The fiscal year-end unadjusted trial balance for Garcia Company is found on the trial balance tab. Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Garcia Company uses a perpetual inventory system. Descriptions of items that require adjusting entries on January 31, 2019, follow.
1. Store supplies still available at the fiscal year-end amount to $2,150.
2. Expired insurance, an administrative expense, for the fiscal year is $1,560.
3. Depreciation expense on store equipment, a selling expense, is $6,700 for the fiscal year.
4. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,150 of inventory is still available at fiscal year-end.
Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2017. (Round your answers to 2 decimal places.)
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Ответ:
The following unadjusted trial balance is prepared at fiscal year-end for Garcia Company:
Cash$1,000
Merchandise Inventory12,500
Store supplies5,800
Prepaid Insurance2,400
Store equipment42,900
Accumulated depreciation - Store equipment $15,250
Accounts payable 10,000
Common Stock 5,000
Retained Earnings 27,000
Dividends2,200
Sales 111,950
Sales discounts2,000
Sales returns and allowances2,200
Cost of goods sold38,400
Depreciation express - Store equipment0
Salaries expense35,000
Insurance expense0
Rent expense15,000
Store supplies expense0
Advertising expense9,800
Totals$169,200169,200
Garcia Company
Computation of:
a) Current Ratio = Current Assets/Current Liabilities = $14,140/$10,000 = 1.4
b) Acid- Test Ratio = (Current Assets - Inventory - Prepaid Insurance - Stores Supplies )/Current Liabilities = ($14,140 - 10,150 - 2,150 - 840)/$10,000 = 0.1
Here, we disregarded Inventory, Prepaid Insurance, and Stores Supplies from the current assets because they are difficult to recover in order to settle short-term debts. So, only the Cash Balance was used for the calculation.
c) Gross Margin Ratio = Gross Profit/Net Sales x 100 = $69,350/$107,750 x 100 = 64.4%.
Explanation:
Adjusting Items:
a. Store Supplies:
Per Trial Balance $5,800
less year-end balance $2,150
Store Supplies Expense $3,650
b. Prepaid Insurance:
Per Trial Balance $2,400
less expired $1,560
Insurance Expense $840 (Admin Expense)
c. Accumulated Depreciation:
Per Trial Balance $15,250
Depreciation Expense $6,700
Accumulated depreciation at year-end $21,950
d. Ending Inventory $10,150
e. Adjusted Trial Balance:
Cash $1,000
Merchandise Inventory 12,500
Store supplies 2,150
Prepaid Insurance 840
Store equipment 42,900
Accumulated depreciation - Store equipment $21,950
Accounts payable 10,000
Common Stock 5,000
Retained Earnings 27,000
Dividends 2,200
Sales 111,950
Sales discounts 2,000
Sales returns and allowances 2,200
Cost of goods sold 38,400
Depreciation expense - Store equipment6,700
Salaries expense 35,000
Insurance expense 1,560
Rent expense 15,000
Store supplies expense 3,650
Advertising expense 9,800
Totals $175,900 175,900
f. Income Statement
Sales $111,950
Sales discounts (2,000)
Sales returns and allowances (2,200)
Net Sales $107,750
Cost of Goods Sold 38,400
Gross Profit $69,350
Selling Expenses:
Depreciation $6,700
Salaries expense 17,500
Rent expense 7,500
Store supplies expense3,650
Advertising expense 9,800 (45,150)
Administrative Expenses:
Insurance $1,560
Salaries expense 17,500
Rent expense 7,500 (26,500)
Net Loss ($2,360)
Inventory Shrinkage ($2,350)
Retained Earnings b/f 27,000
Dividends (2,200)
Retained Earnings c/f $20,090
g) Balance Sheet
Assets:
Cash $1,000
Merchandise Inventory 10,150
Store supplies 2,150
Prepaid Insurance 840 $14,140
Store equipment 42,900
Accumulated depreciation (21,950 ) $20,950
Total Assets $35,090
Liabilities + Equity:
Accounts payable $10,000
Common Stock 5,000
Retained Earnings 20,090
Total Liabilities + Equity $35,090
h) Current Ratio: According to investopedia.com, "The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year," showing investors and analysts how a company can maximize its current assets to meet its current debt and other payables.
i) Acid-test or quick ratio is the financial ratio that compares a company's most short-term assets to its most short-term liabilities to see if a company has enough cash to pay its immediate liabilities, such as short-term debts, disregarding difficult-to-liquidate current assets such as inventory.
j) The gross margin ratio represents a percentage of the gross profit over the net sales, multiplied by 100. This ratio is also known as the gross profit margin or the gross profit percentage, or simply the gross margin.
Ответ:
Select the text, go to the Home tab and click the Text Effects drop-down button. WPS Office provides several options, such as Shadow, Reflection,
Explanation:
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