Insurance expense 1. Prepare adjusted journal entries to reflect each of the fol

Question

Insurance expense

1. Prepare adjusted journal entries to reflect each of the following.

a. Store supplies still available at fiscal year-end amount to 3,700.

b. Expired insurance, an administrative expense, for th fiscal year is 2,800

c. Depreciation expense on store equipment, a selling expense, is 3,000 for a fiscal year.

d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows 21,300 of inventory is still available at fiscal year end.

2. Prepare a multiple step indome statement for fiscal year 2013.   Check in book says Gross profit should be 142,600

3. Prepare a single- step income statement of fiscal year 2013. Check in book Says Total expenses, 197,100 and Net Income, 24,000

4. Compute the current ratio, acid- test ratio, and gross margin ratio as of October 31, 2013.

Unadjusted Trial Balance Cash 7,400 Merchandise inventory 24,000 Store supplies 9,700 Prepaid insurance 6,600 Store equipment 81,800 Accumulated depreciation-Store Equipment 32,000 Accounts payable 18,000 Common Stock 3,000 Retained earnings 40,000 Dividends 2,000 Sales 227,100 Sales Discounts 1,000 Sales returns and allowances 5,000 Cost of goods sold 75,800 Depreciation expense-Store equipment 0 Salariers expense 63,000

Insurance expense

0 Rent Expense 26,000 Store supplies expense 0 Advertising expense 17,800 Totals 320,100 320,100

Explanation / Answer

Answer: 1. Prepare adjusted journal entries Journal in the books of Company (Amount In $) Date Particulars Debit amount Credit amount a. Store supplies still available at fiscal year-end amount to 3,700 Closing stock- Store supplies Account                                                                                   DR 3,700                                                                                                    To Trading Account 3,700 (Being closing stock of store supplies booked) b. Expired insurance, an administrative expense, for the fiscal year is 2,800 Insurance Account                                                                                                                           DR 2800                                                                                                    To Cash Account 2800 (Being insurance expenses paid) Statement of Profit and Loss Account                                                                                    DR 2800                                                                                                    To Insurance Account 2800 (Being insurance expenses transferred) c. Depreciation expense on store equipment, a selling expense, is 3,000 for a fiscal year Selling expenses Account                                                                                                          DR 3000                                                                                                    To Cash Account 3000 (Being selling expenses paid) Statement of Profit and Loss Account                                                                                    DR 3000                                                                                                    To Selling expenses Account 3000 (Being selling expenses transferred) d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows 21,300 of inventory is still available at fiscal year end Closing stock Account                                                                                                                   DR 21300                                                                                                    To Trading Account 21300 (Being closing stock booked)

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