The adjusted trial balance of Big Daddy Music Company at December 3 1. 2008, follows:

Requirements 

1. Journalize Big Daddy's closing entries.

2. Compute the gross profit percentage and the rate of inventory turnover for 2008. Inventory on hand one year ago, at December 3 1 , 2007, was $12,600. For 2007, Big Daddy's gross profit percentage was 50%, and inventory turnover was 4.9 times. Do the trends in these ratios suggest improvement or deterioration in profitability? 

3. Additional inventory data:

Compute Big Daddy's cost of goods sold under the periodic inventory system. Does your computed amount agree with Big Daddy's adjusted balance of cost of goods sold? It should.

Transcribed Image Text:

Adjusted Trial Balance Account Title Debit Credit Cash 4,000 Accounts receivable 38,500 Inventory 17,400 Supplies 400 Furniture 39,600 Accumulated depreciation Accounts payable 8,700 13,600 Salary payable 900 Unearned sales revenue 6,800 Note payable, long-term 15,000 Big Daddy, capital 36,400 Big Daddy, withdrawals 42,000 Sales revenue 185,000 Sales returns 7,000 Cost of goods sold 82,000 Selling expense 19,000 General expense 15,000 Interest expense 1,500 Total 266,400 266,400