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Solution To Exercise Set Chapter 5

The document provides an unadjusted and adjusted trial balance for Rex Company as of January 31, 2011. It also includes adjusting entries needed to account for store supplies on hand, expired insurance, and depreciation expense for the year. Financial statements, including an income statement and calculation of key ratios, are presented.

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114 views5 pages

Solution To Exercise Set Chapter 5

The document provides an unadjusted and adjusted trial balance for Rex Company as of January 31, 2011. It also includes adjusting entries needed to account for store supplies on hand, expired insurance, and depreciation expense for the year. Financial statements, including an income statement and calculation of key ratios, are presented.

Uploaded by

Nguyễn Huy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Given Data P05-03A:

REX COMPANY
Unadjusted Trial Balance Adjusted Trial Balance
January 31, 2011

Cash $ 2,200 $ 2,200


Merchandise inventory 11,500 11,100
Store supplies 4,800 1,650
Prepaid insurance 2,300 800
Store equipment 41,900 41,900
Accumulated depreciation-Store equipment $ 15,000 $ 16,400
Accounts payable 9,000 9,000
A.Helix, Capital 32,000 32,000
A.Helix, Withdrawals 2,000 2,000
Sales 104,000 104,000
Sales discounts 1,000 1,000
Sales returns and allowances 2,000 2,000
Cost of goods sold 37,400 37,800
Depreciation expense-Store equipment - 1,400
Salaries expense 31,000 31,000
Insurance expense - 1,500
Rent expense 14,000 14,000
Store supplies expense - 3,150
Advertising expense 9,900 9,900
Totals $ 160,000 $ 160,000 $ 161,400 $ 161,400

Store supplies on hand at year-end $ 1,650


Expired insurance for year 1,500
Depreciation expense for year 1,400
Ending inventory 11,100

Check figures:
(2) Gross profit $ 63,200
(3) Total expenses 98,750
Net income 2,250
Student Name: Instructor
Class: McGraw-Hill/Irwin
Problem 05-03A

REX COMPANY
General Journal

Trans.
Date Account Titles no. Debit Credit
Adjusting Entries:
Jan. 31 Store Supplies Expense 3,150
Store Supplies 3,150 «- Try again!
31 Insurance Expense 1,500
Prepaid Insurance 1,500 «- Try again!
31 Depreciation Expense, Store Equipment 1,400
Accumulated Depreciation, Store Equipment 1,400 «- Try again!
31 Cost of Goods Sold 400
Merchandise Inventory 400 «- Try again!

REX COMPANY
Income Statement
For Year Ended January 31, 2011

Sales $ 104,000
Less: Sales discounts $ 1,000
Sales returns and allowances $ 2,000 3,000
Net sales 101,000
Cost of goods sold 37,800
Gross profit 63,200

Expenses:
Selling expenses
Depreciation expense, Store equipment 1,400
Sales salaries expense 15,500
Rent expense-Selling space 7,000
Store supplies expense 3,150
Advertising expense 9,900
Total selling expenses 36,950

General and administrative expenses


Insurance expense 1,500
Office salaries expense 15,500
Rent expense-Office space 7,000
Total general and administrative expenses 24,000
Total expenses 60,950
Net income $ 2,250
Try again!
Student Name: Instructor
Class: McGraw-Hill/Irwin
Problem 05-03A

REX COMPANY
Income Statement
For Year Ended January 31, 2011

Net sales $ 101,000


Expenses
Cost of goods sold 37,800
Selling expenses 36,950
General and administrative expense 24,000
Total expenses 98,750
Net income $ 2,250
Try again!

REX COMPANY
Ratios

Current ratio:
Current assets:
Cash $2,200
Merchandise inventory 11,100
Store supplies 1,650
Prepaid insurance 800
Total current assets $15,750
Current liabilities $9,000
Current ratio 1.75 Try again!

Acid-test ratio:
Quick assets: Cash $2,200
Current liabilities $9,000
Acid-test ratio 0.24 Try again!

Gross margin ratio:


Net sales $ 101,000
Cost of goods sold 37,800
Gross margin $ 63,200
Gross margin ratio 62.6% Try again!

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