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

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

1. Prepare adjusting 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 the fiscal year is $ 2,800.
c. Depreciation expense on store equipment, a selling expense, is $ 3,000 for the 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 income statement for fiscal year 2013.
3. Prepare a single- step income statement for fiscal year 2013.
4. Compute the current ratio, acid- test ratio, and gross margin ratio as of October 31, 2013. (Round ratios to two decimals.)

  • CreatedNovember 26, 2013
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