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Problem 5-3A Preparing adjusting entries and income statements; and computing gross margin, acid-test, and current ratios L.O. A1, A2, P3, P4
[The following information applies to the questions displayed below.]
The following unadjusted trial balance is prepared at fiscal year-end for Rex Company.
REX COMPANY
Unadjusted Trial Balance
January 31,2011
Debit
Credit
Cash
$
2,200
Merchandise inventory
11,500
Store supplies
4,800
Prepaid insurance
2,300
Store equipment
41,900
Accumulated depreciation—Store equipment
$
15,000
Accounts payable
9,000
T. Rex, Capital
32,000
T. Rex, Withdrawals
2,000
Sales
104,000
Sales discounts
1,000
Sales returns and allowances
2,000
Cost of goods sold
37,400
Depreciation expense—Store equipment
0
Salaries expense
31,000
Insurance expense
0
Rent expense
14,000
Store supplies expense
0
Advertising expense
9,900
Totals
$
160,000
$
160,000
Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Rex Company uses a perpetual inventory system.
a.
Store supplies still available at fiscal year-end amount to $1,650.
b.
Expired insurance, an administrative expense, for the fiscal year is $1,500.
c.
Depreciation expense on store equipment, a selling expense, is $1,400 for the fiscal year.
d.
To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,100 of inventory is still available at fiscal year-end.
Problem 5-3A Part 1
Required:
1.
Using the above information prepare adjusting journal entries (Omit the "$" sign in your response):
General Journal
Debit
Credit
a.
b.
c.
d.
Problem 5-3A Part 2
2.
Prepare a multiple-step income statement for fiscal year 2011. (Input all amounts as positive values. Omit the "$" sign in your response.)
REX COMPANY
Income Statement
For Year Ended January 31, 2011
$
$
Expenses
Selling expenses
Total selling expenses
General and administrative expenses
Total general and administrative expenses
Total expenses
$
Problem 5-3A Part 3
3.
Prepare a single-step income statement for fiscal year 2011. (Input all amounts as positive values. Omit the "$" sign in your response.)
REX COMPANY
Income Statement
For Year Ended January 31, 2011
$
Expenses
$
Total expenses
$
Problem 5-3A Part 4
4.
Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2011. (Round your answers to 2 decimal places.)
Current ratio
Acid-test ratio
Gross margin ratio
Problem 5-4A Computing merchandising amounts and formatting income statements L.O. C2, P4
[The following information applies to the questions displayed below.]
BizKid Company’s adjusted trial balance on August 31, 2011, its fiscal year-end, follows.
Debit
Credit
Merchandise inventory
$
31,000
Other (noninventory) assets
120,400
Total liabilities
$
35,000
N. Kidman, Capital
101,650
N. Kidman, Withdrawals
8,000
Sales
212,000
Sales discounts
3,250
Sales returns and allowances
14,000
Cost of goods sold
82,600
Sales salaries expense
29,000
Rent expense—Selling space
10,000
Store supplies expense
2,500
Advertising expense
18,000
Office salaries expense
26,500
Rent expense—Office space
2,600
Office supplies expense
800
Totals
$
348,650
$
348,650
On August 31, 2010, merchandise inventory was $25,000. Supplementary records of merchandising activities for the year ended August 31, 2011, reveal the following itemized costs.
Invoice cost of merchandise purchases
$
91,000
Purchase discounts received
1,900
Purchase returns and allowances
4,400
Costs of transportation-in
3,900
Problem 5-4A Part 1
Required:
1.
Compute the company’s net sales for the year. (Omit the "$" sign in your response.)
Net sales
$
Problem 5-4A Part 2
2.
Compute the company’s total cost of merchandise purchased for the year. (Omit the "$" sign in your response.)
Total cost of merchandise purchased
$
Problem 5-4A Part 3
3.
Prepare a multiple-step income statement that includes separate categories for selling expenses and for general and administrative expenses. (Input all amounts as positive values. Omit the "$" sign in your response.)
BIZKID COMPANY
Income Statement
For Year Ended August 31, 2011
$
$
Expenses
Selling expenses
Total selling expenses
General and administrative expenses
Total general and administrative expenses
Total expenses
$
Problem 5-4A Part 4
4.
Prepare a single-step income statement that includes these expense categories: cost of goods sold, selling expenses, and general and administrative expenses. (Input all amounts as positive values. Omit the "$" sign in your response.)
BIZKID COMPANY
Income Statement
For Year Ended August 31, 2011
$
Expenses
$
Total expenses
$
