Part A - The following information is given for Tripp Company, which uses the indirect method.
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Net income
|
$20,000
|
|
Depreciation expense
|
3,000
|
|
Increase in accounts receivable
|
2,000
|
|
Payment of dividends
|
2,000
|
|
Proceeds from sale of equipment
|
6,000
|
|
Increase in accounts payable
|
4,000
|
|
Decrease in inventory
|
3,000
|
From the information provided, answer the following questions:
1. The cash flow from operating activities is
2. The cash flow from investing activities is
3. The cash flow from financing activities is
Part B - Selected data for Stick's Design are given as of December 31, Year 1 and Year 2 (rounded to the nearest hundredth).
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Year 2
|
Year 1
|
|
Net Credit Sales
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$25,000
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$30,000
|
|
Cost of Goods Sold
|
16,000
|
18,000
|
|
Net Income
|
2,000
|
2,800
|
|
Cash
|
5,000
|
900
|
|
Accounts Receivable
|
3,000
|
2,000
|
|
Inventory
|
2,000
|
3,600
|
|
Current Liabilities
|
6,000
|
5,000
|
Compute the following:
1. Current ratio for Year 2
2. Acid-test ratio for Year 2
3. Accounts receivable turnover for Year 2
4. Average collection period for Year 2
5. Inventory turnover for Year 2
Part C - Prepare an income statement showing departmental contribution margin based on the following:
|
|
Dept. X
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Dept. Y
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Rent Expense
|
|
Space (square feet)
|
17,500
|
|
35,000
|
|
Net Sales
|
$60,000
|
$40,000
|
|
|
Cost of Goods Sold
|
18,000
|
|
16,000
|
|
Rent Expense (allocated based on square feet)
|
|
|
$2,700
|
Part D - From the following transactions, prepare the appropriate general journal entries for the month of April.
1. Raw materials costing $60,000 were issued from the storeroom.
2. Direct labor of $53,000 was charged to production.
3. Indirect labor costs of $17,000 were incurred.
4. Overhead was applied at the rate of 40% of direct labor dollars.
5. Completed products costing $42,000 were transferred to finished goods.
6. Products costing $32,000 were sold.