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

Question

The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company NELSON COMPANY Unadjusted Trial Balance January 31, 2017 Debit Credit Cash Merchandise inventor,y Store supplies Prepaid insurance Store equipment Accumulated depreciation-Store equipment Accounts payable Common stock Retained earnings Dividends Sales Sales discounts Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Salaries expense Insurance expense Rent expense Store supplies expense Advertising expense Totals $ 12,050 12,500 5,100 2,700 42,900 $ 19,550 12,000 3,400 17,000 2,300 116,450 2,050 2,200 38,000 25,500 14,000 9,100 $168,400 $168,400 Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system Additional Information: a. Store supplies still available at fiscal year-end amount to $1,800 b. Expired insurance, an administrative expense, for the fiscal year is $1,800 c. Depreciation expense on store equipment, a selling expense, is $1,575 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,700 of inventory is still available at fiscal year-end 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2017. (Round your answers to 2 decimal places.) Current ratio Acid-test ratio Gross margin ratio

Explanation / Answer

Current assets: Cash 12050 Merchandise inventory 10700 Store supplies 1800 Prepaid insurance 900 =2700-1800 Total current assets 25450 4 a Current ratio = Current assets /Current Liabilities = 24450/12000= 2.04:1 b Acid-test ratio = 12050/12000= 1.00:1 or 1.08:1 c Net sales 112200 =116450-2050-2200 Less: Cost of goods sold 39800 =38000+(12500-10700) Gross margin 72400 Gross margin ratio = 72400/112200= 0.65:1

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.