ASSIGNMENT 08 A03 Principles of Accounting

| September 29, 2018

ASSIGNMENT 08A03 Principles of Accounting IIPart 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 $20,000Depreciation expense 3,000Increase in accounts receivable 2,000Payment of dividends 2,000Proceeds from sale of equipment 6,000Increase in accounts payable 4,000Decrease in inventory 3,000From 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 1Net Credit Sales $25,000 $30,000Cost of Goods Sold 16,000 18,000Net Income 2,000 2,800Cash 5,000 900Accounts Receivable 3,000 2,000Inventory 2,000 3,600Current Liabilities 6,000 5,000Compute 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 ExpenseSpace (square feet) 17,500 35,000Net Sales $60,000 $40,000Cost of Goods Sold 18,000 16,000Rent Expense (allocated based on square feet) $2,700Part 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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