Goods sold depreciatio n expense store equipment 0

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goods sold Depreciatio n expense— Store equipment 0 Salaries expense 35,000 Insurance expense 0 Rent expense 15,000 Store supplies expense 0 Advertising expense 9,800 Totals $ 169,200 $ 169,200 Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Nelson Company uses a perpetual inventory system. a. Store supplies still available at fiscal year-end amount to $1,750. b. Expired insurance, an administrative expense, for the fiscal year is $1,400. c. Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still available at fiscal year-end.
2. Prepare a multiple-step income statement for fiscal year 2013.
Less: Sales discounts $2,000 Less: Sales returns and allowances 2,200 4,200 Net sales 107,750 Cost of goods sold 40,000 Gross profit 67,750 Expense 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 0 0 Total selling expenses 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 3. Prepare a single-step income statement for fiscal year 2013.
Current ratio1.47 Acid-test ratio0.10 Gross margin ratio0.63 Current assets Cash $ 1,000 Merchandis e inventory 10,900 Store supplies 1,750 Prepaid insurance 1,000* Total current assets $ 14,650 Current liabilities $ 10,000 Current ratio ($14,650 / $10,000) 1.47 Prepaid insurance: $2,400 – $1,400 = $1,000 Merchandise inventory: $12,500 – $1600 = $10,900 Quick assets (Cash) $ 1,000 Current liabilities $10,000 Acid-test ratio ($1,000 / $10,000) 0.10 Net Sales $ 107,750 Cost of goods sold 40,000 Gross margin $ 67,750 Gross margin ratio ($67,750 / $107,750) 0.63 The following supplementary records summarize Tosca Company's merchandising activities for year 2013. Cost of merchandise sold to customers in sales transactions $196,000 Merchandise inventory, December 31, 2012 25,000 Invoice cost of merchandise purchases 192,500 Shrinkage determined on December 31, 2013 800 Cost of transportation-in 2,900

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