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Posts: 2
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A year ago
Part A
(2 points each for a possible total of 6 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 ________.
136 PRINCIPLES OF ACCOUNTING 2
Part B
(2 points each for a possible total of 10 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
(10 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
PRINCIPLES OF ACCOUNTING 2 137
Part D
(4 points each for a possible total of 24 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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wrote...
Valued Member
A year ago
Part A

1. The cash flow from operating activities is $28,000.00
2. The cash flow from investing activities is $6,000.00
3. The cash flow from financing activities is $2,000.00


wrote...
A year ago
Thank you. Could you help with Part B, C, and D?
wrote...
Educator
A year ago
Part B
(2 points each for a possible total of 10 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

(1)

Current ratio = current assets / current liabilities

Current assets = cash + accounts receivable1.33

(2) Acid-test ratio = (current assets - inventory) / current liabilities

= $3,000 / $6,000 = 0.50

(3) Accounts receivable turnover = Net credit sales for the year / average accounts receivable

= $25,000 / $(3,000 + 2,000) = 5.0

(4) Average collection period = number of days in the year / Accounts receivable turnover

= 365 days / 5.0 = 73 days

(5) Inventory turnover ratio = COGS for the year / average inventory

= $16,000 / $(2,000 + 3,600) = 2.86

So, current ratio = $(5,000 + 3,000) / $6,000 =
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wrote...
Educator
A year ago
Part C
(10 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
PRINCIPLES OF ACCOUNTING 2 137

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wrote...
Educator
A year ago
Part D
(4 points each for a possible total of 24 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.

Answer:

1 Goods in process inventory A/C Dr.$60000

        To Raw material inventory A/C              $60000

2 Goods in process inventory A/C Dr. $53000

       To factory payroll A/C                        $53000

3. Factory payroll A/C Dr. $17000

       To cash A/C                         $17000

4. Goods in process inventory A/C Dr. $21200

       To factory payroll A/C                        $21200

5. Finished goods A/C Dr. $42000

        To goods in process A/C      $42000

6. Cost of goods sold A/C Dr. $32000

         To Finished goods A/C    $32000
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1 weeks ago
Thank you
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Thank you
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A week ago
Thank you!!
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A week ago
Thanks
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