Problem 5-3A Preparing adjusting entries and income statements; and computing gross margin, acid-test, and current ratios L.O. A1, A2, P3, P4<\/p>\n
[The following information applies to the questions displayed below.]<\/p>\n
The following unadjusted trial balance is prepared at fiscal year-end for Rex Company.<\/p>\n
REX COMPANY<\/p>\n
Unadjusted Trial Balance<\/p>\n
January 31,2011<\/p>\n
<\/p>\n
Debit<\/p>\n
Credit<\/p>\n
Cash<\/p>\n
$<\/p>\n
2,200 <\/p>\n
<\/p>\n
Merchandise inventory<\/p>\n
<\/p>\n
11,500 <\/p>\n
<\/p>\n
Store supplies<\/p>\n
<\/p>\n
4,800 <\/p>\n
<\/p>\n
Prepaid insurance<\/p>\n
<\/p>\n
2,300 <\/p>\n
<\/p>\n
Store equipment<\/p>\n
<\/p>\n
41,900 <\/p>\n
<\/p>\n
Accumulated depreciation\u2014Store equipment<\/p>\n
<\/p>\n
$<\/p>\n
15,000 <\/p>\n
Accounts payable<\/p>\n
<\/p>\n
9,000 <\/p>\n
T. Rex, Capital<\/p>\n
<\/p>\n
32,000 <\/p>\n
T. Rex, Withdrawals<\/p>\n
<\/p>\n
2,000 <\/p>\n
<\/p>\n
Sales<\/p>\n
<\/p>\n
104,000 <\/p>\n
Sales discounts<\/p>\n
<\/p>\n
1,000 <\/p>\n
<\/p>\n
Sales returns and allowances<\/p>\n
<\/p>\n
2,000 <\/p>\n
<\/p>\n
Cost of goods sold<\/p>\n
<\/p>\n
37,400 <\/p>\n
<\/p>\n
Depreciation expense\u2014Store equipment<\/p>\n
<\/p>\n
0 <\/p>\n
<\/p>\n
Salaries expense<\/p>\n
<\/p>\n
31,000 <\/p>\n
<\/p>\n
Insurance expense<\/p>\n
<\/p>\n
0 <\/p>\n
<\/p>\n
Rent expense<\/p>\n
<\/p>\n
14,000 <\/p>\n
<\/p>\n
Store supplies expense<\/p>\n
<\/p>\n
0 <\/p>\n
<\/p>\n
Advertising expense<\/p>\n
<\/p>\n
9,900 <\/p>\n
<\/p>\n
Totals<\/p>\n
$<\/p>\n
160,000 <\/p>\n
$<\/p>\n
160,000 <\/p>\n
<\/p>\n
Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Rex Company uses a perpetual inventory system.<\/p>\n
a.<\/b><\/p>\n
Store supplies still available at fiscal year-end amount to $1,650.<\/p>\n
b.<\/b><\/p>\n
Expired insurance, an administrative expense, for the fiscal year is $1,500.<\/p>\n
c.<\/b><\/p>\n
Depreciation expense on store equipment, a selling expense, is $1,400 for the fiscal year.<\/p>\n
d.<\/b><\/p>\n
To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,100 of inventory is still available at fiscal year-end.<\/p>\n
Problem 5-3A Part 1<\/p>\n
Required:<\/b><\/p>\n
1.<\/b><\/p>\n
Using the above information prepare adjusting journal entries (Omit the “$” sign in your response)<\/b>:<\/p>\n
<\/p>\n
General Journal<\/p>\n
Debit<\/p>\n
Credit<\/p>\n
a.<\/p>\n
<\/p>\n
b.<\/p>\n
<\/p>\n
c.<\/p>\n
<\/p>\n
d.<\/p>\n
<\/p>\n
Problem 5-3A Part 2<\/p>\n
2.<\/b><\/p>\n
Prepare a multiple-step income statement for fiscal year 2011. (Input all amounts as positive values. Omit the “$” sign in your response.)<\/b><\/p>\n
REX COMPANY<\/p>\n
Income Statement<\/p>\n
For Year Ended January 31, 2011<\/p>\n
$ <\/p>\n
$ <\/p>\n
Expenses<\/p>\n
Selling expenses<\/p>\n
Total selling expenses<\/p>\n
General and administrative expenses<\/p>\n
Total general and administrative expenses<\/p>\n
Total expenses<\/p>\n
$ <\/p>\n
Problem 5-3A Part 3<\/p>\n
3.<\/b><\/p>\n
Prepare a single-step income statement for fiscal year 2011. (Input all amounts as positive values. Omit the “$” sign in your response.)<\/b><\/p>\n
REX COMPANY<\/p>\n
Income Statement<\/p>\n
For Year Ended January 31, 2011<\/p>\n
$ <\/p>\n
Expenses<\/p>\n
$ <\/p>\n
Total expenses<\/p>\n
$ <\/p>\n
Problem 5-3A Part 4<\/p>\n
4.<\/b><\/p>\n
Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2011. (Round your answers to 2 decimal places.)<\/b><\/p>\n
Current ratio<\/p>\n
Acid-test ratio<\/p>\n
Gross margin ratio<\/p>\n
Problem 5-4A Computing merchandising amounts and formatting income statements L.O. C2, P4<\/p>\n
[The following information applies to the questions displayed below.]<\/p>\n
BizKid Company\u2019s adjusted trial balance on August 31, 2011, its fiscal year-end, follows.<\/p>\n
Debit<\/p>\n
Credit<\/p>\n
Merchandise inventory<\/p>\n
$<\/p>\n
31,000<\/p>\n
Other (noninventory) assets<\/p>\n
120,400<\/p>\n
Total liabilities<\/p>\n
$<\/p>\n
35,000<\/p>\n
N. Kidman, Capital<\/p>\n
101,650<\/p>\n
N. Kidman, Withdrawals<\/p>\n
8,000<\/p>\n
Sales<\/p>\n
212,000<\/p>\n
Sales discounts<\/p>\n
3,250<\/p>\n
Sales returns and allowances<\/p>\n
14,000<\/p>\n
Cost of goods sold<\/p>\n
82,600<\/p>\n
Sales salaries expense<\/p>\n
29,000<\/p>\n
Rent expense\u2014Selling space<\/p>\n
10,000<\/p>\n
Store supplies expense<\/p>\n
2,500<\/p>\n
Advertising expense<\/p>\n
18,000<\/p>\n
Office salaries expense<\/p>\n
26,500<\/p>\n
Rent expense\u2014Office space<\/p>\n
2,600<\/p>\n
Office supplies expense <\/p>\n
800<\/p>\n
Totals<\/p>\n
$<\/p>\n
348,650<\/p>\n
$<\/p>\n
348,650<\/p>\n
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.<\/p>\n
Invoice cost of merchandise purchases<\/p>\n
$<\/p>\n
91,000 <\/p>\n
Purchase discounts received<\/p>\n
1,900 <\/p>\n
Purchase returns and allowances<\/p>\n
4,400 <\/p>\n
Costs of transportation-in<\/p>\n
3,900 <\/p>\n
Problem 5-4A Part 1<\/p>\n
Required:<\/b><\/p>\n
1.<\/b><\/p>\n
Compute the company\u2019s net sales for the year. (Omit the “$” sign in your response.)<\/b><\/p>\n
Net sales<\/p>\n
$ <\/p>\n
Problem 5-4A Part 2<\/p>\n
2.<\/b><\/p>\n
Compute the company\u2019s total cost of merchandise purchased for the year. (Omit the “$” sign in your response.)<\/b><\/p>\n
Total cost of merchandise purchased<\/p>\n
$ <\/p>\n
Problem 5-4A Part 3<\/p>\n
3.<\/b><\/p>\n
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.)<\/b><\/p>\n
BIZKID COMPANY<\/p>\n
Income Statement<\/p>\n
For Year Ended August 31, 2011<\/p>\n
$ <\/p>\n
$ <\/p>\n
Expenses<\/p>\n
Selling expenses<\/p>\n
Total selling expenses<\/p>\n
General and administrative expenses<\/p>\n
Total general and administrative expenses<\/p>\n
Total expenses<\/p>\n
$ <\/p>\n
Problem 5-4A Part 4<\/p>\n
4.<\/b><\/p>\n
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.)<\/b><\/p>\n
BIZKID COMPANY<\/p>\n
Income Statement<\/p>\n
For Year Ended August 31, 2011<\/p>\n
$ <\/p>\n
Expenses<\/p>\n
$ <\/p>\n
Total expenses<\/p>\n
$ <\/p>\n","protected":false},"excerpt":{"rendered":"
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 Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-50387","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/50387","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=50387"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/50387\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=50387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=50387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=50387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}