Part A
The following information is given for Tripp Company which uses the indirect method.
Net income $20000
Depreciation expense 3000
Increase in accounts receivable 2000
Payment of dividends 2000
Proceeds from sale of equipment 6000
Increase in accounts payable 4000
Decrease in inventory 3000
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
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 $25000 $30000
Cost of Goods Sold 16000 18000
Net Income 2000 2800
Cash 5000 900
Accounts Receivable 3000 2000
Inventory 2000 3600
Current Liabilities 6000 5000
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
Prepare an income statement showing departmental contribution margin based on the following:
Dept. X Dept. Y Rent Expense
Space (square feet) 17500 35000
Net Sales $60000 $40000
Cost of Goods Sold 18000 16000
Rent Expense (allocated based on square feet) $2700
