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

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

Required
1. Prepare adjusting journal entries to reflect each of the following:
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.
2. Prepare a multiple-step income statement for fiscal year 2011.
3. Prepare a single-step income statement for fiscal year 2011.
4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31,2011.

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REX COMPANY Unadjusted Trial Balance January 31, 2011 Debit Credit $ 2,200 11,500 4,800 2,300 41,900 Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation- Store equipment Accounts payable T. Rex, Capital T. Rex, Withdrawals Sales Sales discounts Sales returns and allowances Cost of goods sold Depreciation expense Store equipment Salaries expense Insurance expense Rent expense St $15,000 9,000 32,000 2 2,000 104,000 1,000 2,000 37,400 31,000 14,000 ore supplies expense Advertising expense Totals 9,900 $160,000 $160,000