Question 1

Hill Company reported net income of $10,000 for 2010. Additional 2010 information is as follows:

Expenditures for productive assets	$6000
Depreciation expense on productive assets	2000
Dividends paid on common stock	900
Increase in accounts payable	400
Decrease in inventory	200
Amortization of patent	100
Decrease in accounts receivable	300

Calculate the cash flows from operating activities.

Question 2

Prior to the year-end adjustment to record bad debt expense the ledger of Stickler Company included the following accounts and balances:

Allowance for doubtful accounts $15,000 Bad debt expense 0 Accounts Receivable 200,000 Cash collections on accounts receivable during 2010 amounted to $450,000. Sales revenue during 2010 amounted to $800,000, of which 75% was on credit, and it was estimated that 2% of the credit sales made in 2010 would ultimately become uncollectible. Determine the balances of the allowance for doubtful accounts and bad debt expense after the adjustment to record bad debt expense was made. The allowance for doubtful accounts has a credit balance prior to the adjusting entry.

Question 3

On December 31, 2011, Colonial Corporation had the following account balances related to credit sales and receivables prior to recording adjusting entries:

Accounts receivable $25,000 Allowance for doubtful accounts 200 (credit) Sales revenue (all credit sales) 400,000 Requirements: Present the necessary year-end adjusting entry related to uncollectible accounts for each of the following independent assumptions:

1. An aging of accounts receivable is completed. It is estimated that $5,000 of the receivables outstanding at year-end will be uncollectible.
2. Assume the same information presented in part 1. Except that prior to adjustment, the allowance for doubtful accounts had a debit balance of $200 rather than a credit balance of $200.

Question 4

The inventory records of Martin Corporation below reflected the following information for the month of August.

1. Determine the amount of the ending inventory and cost of goods sold under each of the following methods assuming the periodic inventory system. Assuming a physical count shows there are 1,300 units in the ending inventory.
   • FIFO
   • LIFO.
2. Which method gives the highest Net Income?
3. Which method gives the highest assets value?

Date	Transaction	Number of Units	Unit Cost
8/1	Beginning inventory	400	$5
8/3	Purchase No. 1	400	$5
8/5	Sale No. 1	600
8/7	Sale No. 2	100
8/11	Purchase No. 2	1000	$7
8/17	Sale No. 3	700
8/19	Purchase No. 3	1000	$7
8/21	Sale No. 4	600
8/28	Sale No. 5	600
8/29	Purchase No. 4	1200	$9
8/30	Ending Inventory