The following unadjusted trial balance is prepared at fiscal year end for Rex Company.
|
REX COMPNAY 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.
Required
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.