Question description

 

1. 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: 

The cash flow from operating activities is ________. 

The cash flow from investing activities is ________. 

The cash flow from financing activities is ________. 

 

 

 

2. 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: 

Current ratio for Year 2 

 Acid-test ratio for Year 2 

 Accounts receivable turnover for Year 2 

Average collection period for Year 2 

 Inventory turnover for Year 2

 

 

 

3. 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

 

 

 

4. 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.