The adjusted trial balance of Propp Products at November 30, 2014, is shown on below. Propp Products
Question:
Required
1. Journalize Propp Products' closing entries.
2. Compute the gross margin percentage and the rate of inventory turnover for 2014. Inventory on hand one year ago was $10,700. For 2013, Propp Products' gross margin was 32 percent, and inventory turnover was 4.9 times during the year. Does the two-year trend in these ratios suggest improvement or deterioration in profitability?
Adjusted Trial Balance Account Title Debit Credit $ 4,000 Cash Accounts receivable 24,250 13,700 Inventory 700 Supplies Furniture 20,000 $ 12,000 Accumulated amortization-furniture Accounts payable 7,250 Salary payable 1,100 Unearned sales revenue 3,600 Note payable, long-term 22,500 A. Propp, capital 20,650 A. Propp, withdrawals 18,000 112,500 Sales revenue Sales returns 3,000 Cost of goods sold 67,500 Selling expenses 16,850 General expenses 10,500 Interest expense 1,100 Total $179,600 $179,600
Step by Step Answer:
Req 1 Journal DATE 2014 ACCOUNT TITLES AND EXPLANATIONS POST REF DEBIT CREDIT Nov 3...View the full answer
Accounting Volume 1
ISBN: 978-0132690096
9th Canadian edition
Authors: Charles T. Horngren, Walter T. Harrison, Jo Ann L. Johnston, Carol A. Meissner, Peter R. Norwood
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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