SP04 - 40,375 General and administrative expenses Insurance...

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Student Name: Instructor Class: McGraw-Hill/Irwin Problem 04-03A NELSON COMPANY General Journal Trans. Date Account Titles no. Debit Credit Adjusting Entries: Jan. 31 Store Supplies Expense 4,050 Store Supplies 4,050 «- Correct! To record store supplies expense. 31 Insurance Expense 1,400 Prepaid Insurance 1,400 «- Correct! To record expired insurance. 31 Depreciation Expense - Store Equipment 1,525 Accumulated Depreciation - Store Equipment 1,525 «- Correct! To record depreciation expense. 31 Cost of Goods Sold 1,600 Merchandise Inventory 1,600 «- Correct! To adjust inventory for shrinkage. NELSON COMPANY Income Statement For Year Ended January 31, 2013 Sales $111,950 Less: Sales discounts $2,000 Sales returns and allowances 2,200 4,200 Net sales 107,750 Cost of goods sold 40,000 Gross profit 67,750 Expenses Selling expenses Depreciation expense - Store equipment 1,525 Sales salaries expense 17,500 Rent expense - Selling space 7,500 Store supplies expense 4,050 Advertising expense 9,800 Total selling expenses
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Unformatted text preview: 40,375 General and administrative expenses Insurance expense 1,400 Office salaries expense 17,500 Rent expense - Office space 7,500 Total general and administrative expenses 26,400 Total expenses 66,775 Net income $975 Correct! NELSON COMPANY Income Statement For Year Ended January 31, 2013 Net sales $107,750 Expenses Cost of goods sold 40,000 Selling expenses 40,375 General and administrative expense 26,400 Total expenses 106,775 Net income $975 Correct! NELSON COMPANY Ratios Current ratio: Current assets: Cash $1,000 Merchandise inventory 10,900 Store supplies 1,750 Prepaid insurance 1,000 Total current assets $14,650 Current liabilities $10,000 Current ratio 1.47 «- Correct! Acid-test ratio: Quick assets: Cash $1,000 Current liabilities $10,000 Acid-test ratio 0.10 «- Correct! Gross margin ratio: Net sales $107,750 Cost of goods sold 40,000 Gross margin $67,750 Gross margin ratio 0.63 «- Correct!...
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