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Drapeau Corp

Accounting

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Drapeau Corp. has provided you with financial information for the years 2011 and 2010, respectively. The company's fiscal year ends on December 31.
2011
2010
Assets
Cash
$  47,000
$  12,000
Trade Receivables
110,000
125,000
Merchandise inventory
25,000
36,000
Prepaid rent
0
7,000
Land, at cost
29,000
38,000
Equipment, at cost
690,000
600,000
Less: Accumulated depreciation
(224,000)
(215,000)
Total Assets
$ 677,000
$ 603,000
Liabilities
Trade payables
$  32,000
$  61,000
Rent payable
4,000
0
Bonds payable, at par, due 2020
45,000
120,000
Shareholders' Equity
Common shares
201,000
42,000
Retained earnings
395,000
380,000
Total Liabilities and Shareholders' Equity
$ 677,000
$ 603,000
Additional information for 2011:
1.     Net Profit for 2011 was $22,000. The calculation of profit includes the following selected items and amounts: Cost of goods sold, $293,000; Gross profit, $444,000; Depreciation expense, $27,000; Gain on sale of land, $2,000; Loss on sale of equipment, $4,000; and Rent expense, $16,000.          
2.     New equipment was purchased for $142,000 cash in 2011. Old equipment was sold for cash in 2011 (the amount can be derived).
3.     Bonds payable with a face value of $75,000 were converted to common shares in 2011.
4.     Trade payables relates to transactions with suppliers of merchandise inventory only.
Required
a.      How much cash was paid for rent in 2011? (2.5 marks)
b.     How much cash was paid to suppliers of merchandise inventory in 2011? (3 marks)
c.      How much cash was collected from customers in 2011?  (1.5 marks)
d.     Prepare in proper form a complete Statement of Cash Flows for 2011 (i.e., all sections).
     Use the indirect method for the Operating section. (13 marks)
e.  Calculate the quality of earnings ratio for 2011 and give a meaningful definition of
     this ratio. (2 marks)Drapeau Corp. has provided you with financial information for the years 2011 and 2010, respectively. The company's fiscal year ends on December 31.
2011
2010
Assets
Cash
$  47,000
$  12,000
Trade Receivables
110,000
125,000
Merchandise inventory
25,000
36,000
Prepaid rent
0
7,000
Land, at cost
29,000
38,000
Equipment, at cost
690,000
600,000
Less: Accumulated depreciation
(224,000)
(215,000)
Total Assets
$ 677,000
$ 603,000



Liabilities


Trade payables
$  32,000
$  61,000
Rent payable
4,000
0
Bonds payable, at par, due 2020
45,000
120,000
Shareholders' Equity
Common shares
201,000
42,000
Retained earnings
395,000
380,000
Total Liabilities and Shareholders' Equity
$ 677,000
$ 603,000

Additional information for 2011:
1.     Net Profit for 2011 was $22,000. The calculation of profit includes the following selected items and amounts: Cost of goods sold, $293,000; Gross profit, $444,000; Depreciation expense, $27,000; Gain on sale of land, $2,000; Loss on sale of equipment, $4,000; and Rent expense, $16,000.          
2.     New equipment was purchased for $142,000 cash in 2011. Old equipment was sold for cash in 2011 (the amount can be derived).
3.     Bonds payable with a face value of $75,000 were converted to common shares in 2011.
4.     Trade payables relates to transactions with suppliers of merchandise inventory only.
Required
a.      How much cash was paid for rent in 2011? (2.5 marks)
b.     How much cash was paid to suppliers of merchandise inventory in 2011? (3 marks)
c.      How much cash was collected from customers in 2011?  (1.5 marks)
d.     Prepare in proper form a complete Statement of Cash Flows for 2011 (i.e., all sections).
     Use the indirect method for the Operating section. (13 marks)
e.  Calculate the quality of earnings ratio for 2011 and give a meaningful definition of
     this ratio. (2 marks)