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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.

  

[removed] 

 
 

       

 

[removed] 

 

  

  

b.

  

[removed] 

 
 

       

 

[removed] 

 

  

  

c.

  

[removed] 

 
 

       

 

[removed] 

 

  

  

d.

  

[removed] 

 
 

       

 

[removed] 


 

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

  

 

$ [removed]  

  

$ [removed] 

 

  

[removed] 

[removed]  

 



  

 

[removed]  

  

 

[removed]  

 

 


  

 

[removed]  

  Expenses

 

 

     Selling expenses

 

 

     

[removed] 

 

     

[removed] 

 

     

[removed] 

 

     

[removed] 

 

     

[removed] 

 

 


 

     Total selling expenses

[removed] 

 

     General and administrative expenses

 

 

     

[removed] 

 

     

[removed] 

 

     

[removed] 

 

 


 

     Total general and administrative expenses

[removed] 

 

 


 

     Total expenses

 

[removed] 

 

 


  

 

$ [removed] 

 

 


 

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

  

 

$ [removed] 

  Expenses

 

 

     

$ [removed] 

 

     

[removed] 

 

     

[removed] 

 

 


 

     Total expenses

 

[removed] 

 

 


  

 

$ [removed] 

 

 

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

[removed]  

  Acid-test ratio

[removed]  

  Gross margin ratio

[removed] 

 

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

$ [removed] 

 

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

$ [removed] 

 

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

  

 

$ [removed]   

  

$ [removed] 

 

  

[removed] 

[removed]  

 



  

 

[removed]   

  

 

[removed]   

 

 


  

 

[removed]   

  Expenses

 

 

  Selling expenses

 

 

    

[removed] 

 

    

[removed] 

 

    

[removed] 

 

    

[removed] 

 

 


 

    Total selling expenses

 

[removed]   

  General and administrative expenses

 

 

    

[removed] 

 

    

[removed] 

 

    

[removed] 

 

 


 

    Total general and administrative expenses

 

[removed]   

 

 


  Total expenses

 

[removed]   

 

 


  

 

$ [removed]   

 

 


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

  

 

$ [removed] 

  Expenses

 

 

      

$ [removed] 

 

      

[removed] 

 

      

[removed] 

 

 


 

      Total expenses

 

[removed] 

 

 


  

 

$ [removed] 

 

    • Posted: 7 years ago
    • Due: 
    • Budget: $20
    Answers 1
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