The Chart of Accounts (GL no.) is shown below: Account Description Account # ASSETS Cash Petty...
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The Chart of Accounts (GL no.) is shown below: Account Description Account # ASSETS Cash Petty Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Equipment Accumulated Depreciation LIABILITIES Accounts Payable Interest Payable CPP Payable El Payable Income Tax Payable Salaries Payable Unearned Revenue Bank Loan SHAREHOLDERS' EQUITY Common Shares Retained Earnings 101 105 110 120 125 140 145 200 205 220 225 230 235 240 245 300 305 Account Description REVENUE Sales Revenue Sales Discounts Sales Returns and Allowances Interest Revenue Other Income EXPENSES Cost of Goods Sold Employee Benefits Expense Depreciation Expense Insurance Expense Interest Expense Office Supplies Expense Rent Expense Salaries Expense Bank Charges Expense Maintenance Expense Entertainment Expense Shipping Expense Cash Over and Short Account # 400 405 410 420 430 500 510 515 520 525 530 535 540 545 550 555 560 565 Transactions for the month of August: Aug 1 Aug 1 Aug 5 Aug 5 Aug 7 Aug 12 Aug 14 Aug 15 Aug 15 Aug 18 Aug 20 Aug 20 Aug 25 Aug 31 Aug 31 Aug 31 Paid the amount owing from July 31 for salaries payable amounting to $9,600, Cheque #7107. Paid rent for August amounting to $1050, Cheque #7108 Goulet Inc. decided to establish a petty cash fund for the office. A cheque #7109 of $600 was issued and cashed. Purchased merchandise from Design Shirts Co. on account, invoice # 425; 6,100 units at $26 each. Terms of the purchase were net 30, FOB Destination. The seller paid the shipping cost amounting to $522. Note: Update the Inventory Valuation table after each purchase. Sold mechandise on accout to Dunn Inc., 4,250 units at $60 each with invoice # 100102. The invoice terms were 3/10, net 30, FOB Destination. Note: Update the Inventory Valuation table after each sale. Paid $15,400 with a cheque #7110 to Design Shirts Co. for the July invoices owing. Dunn Inc. paid invoice #100102 less the discount. The employees are paid bi-weekly. Paid the payroll for the first half of August, cheque # 7111. Gross pay is $17,500, CPP is $893, El is $329 and income tax is $3,500. Use the general journal to record this. Record the employer's share of CPP (100%) and EI (140%) of what was deducted from employees. Bought inventory from Gabe Clothing Co. with cheque #7112 , 3 ,600 units at $22 per unit. Note: Update Inventory Valuation table to reflect purchase. Sold 3,000 units on account at $63 each with invoice #100103 to Moreau Inc.. The invoice term 3/10, net 30, FOB shipping point. Note: Update Inventory Valuation table. Received $7,120 from Vachon Inc. for a sale on account last month. The remaining balance of the petty cash account was $245. Total expenses incurred using the petty cash fund this month amounting to $230. In this amount, it includes the shipping cost incurred on August 7 in the amount of $166 and the other costs are for the office supplies expense. Prepare the entry to replenish the petty cash fund with Chq #7113. Made monthly bank loan payment of $2,209 which includes $1,880 principal and $329 interest. Prepared the payroll for the second half of August to be paid on September 5. Gross pay is $19,000, CPP is $969, El is $357 and income tax is $3,800. The cheque will be prepared later. Use the general journal to record this. Record the employer's share of CPP (100%) and EI (140%) of what was deducted from employees. Assets Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Total Current Assets Goulet Inc. Classified Balance Sheet As at July 31, 2023 Long-Term Assets Equipment Accumulated Depreciation Total Assets Liabilities Current Liabilities Accounts Payable Unearned Revenue Salaries Payable Current Portion of Bank Loan Total Current Liabilities Non-Current Liabilities Non-Current Portion of Bank Loan Total Liabilities Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity $81,240 $30,090 $27,600 $9,200 175,000 -92,000 $29,200 $17,000 $9,600 $22,560 148,130 83,000 $231,130 $78,360 33,840 $112,200 93,200 25,730 118,930 $231,130 Required: Using the balances of the General Ledger accounts as of August 31, complete the financial statements. 1) Prepare a multistep income statement. Goulet Inc. Income Statement For the Month Ended August 31, 2023 2) Prepare a calculation of retained earnings Calculation of Retained Earnings For the Month Ended August 31, 2023 3) Prepare a classified balance sheet. Assume that $22,560 of the bank loan will be paid off in the 12 months. Goulet Inc. Balance Sheet As at August 31, 2023 Based on the information above, answer the following questions. a) Calculate the current ratio as at August 31, 2023. b) Does Goulet Inc. have a good or bad current ratio? Explain why or why not. c) Calculate the inventory days on hand ratio as at August 31, 2023. (Since this is for the month, do not multiply by 365 in the formula. Instead multiply by 31 days.) d) Last month, the inventory days on hand ratio was 7 days. Has the ratio improved? Why or why not? e) Calculate the debt to equity ratio as at August 31, 2023. f) Calculate the gross profit margin as at August 31, 2023. g) Last month, the gross profit margin percentage was 63%. What could have caused this decrease in gross margin percentage? h) Calculate the inventory turnover as at August 31, 2023. i) If inventory turnover last month was 4.43 is the company holding on to inventory for a longer or shorter period of time? The Chart of Accounts (GL no.) is shown below: Account Description Account # ASSETS Cash Petty Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Equipment Accumulated Depreciation LIABILITIES Accounts Payable Interest Payable CPP Payable El Payable Income Tax Payable Salaries Payable Unearned Revenue Bank Loan SHAREHOLDERS' EQUITY Common Shares Retained Earnings 101 105 110 120 125 140 145 200 205 220 225 230 235 240 245 300 305 Account Description REVENUE Sales Revenue Sales Discounts Sales Returns and Allowances Interest Revenue Other Income EXPENSES Cost of Goods Sold Employee Benefits Expense Depreciation Expense Insurance Expense Interest Expense Office Supplies Expense Rent Expense Salaries Expense Bank Charges Expense Maintenance Expense Entertainment Expense Shipping Expense Cash Over and Short Account # 400 405 410 420 430 500 510 515 520 525 530 535 540 545 550 555 560 565 Transactions for the month of August: Aug 1 Aug 1 Aug 5 Aug 5 Aug 7 Aug 12 Aug 14 Aug 15 Aug 15 Aug 18 Aug 20 Aug 20 Aug 25 Aug 31 Aug 31 Aug 31 Paid the amount owing from July 31 for salaries payable amounting to $9,600, Cheque #7107. Paid rent for August amounting to $1050, Cheque #7108 Goulet Inc. decided to establish a petty cash fund for the office. A cheque #7109 of $600 was issued and cashed. Purchased merchandise from Design Shirts Co. on account, invoice # 425; 6,100 units at $26 each. Terms of the purchase were net 30, FOB Destination. The seller paid the shipping cost amounting to $522. Note: Update the Inventory Valuation table after each purchase. Sold mechandise on accout to Dunn Inc., 4,250 units at $60 each with invoice # 100102. The invoice terms were 3/10, net 30, FOB Destination. Note: Update the Inventory Valuation table after each sale. Paid $15,400 with a cheque #7110 to Design Shirts Co. for the July invoices owing. Dunn Inc. paid invoice #100102 less the discount. The employees are paid bi-weekly. Paid the payroll for the first half of August, cheque # 7111. Gross pay is $17,500, CPP is $893, El is $329 and income tax is $3,500. Use the general journal to record this. Record the employer's share of CPP (100%) and EI (140%) of what was deducted from employees. Bought inventory from Gabe Clothing Co. with cheque #7112 , 3 ,600 units at $22 per unit. Note: Update Inventory Valuation table to reflect purchase. Sold 3,000 units on account at $63 each with invoice #100103 to Moreau Inc.. The invoice term 3/10, net 30, FOB shipping point. Note: Update Inventory Valuation table. Received $7,120 from Vachon Inc. for a sale on account last month. The remaining balance of the petty cash account was $245. Total expenses incurred using the petty cash fund this month amounting to $230. In this amount, it includes the shipping cost incurred on August 7 in the amount of $166 and the other costs are for the office supplies expense. Prepare the entry to replenish the petty cash fund with Chq #7113. Made monthly bank loan payment of $2,209 which includes $1,880 principal and $329 interest. Prepared the payroll for the second half of August to be paid on September 5. Gross pay is $19,000, CPP is $969, El is $357 and income tax is $3,800. The cheque will be prepared later. Use the general journal to record this. Record the employer's share of CPP (100%) and EI (140%) of what was deducted from employees. Assets Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Total Current Assets Goulet Inc. Classified Balance Sheet As at July 31, 2023 Long-Term Assets Equipment Accumulated Depreciation Total Assets Liabilities Current Liabilities Accounts Payable Unearned Revenue Salaries Payable Current Portion of Bank Loan Total Current Liabilities Non-Current Liabilities Non-Current Portion of Bank Loan Total Liabilities Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity $81,240 $30,090 $27,600 $9,200 175,000 -92,000 $29,200 $17,000 $9,600 $22,560 148,130 83,000 $231,130 $78,360 33,840 $112,200 93,200 25,730 118,930 $231,130 Required: Using the balances of the General Ledger accounts as of August 31, complete the financial statements. 1) Prepare a multistep income statement. Goulet Inc. Income Statement For the Month Ended August 31, 2023 2) Prepare a calculation of retained earnings Calculation of Retained Earnings For the Month Ended August 31, 2023 3) Prepare a classified balance sheet. Assume that $22,560 of the bank loan will be paid off in the 12 months. Goulet Inc. Balance Sheet As at August 31, 2023 Based on the information above, answer the following questions. a) Calculate the current ratio as at August 31, 2023. b) Does Goulet Inc. have a good or bad current ratio? Explain why or why not. c) Calculate the inventory days on hand ratio as at August 31, 2023. (Since this is for the month, do not multiply by 365 in the formula. Instead multiply by 31 days.) d) Last month, the inventory days on hand ratio was 7 days. Has the ratio improved? Why or why not? e) Calculate the debt to equity ratio as at August 31, 2023. f) Calculate the gross profit margin as at August 31, 2023. g) Last month, the gross profit margin percentage was 63%. What could have caused this decrease in gross margin percentage? h) Calculate the inventory turnover as at August 31, 2023. i) If inventory turnover last month was 4.43 is the company holding on to inventory for a longer or shorter period of time?
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Related Book For
College Accounting A Practical Approach
ISBN: 978-0132564441
11th Canadian Edition
Authors: Jeffrey Slater, Brian Zwicker
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