#3 disregard Heartstrings and Decision Case
Heartstrings Music Company Trial Balance February 29, 2018 Account Cash Accounts receivable Inventory Supplies Furniture Accumulated depreciation Accounts payable Salary payable Unearned revenue Notes payable, long term Common stock Retained earnings Dividends Sales revenue Sales returns Cost of goods sold Selling expense General expense Interest Expense Total Trial Balance Debit Credit $6,000 19,000 16,000 1,000 40,000 $8,500 12,000 500 8,000 13,500 5,000 34,000 42,200 165,000 7,400 78,000 22,000 12,500 2.400 $246.500 $246,500 Requirements: R1. Journalize Heartstrings' closing entries. R2. Prepare Heartstrings' single-step income statement for the year. R3. Compute the gross profit percentage and the rate of inventory turnover for 2018. Inventory on hand one year ago, at February 28, 2017, was $12,800. R4. For the year ended February 28, 2017, Heartstrings' gross profit bercentage was 51%, and inventory turnover was 5.4 times. Did the results for the year ended February 29, 2018 suggest improvement or deterioration in profitability over last year? 3. The records of Farm Quality Steak Company list the following selected accounts for the quarter ended April 30, 2018: Accounting 1 Handouts $12.700 Interest Revenue Merchandie Inventory Notes Payable long term Salaries Payable Net Sales Revenue Rent Expenseling Solaries Expense Administrative 400 Accounts Payable 45,000 Accounts Receivable 54,000 Accumulated Depreciation Equipment 2.800 Fisher, Capital 29 000 Fisher w a s 15100 Cash 2.009 Cost of Goods Sold 6.500 tulement 13.00 interest Payable 2.100 Nest Expense Administrativel 1.0 Salaries Expense dating 4.600 tis Expenseling Uneaed Revenue Interest Expense Depreciation Experte Equipment Administrative Utilities Expense (Administrative Delivery Expense Selling Requirements R1 Prepare a multi-step income statement R2. M Fisher, owner of the company, strives to earn a gross profit percentage of at least 50%. Did Farm Quality achieve this goal? Show your calculations. Decision Case Jim McNamara and Holly Clark opened Game-Time T-Shirts to sell T-shirts for football games at their college. The company completed the first year of operations, and the owners are generally pleased with operating results, as shown by the following income statement: Game-Time T-Shirts Income Statement Year Ended December 31, 2018 Net sales revenue Cost of goods sold Gross margin Operating expenses Selling expense General expense $ 375,000 185,000 190,000 60,000 30.000 $ 100,000 Net Income Manartara and Clark are considering how to expand the business. They each propose a way to increase profits to $150,000 during 2019 McNamara believes they should advertise more heavily. He believes additional advertising costing $25,000 will increase net sales by 30% and leave general expense unchanged. . Clark proposes selling higher margin merchandise, such as sweatshirts. An importer can supply a minimum of 1,000 sweatshirts for $35 each; Game
