BUSINESS AND FINANCE

Problem 5-3A Preparing adjusting entries and income statements; and computing gross margin, acid-test, and current ratios L.O. A1, A2, P3, P4

[The following information applies to the questions displayed below.]

The following unadjusted trial balance is prepared at fiscal year-end for Rex Company.

 

REX COMPANY
Unadjusted Trial Balance
January 31,2011
Debit Credit
  Cash $ 2,200
  Merchandise inventory 11,500
  Store supplies 4,800
  Prepaid insurance 2,300
  Store equipment 41,900
  Accumulated depreciation—Store equipment $ 15,000
  Accounts payable 9,000
  T. Rex, Capital 32,000
  T. Rex, Withdrawals 2,000
  Sales 104,000
  Sales discounts 1,000
  Sales returns and allowances 2,000
  Cost of goods sold 37,400
  Depreciation expense—Store equipment 0
  Salaries expense 31,000
  Insurance expense 0
  Rent expense 14,000
  Store supplies expense 0
  Advertising expense 9,900




  Totals $ 160,000 $ 160,000









 

Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Rex Company uses a perpetual inventory system.

 

a. Store supplies still available at fiscal year-end amount to $1,650.
b. Expired insurance, an administrative expense, for the fiscal year is $1,500.
c. Depreciation expense on store equipment, a selling expense, is $1,400 for the fiscal year.
d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $11,100 of inventory is still available at fiscal year-end.

 

Problem 5-3A Part 1

Required:
1. Using the above information prepare adjusting journal entries (Omit the “$” sign in your response):

 

General Journal Debit Credit
a.   [removed]
  [removed]
 
b.   [removed]
  [removed]
 
c.   [removed]
  [removed]
 
d.   [removed]
  [removed]

 

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