1. Complete the Adjustments section of the work sheet using the following information: a. On October 30, an inventory of the supplies showed that items costing $1,730 were used this month. Record an adjustment for the supplies used in October. b. On October 1, 20xx the company purchased a twelve-month insurance policy for $8,400. Record an adjustment for the expired insurance during the month of October. c. On October 3, the company purchased a six-month advertising contract for $4,800. Record an adjustment for the expired advertising in October. Assume a full month of advertising expired in October. d. The company owns store equipment and purchased it for $83,000. The store equipment has an estimated useful life of 8 years and a salvage value of $8,000. Record depreciation on the store equipment for one month using the 200% declining balance method. e - f. Based on a physical count, ending merchandise inventory was determined to be $21,500. g. Record the estimate for uncollectible accounts using the percent of credit sales method at 2% of credit (on account) sales 2. Complete the remaining columns of the work sheet and determine the amount for net income (or net loss). 3. Copy the amounts on the worksheet in the Income Statement and Balance Sheet columns into the respective horizontal and vertical analyses for 2020.
Express Fashion is financing its operations
a. primarily through debt
b. primarily through equity (capital)
c. equally between debt and equity (capital)
d. Cannot be determined
The Profitability Ratios for Express Fashion indicate the company
a. is in a good financial situation
b. is not headed in right direction financially
c. may not have enough money to continue operating for the foreseeable future unless something is corrected
d. A or B
A D E F G H I M N O ADJUSTMENTS INCOME STATEMENT DEBIT CREDIT BALANCE SHEET DEBIT CREDIT DEBIT CREDIT 8 9 1 1 2 10 11 3 3 12 4 4 5 S 6 6 13 14 15 16 17 7 8 8 9 9 18 10 10 11 11 12 12 13 13 19 20 21 22 23 24 25 ACCOUNT NAME Cash Accounts Receivable Merchandise Inventory Supplies Prepaid Insurance Prepaid Advertising Store Equipment Accumulated Deprec. - Store Equip Accounts Payable Wages Payable Sales Tax Payable 1. Lashay, Capital T. Lashay, Drawing Sales Sales Returns and Allowances Sales Discounts Purchases Purchases Returns and Allowances Purchases Discounts Freight in Rent Expense Advertising Expense Depreciation Expense-Store Equip Janitorial Services Expense Wages Expense Phone Expense Utilities Expense TRIAL BALANCE DEBIT CREDIT 66,696.00 7,284.50 23,235.00 5,150.00 8,400.00 4,800.00 83,000.00 7,050.00 9,820.00 4,084.00 19,658.50 137,491.00 4,200.00 37,370.00 502.00 98.00 3,863.00 147.00 140.00 375.00 2,400.00 850.00 798.00 650.00 2,419.00 480.00 560.00 215,760.50 215,760.50 14 15 IS 16 16 17 17 18 18 19 19 28 27 28 29 30 20 20 21 21 22 22 23 23 24 31 32 33 34 35 25 25 26 26 27 38 28 28 37 29 29 30 38 39 30 31 31 40 32 32 41 33 33 42 34 34 35 35 36 Net Income 25 L L M S U W AA N O P Q a R Vertical Analysis 3 AB C D E F G Horizontal Analysis Express Fashion Comparative Balance Sheet For the Months October 31, 2019 and October 31, 2020 Express Fashion Balance Sheet For the Months October 31, 2019 and October 31, 2020 Oct-19 Dollar Oct-20 Dollar Oct-19 Amount Amount Percentage Percent Change Dollar Change Oct-20 Percentage 3 Oct-19 Oct-20 Assets: Assets: Cash 0 $ 38,500.00 4,200.00 1 F (145.00) i 11,225.00 750.00 1,100.00 1 2 3 4 Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Supplies Prepaid Insurance Prepaid Advertising Store Equipment Accum. Dep. - Store Equipment Office Equipment Accum. Dep. - Office Equipment Total Assets Liabilities: $ 38,500.00 i 4,200.00 I F (145.00) i 11,225.00 ! f 750.00 L 1,100.00 I f L 18,500.00 (3,025.00) 7,525.00! (2,120.00) i $ 76,510.00 5 18.500.00 6 7 Cash Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Supplies Prepaid Insurance Prepaid Advertising Store Equipment Accum. Dep. - Store Equipment Office Equipment Accum. Dep. - Office Equipment Total Assets Liabilities: Accounts Payable Sales Tax Payable Wages Payable Total Liabilities Owner's Equity: T. Lashay, Capital Total Liabilities & Owner's Equity (3,025.00) 7.525.00 (2,120.00) $ 76,510.00 8 $ 100% 100% 7,250.00 0 1 2 3 Accounts Payable Sales Tax Payable Wages Payable Total Liabilities Owner's Equity: T. Lashay, Capital Total Liabilities & Owner's Equity 1,030.00 975.00 9,255.00 7,250.00 1,030.00 975.00 $ 9,255.00 $ $ 4 5 $ 6 67,255.00 $ 76,510.00 67,255.00 $ 76,510.00 $ $ 100% 100% 7 8 A D E F G H I M N O ADJUSTMENTS INCOME STATEMENT DEBIT CREDIT BALANCE SHEET DEBIT CREDIT DEBIT CREDIT 8 9 1 1 2 10 11 3 3 12 4 4 5 S 6 6 13 14 15 16 17 7 8 8 9 9 18 10 10 11 11 12 12 13 13 19 20 21 22 23 24 25 ACCOUNT NAME Cash Accounts Receivable Merchandise Inventory Supplies Prepaid Insurance Prepaid Advertising Store Equipment Accumulated Deprec. - Store Equip Accounts Payable Wages Payable Sales Tax Payable 1. Lashay, Capital T. Lashay, Drawing Sales Sales Returns and Allowances Sales Discounts Purchases Purchases Returns and Allowances Purchases Discounts Freight in Rent Expense Advertising Expense Depreciation Expense-Store Equip Janitorial Services Expense Wages Expense Phone Expense Utilities Expense TRIAL BALANCE DEBIT CREDIT 66,696.00 7,284.50 23,235.00 5,150.00 8,400.00 4,800.00 83,000.00 7,050.00 9,820.00 4,084.00 19,658.50 137,491.00 4,200.00 37,370.00 502.00 98.00 3,863.00 147.00 140.00 375.00 2,400.00 850.00 798.00 650.00 2,419.00 480.00 560.00 215,760.50 215,760.50 14 15 IS 16 16 17 17 18 18 19 19 28 27 28 29 30 20 20 21 21 22 22 23 23 24 31 32 33 34 35 25 25 26 26 27 38 28 28 37 29 29 30 38 39 30 31 31 40 32 32 41 33 33 42 34 34 35 35 36 Net Income 25 L L M S U W AA N O P Q a R Vertical Analysis 3 AB C D E F G Horizontal Analysis Express Fashion Comparative Balance Sheet For the Months October 31, 2019 and October 31, 2020 Express Fashion Balance Sheet For the Months October 31, 2019 and October 31, 2020 Oct-19 Dollar Oct-20 Dollar Oct-19 Amount Amount Percentage Percent Change Dollar Change Oct-20 Percentage 3 Oct-19 Oct-20 Assets: Assets: Cash 0 $ 38,500.00 4,200.00 1 F (145.00) i 11,225.00 750.00 1,100.00 1 2 3 4 Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Supplies Prepaid Insurance Prepaid Advertising Store Equipment Accum. Dep. - Store Equipment Office Equipment Accum. Dep. - Office Equipment Total Assets Liabilities: $ 38,500.00 i 4,200.00 I F (145.00) i 11,225.00 ! f 750.00 L 1,100.00 I f L 18,500.00 (3,025.00) 7,525.00! (2,120.00) i $ 76,510.00 5 18.500.00 6 7 Cash Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Supplies Prepaid Insurance Prepaid Advertising Store Equipment Accum. Dep. - Store Equipment Office Equipment Accum. Dep. - Office Equipment Total Assets Liabilities: Accounts Payable Sales Tax Payable Wages Payable Total Liabilities Owner's Equity: T. Lashay, Capital Total Liabilities & Owner's Equity (3,025.00) 7.525.00 (2,120.00) $ 76,510.00 8 $ 100% 100% 7,250.00 0 1 2 3 Accounts Payable Sales Tax Payable Wages Payable Total Liabilities Owner's Equity: T. Lashay, Capital Total Liabilities & Owner's Equity 1,030.00 975.00 9,255.00 7,250.00 1,030.00 975.00 $ 9,255.00 $ $ 4 5 $ 6 67,255.00 $ 76,510.00 67,255.00 $ 76,510.00 $ $ 100% 100% 7 8
