Reference no: EM131870859
Problem - REX COMPANY Unadjusted Trial Balance 31-Jan-11
| |
Debit
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Credit
|
|
Cash
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$2,200
|
|
|
Merchandise Inventory
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11,500
|
|
|
Store Supplies
|
4,800
|
|
|
Prepaid Insurance
|
2,300
|
|
|
Store Equipment
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41,900
|
|
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Accumulated Depreciation-Store Equip.
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|
15,000
|
|
Accounts Payable
|
|
9,000
|
|
Common Stock
|
|
5,000
|
|
Retained Earnings
|
|
27,000
|
|
Dividends
|
2,000
|
|
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Sales
|
|
104,000
|
|
Sales Discounts
|
1,000
|
|
|
Sales Returns and Allowances
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2,000
|
|
|
Cost of goods sold
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37,400
|
|
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Depreciation Expense-Store Equip.
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0
|
|
|
Salaries Expense
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31,000
|
|
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Insurance Expense
|
0
|
|
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Rent Expense
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14,000
|
|
|
Store Supplies Expense
|
0
|
|
|
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.