ASSIGNMENT 08 A03 Principles of Accounting II

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A03 Principles of Accounting II

Part A (5 points each for a possible total of 15 points)
The following information is given for Tripp Company, which uses the indirect method.
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 (5 points each for a possible total of 25 points)
Selected data for Stick's Design are given as of December 31, Year 1 and Year 2 (rounded to the nearest hundredth).
                                           Year 2             Year 1
Net Credit Sales                        $25,000           $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 (30 points)
Prepare an income statement showing departmental contribution margin based on the following:
                                      Dept. X           Dept. Y           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 (5 points each for a possible total of 30 points)

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.

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