Assignment 08 a03 principles of accounting ii

ASSIGNMENT 08

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.