Problem - REX COMPANY Unadjusted Trial Balance 31-Jan-11
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Debit
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Credit
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Cash
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$2,200
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|
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Merchandise Inventory
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11,500
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|
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Store Supplies
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4,800
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|
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Prepaid Insurance
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2,300
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Store Equipment
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41,900
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Accumulated Depreciation-Store Equip.
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15,000
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Accounts Payable
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9,000
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Common Stock
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5,000
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Retained Earnings
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27,000
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Dividends
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2,000
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Sales
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104,000
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Sales Discounts
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1,000
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Sales Returns and Allowances
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2,000
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Cost of goods sold
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37,400
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|
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Depreciation Expense-Store Equip.
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0
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|
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Salaries Expense
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31,000
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|
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Insurance Expense
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0
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Rent Expense
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14,000
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Store Supplies Expense
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0
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Advertising Expense
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9,900
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Totals
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160,000
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$160,000
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Rent Expense and Salaries Expense are equally divided between selling activities and the general and administrative activities. Rex Company uses a perpetual inventory system.
1. Prepare adjusting journal entries to reflect each of the following:
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
2. Prepare a multiple-step income statement for fiscal year 2011.
3. Prepare a single-step income statement for fiscal year 2011.
4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2011.