Principles of accounting ii assignment


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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.