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.

Required

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.)

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FOSTER PRODUCTS COMPANY Unadjusted Trlal Balance October 31, 2013 Deblt Credit $ 7,400 Cash Merchandise inventory Store supplies 24,000 9,700 6,600 Prepaid insurance Store equipment 81,800 $ 32,000 Accumulated depreciation-Store equipment Accounts payable 18,000 D. Foster, Capital 43,000 D. Foster, Withdrawals 2,000 Sales 227,100 1,000 Sales discounts 5,000 Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Salaries expense 75,800 63,000 Insurance expense Rent expense 26,000 Store supplies expense Advertising expense 17,800 $320,100 Totals $320,100