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Bagwell's net income for the year ended December 31, Year 2 was $199,000. Information from Bagwell's...

Bagwell's net income for the year ended December 31, Year 2 was $199,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2.

At December 31 Year 2 Year 1
Common Stock, $5 par value $ 514,000 $ 462,600
Paid-in capital in excess of par 962,000 865,600
Retained earnings 702,000 594,600

Multiple Choice

  • $51,400.

  • $199,000.

  • $107,400.

  • $96,400.

  • $147,800.

Glaston Company manufactures a single product using a JIT inventory system. The production budget indicates that the number of units expected to be produced are 197,000 in October, 205,500 in November, and 202,000 in December. Glaston assigns variable overhead at a rate of $0.80 per unit of production. Fixed overhead equals $154,000 per month. Compute the total budgeted overhead that would appear on the factory overhead budget for month of October.

Multiple Choice

  • $351,000.

  • $154,000.

  • $157,600.

  • $318,400.

  • $311,600.

Solutions

Expert Solution

Ans:

Answer

A. 147,800

Working:

Cash received from the sale of its common stock during Year 2 =

Common Stock @5 par value in Year 2 + Paid in Capital in excess of par in year 2 -  Common Stock @5 par value in Year 1 - Paid in Capital in excess of par in year1

Cash received from the sale of its common stock during Year 2:

                            = 514,000+962,000 – (462,600+865,600)

Cash received from the sale of its common stock during Year 2 = $ 147,800

Ans: $311,600

Working:

Budgeted Production for the month of October is 197,000 Units.

Factory Budgeted Over head = Budgeted variable overhead + Budgeted Fixed Overhead

Budgeted Variable Overhead

Variable Overhead rate X Budgeted production = $0.80 X 197,000 units =$157,600

Budgeted Fixed Overhead = $ 154,000

Factory Overhead Budget = $157,600 + $154,000 = $311,600

Note: Fixed Overhead given are related to be part of Factory like rent of factory building, machinery etc

ekkarill92 answered 1 year ago
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