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The following unadjusted trial balance is prepared at fiscal year-end for Rex Company

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P5-3A The following unadjusted trial balance is prepared at fiscal year-end for Rex Company.

REX COMPANY
Unadjusted Trial Balance
January 31, 2011

Cash 2200
Merchandise inventory 11500
Store supplies 4800
Prepaid insurance 2300
Store equipment 41900
Accumulated depreciation—Store equipment 15000
Accounts payable 9000
T. Rex, Capital 32000
T. Rex, Withdrawals 2000
Sales 2000
Sales discounts 104000
Sales returns and allowances 1000
Cost of goods sold 2000
Depreciation expense—Store equipment 37400
Salaries expense 0
Insurance expense 31000
Rent expense 0
Store supplies expense 14000
Advertising expense 9900
Totals 160000 160000

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.

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