The following unadjusted trial balance is prepared at fiscal year end for FAB Products Company.
|
FAB PRODUCTS COMPANY Unadjusted Trial Balance October 31, 2011 |
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|
|
Debit |
Credit |
|
Cash |
$4,400 |
|
|
Merchandise inventory |
23,000 |
|
|
Store supplies |
9,600 |
|
|
Prepaid insurance |
4,600 |
|
|
Store equipment |
83,800 |
|
|
Accumulated depreciation—Store equipment |
|
$30,000 |
|
Accounts payable |
|
16,000 |
|
A. Fab, Capital |
|
64,000 |
|
A. Fab, Withdrawals |
2,000 |
|
|
Sales |
208,000 |
|
|
Sales discounts |
2,000 |
|
|
Sales returns and allowances |
4,000 |
|
|
Cost of goods sold |
74,800 |
|
|
Depreciation expense—Store equipment |
0 |
|
|
Salaries expense |
62,000 |
|
|
Insurance expense |
0 |
|
|
Rent expense |
28,000 |
|
|
Store supplies expense |
0 |
|
|
Advertising expense |
19,800 |
|
|
Totals |
$318,000 |
$318,000 |
Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. FAB Products 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 $3,300.
b. Expired insurance, an administrative expense, for the fiscal year is $3,000.
c. Depreciation expense on store equipment, a selling expense, is $2,800 for the fiscal year.
d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $22,200 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 October 31, 2011.