Use the following adjusted trial balance and additional information to complete the requirements.
|
KC ANTIQUES Adjusted Trial Balance December 31,2011 |
||
|
|
Debit |
Credit |
|
Cash |
$ 7,000 |
|
|
Accounts receivable |
13,000 |
|
|
Merchandise inventory |
60,000 |
|
|
Store supplies |
1,500 |
|
|
Equipment |
45,600 |
|
|
Accumulated depreciation—Equipment |
|
$ 16,600 |
|
Accounts payable |
|
9,000 |
|
Salaries payable |
|
2,000 |
|
K. Carter, Capital |
|
79,000 |
|
K. Carter, |
10,000 |
|
|
Sales |
|
343,250 |
|
Sales discounts |
5,000 |
|
|
Sales returns and allowances |
6,000 |
|
|
Cost of goods sold |
159,900 |
|
|
Depreciation expense—Store equipment |
4,100 |
|
|
Depreciation expense—Office equipment |
1,600 |
|
|
Sales salaries expense |
30,000 |
|
|
Office salaries expense |
34,000 |
|
|
Insurance expense |
11,000 |
|
|
Rent expense (70% is store, 30% is office) |
24,000 |
|
|
Store supplies expense |
5,750 |
|
|
Advertising expense |
31,400 |
|
|
Totals |
$449,850 |
$449,850 |
KC Antiques’ supplementary records for 2011 reveal the following itemized costs for merchandising activities:
|
Invoice cost of merchandise purchases |
$150,000 |
|
Purchase discounts received |
2,500 |
|
Purchase returns and allowances |
2,700 |
|
Cost of transportation in |
5,000 |
Required
1. Use the supplementary records to compute the total cost of merchandise purchases for 2011.
2. Prepare a 2011 multiple step income statement. (Inventory at December 31, 2010, is $70,100.)
3. Prepare a single step income statement for 2011.
4. Prepare closing entries for KC Antiques at December 31, 2011.
5. Compute the acid test ratio and the gross margin ratio. Explain the meaning of each ratio and interpret them for KC Antiques.