??

J2

J2

J2

Common Stock
Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance ï??

J2

J2

Paid-in Capital in Excess of Par Value-Preferred Stock
Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance ï??

J2

J2

J2

Paid-in Capital in Excess of Par Value-Common Stock
Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance ï??

J2

J2

Retained Earnings
Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance ï??

J2

VARGAS CORPORATION
C. Stockholders' equity

,

$ par value,

shares authorized,

shares issued and outstanding
$

,

$ par value,

shares authorized,

shares issued and outstanding

$

Total stockholders' equity $

Complete a stockholders' equity section at December 31, 2012.

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Your tutorial is in excel (click in cells to see computations) in a schedule that maps out all the activity. Then the details are put into the grid provided (in word).

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Flow of Cost in Job Order Cost System

See the attached file.
1. Knox Company begins operations in on January 1st Because all work is done to customer specification, the company decides to use a job order cost system. Prepare a flow chart of a typical job order system with the arrows showing the flow of cost. Identify the eight transactions.

2. During January, it's first month of operations, Knox Company accumulated the following manufacturing costs: raw material $4,000 on account, factory labor 6,000 of which $5,200 relates to factory wages payable and $800 relates to payroll taxes payable, and utilities payable $2,000. Prepare separate journal entries for each type of manufacturing cost.

3. In January, Knox Company requisitions raw materials for production as follows: Job 1 $900, Job 2 $1,400, Job 3 $700, and general factory use $600, Prepare a summary journal entry to record raw materials used.

4. The gross earnings of the factory workers for Vargas Company during the month of January are $66,000. The employer's payroll taxes for the factory payroll are $ 8,000. The fringe benefits to be paid by the employer on this payroll are $6,000. Of the total accumulated cost of factory labor 85% is related to direct labor and 15% is attributed to indirect labor.
(a) Prepare the entry to record the factory labor costs for the month of January.
(b) Prepare the entry to assign factory labor to production.

5. Stine Company uses a job order cost system. On May 1, the company has a balance in Work Process Inventory of $ 3,500 and two jobs in process: Job No. 429 $2,000 and Job No. 430 $1,500. During May, a summary of source documents (see the attachment) reveals that Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 429 is completed during the month.
(a) Prepare summery journal entries to record the requisition slips, the time tickets, the assignment of manufacturing overhead to jobs, and the completion of Job No. 429.
(b) Post the entries to Work in Process Inventory, and prove the agreement of the control account with the job cost sheets using a T-account.

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