A. Journalize the transactions, b) Enter the opening balances for balance sheet accounts and post the transactions to the General Ledger. b) Complete an inventory record using weighted average cost flow. c) Prepare a Bank Reconciliation Statement and record related journal entries in the General Journal. d) Post above journal entries (a) & (c) to general ledger accounts. e) Prepare the financial statements using ending account balances from ledger f) Calculate ratios and do simple analysis. Case: DITO Shoppee - Solutions DITO Shoppee owned by Graham Smith, is an freestyle clothing retailer. You were hired to account the transactions and report the status of the business. They use the perpetual inventory system and use the weigted average method to determine value for the inventory. Its balance sheet as at January 31, 2021, is presented below. DITO Shoppee Classified Balance Sheet As at January 31, 2021 Assets Cash $32,400 Accounts Receivable 16,820 Merchandise Inventory 37,200 Prepaid Insurance 3,200 Total Current Assets Long-Term Assets Equipment 145,000 Accumulated Depreciation -40,000 Total Assets 89,620 105.000 $194,620 Liabilities Current Liabilities Accounts Payable Unearned Revenue Salaries Payable Current Portion of Bank Loan Total Current Liabilities Non-Current Liabilities Non-Current Portion of Bank Loan Total Liabilities $13,100 $9,200 $3,400 10.560 $36,260 19,440 $55,700 Shareholders Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity 72,000 66.920 138,920 $194,620 The bank loan has an annual Interest rate of 8% and has monthly principal payment of $880. The inventory figure includes 1,200 units purchased at $31.00 each. Transactions for the month of February: Feb 1 Feb 1 Feb 5 Paid rent for February amounting to $520, Cheque #2314 DITO Shoppee decided to establish a petty cash fund for the office. A cheque #2315 of $500 was issued and cashed Purchased merchandise from Canadian Polo Inc. on account, invoice #425; 800 units at 525 each. Terms of the purchase were 4/10, net 30, FOB Destination. The seller paid the shipping cost amounting to $55. Update the inventory table after each purchase. Sold mechandise to Lee, 750 units at $95 each with invoice #1120. The invoice terms were 3/10, net 30, FOB Destination. DITO Shoppee paid the $40 to ship the goods to Lee. They used petty cash fund to pay. Update the inventory table after each sale. Some of goods purchased from Canadian Polo Inc. was defective. Canadian Polo Inc. agreed to a 30% allowance on the total purchased. Paid total liability with a cheque #2316 to Canadian Polo Inc. for the February 6 purchased. Feb 7 Feb 9 Feb 12 Feb 17 Feb 18 Feb 20 Feb 20 Lee paid invoice #1120 on time and took advantage of the early payment discount. Bought inventory from Coleman with cheque #2317, 900 units at $28 per unit. Sold 200 units at $90 each with invoice #1121 to Guess. The invoice term 3/10, net 30, FOB shipping point Received $1,000 from Prinsted Shirt Inc for a sale on account last month. The remaining balance of the petty cash account was $245. Total expenses incurred using the petty cash fund this month amounting to $250. In this amount, it includes the shipping cost incurred on Feb 7 and the other costs are for the office supplies expense. Prepare the entry to replenish the petty cash fund with Chq#2318 Prepared the payroll for February to be paid on March 5. Gross pay is $12,300, CPP is $627, El is 5231 and income tax is $2,460. The employer matches CPP contributions and pays 1.4 times the El deduction. Use the general journal to record this. The cheque will be prepared later. Feb 25 Feb 28 Feb 28 Made monthly bank loan payment of $1,080 which includes $880 principal and $200 interest. Record the transactions above in the general journal. General Journal Account Title and Explanation Date PR Page 3 CR DR General Journal Account Title and Explanation Date PR Page 3 CR DR General Ledger Accounts Account: Cash Date Description Opening Balance PR DR CR GL No: 101 Balance DR or CR) 32.400.00 DR Account: Date Petty Cash Description Opening Balance PR DR CR GL No: 105 Balance (DR or CR) 0.00 DR Account: Date 110 Accounts Receivable Description Opening Balance PR DR CR GL No: Balance (DR or CR 16 820 00 DR Account: Date Merchandise Inventory Description PR Opening Balance DR CR GL No: 120 Balance (OR or CR) 37,200.00 DR Account: Date Prepaid Insurance Description Opening Balance PR DR CR GL NO: 125 Balance (DR or CR) 3.200.00 DR Account: Date Equipment Description Opening Balance PR DR CR GL No: 140 Balance (DR or CR) 145,000.00 DR Account: Date Accumulated Depreciation Description PR Opening Balance DR CR GL No: 145 Balance (DR or CR) 40,000.00 CR Account: Date Accounts Payable Description Opening Balance PR DR CR GL No: 200 Balance (DR or CR) 13,100.00 CR Account: Date Interest Payable Description Opening Balance PR DR CR GL No: 205 Balance (DR or CR) 0.00 CR Account: Date CPP Payable Description Opening Balance PR DR CR GL No: 220 Balance (DR or CR 0.00 CR Account: Date E Payable Description Opening Balance PR DR CR GL NO: 225 Balance (DR or CR) 0.00 CR Account: Date Income Tax Payable Description Opening Balance PR DR CR GL No: 230 Balance (DR or CR) 0.00 CR Account: Salaries Payable GL No: 235 Date Description PR DR CR Opening Balance Balance (DR or CR) 3.400.00 CR Account: Date Unearned Revenue Description Opening Balance PR DR CR GL NO 240 Balance (DR or CR) 9,200.00 CR Account: Date Bank Loan Description Opening Balance PR DR CR GL. No: 245 Balance (DR or CRI 30,000.00 CR Account: Date Common Shares Description Opening Balance PR DR CR GL No: 300 Balance DR OF CR) 72,000.00 CR Account: Date Retained Earnings Description Opening Balance PR DR CR GL No: 305 Balance (DR or CR) 66,920.00 CR Account: Date Sales Revenue Description PR DR GL No: 400 Balance (OR or CR) CR Account: Date Sales Discounts Description GL Nos 405 Balance (DR or CR) PR DR CR Account: Date Sales Returns and Allowances Description PR GL No: 410 Balance (DR or CRT DR CR Account: Date Interest Revenue Description GLNG 420 Balance (DR or CR) PR DR OR Account: Date Cost of Goods Sold Description PR DR CR GL No: SOO Balance (DR or CR Account: Date Employee Benefits Expense Description PR DR GL No: 510 Balance IDR or CR) CR Account: Date Depreciation Expense Description 515 PR GL No: Balance (DR or CR DR CR Account: Date Insurance Expense Description 520 PR DR GL No: Balance (DR or CR) CR Account: Date Interest Expense Description 525 PR OR OR GL No: Balance (DR or CR) Account: Date Office Supplies Expense Description PR GL No: 530 Balance (DR or CR) DR CR Account: Date Rent Expense Description PR DR CR GL No: 535 Balance (DR or CR) Account: Date Salaries Expense Description GL NO: 540 Balance (DR or CR) PR DR CR Account: Date Bank Charges Expense Description GL No: 545 Balance (DR or CR) PR DR CR Account: Date Entertainment Expense Description PR GL No: 555 Balance (DR or CR) DR CR Account: Date Shipping Expense Description PR GL No: 560 Balance (DR or CR) DR CR Account: Date Cash Over and Short Description GL No: 565 Balance (DR or CR) PR DR CR Use this chart to keep track of inventory values Purchases Date Quantity Unit Cost Value Sales Quantity Unit Cost Value Balance Quantity Unit Cost Value 1,200 31.00 37,200.00 Your accountant goes through the mail and opens the bank statement for the month of February provided by Well shown below. Date Feb 1 Feb 8 Feb 14 Feb 17 Feb 18 Feb 19 Feb 25 Feb 28 Feb 28 Feb 28 Wells Fargo Local Bank Prepared for DITO Shoppee information Withdrawal Deposit Opening Balance hg#2315 500.00 Deposit 9,540.00 Cha2316 13.440.00 Deposit 69,112.50 Ch #2317 25,200.00 Cha#10428 2,400.00 Petty Cash Ch#2318 255.00 Auto debit loan payment 1080.00 Service Charge 150.00 Interest 212.00 Balance 22.860.00 22.360.00 31 900.00 18,460.00 87,57250 62 372.50 59.972.50 59,717.50 58,637.50 58.487.50 58,699.50 101 PR General Ledger Accounts Account: Cash Date Description Opening Balance Feb 1 Paid Cho#2214 Feb 1 Paid Cha#2315 Feb 13 Paid Cho#2316 Feb 17 Received payment Feb 18 Paid inventory Cha#2317 Feb 20 Received payment Feb 25 Petty Cash Cha#2318 Feb 28 Paid loan G13 GIB G3 GI3 G13 GI3 G13 IGL No: DR CR Balance (DR or CR) 32,400.00 (DR 520.00 31.880.00 DR 500 31,380,00 DR 13.440.00 17 940.00 DR 69.112.50 87 052.50 OR 25,200.00 61.85250 IDR 1.000.00 62.852.50 DR 255 62.597.50 DR 1080.00 61,517.50 DR G13 Additional Information: a) The $9,540 is already recorded in the ledger last month. b) Cheque number of the company has only three (4) digits. Required: Prepare the February bank reconciliation for DITO Shopper using the bank statement and peneral ledger provided. Compare the information in the general ledger to the bank statement. Once reconciled record the relevant journal entries in the general journal and post the entries in the general ledger to bring the company's record up to date. DITO Shoppee Bank Reconciliation Statement February 28, 2021 Balance per books Explanation Balance per Bank DITO Shoppee Classified Balance Sheet As at January 31, 2021 Assets Cash $32,400 Accounts Receivable $16,820 Merchandise Inventory $37,200 Prepaid Insurance $3,200 Total Current Assets Long-Term Assets Equipment 145,000 Accumulated Depreciation -40.000 Total Assets 89,620 105.000 $194,620 Liabilities Current Liabilities Accounts Payable Unearned Revenue Salaries Payable Current Portion of Bank Loan Total Current Liabilities Non-Current Liabilities Non-Current Portion of Bank Loan Total Liabilities $13100 $9,200 $3,400 $10,560 $36,260 19,440 555,700 Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity 72,000 66.920 138.920 $194,620 Required: Using the balances of the General Ledger accounts as of Feb. 28, complete the financial statements 1) Prepare a multistep income statement DITO Shoppee Income Statement For the Month Ended February 28, 2021 2) Prepare a calculation of retained earnings Calculation of Retained Earnings For the Month Ended February 28, 2021 3) Prepare a classified balance sheet. Assume that $10,560 of the bank loan will be paid off in the 12 months DITO Shoppee Balance Sheet As at February 28, 2021 h) Calculate the inventory turnover as at February 28, 2021. i) If inventory turnover last month was 0.745, is the company holding on to inventory for a longer or shorter period of time? Based on the information above, answer the following questions. a) Calculate the current ratio as at February 28, 2021 b) Does DITO Shoppee have a good or bad current ratio? Explain why or why not. c) Calculate the inventory days on hand ratio as at February 28, 2021. (Since this is for the month, do not multiply by 365 in the formula. Instead multiply by 31 days) d) Last month, the inventory days on hand ratio was 37 days. Has the ratio improved? Why or why not? e) Calculate the debt to equity ratio as at February 28, 2021 Calculate the gross profit margin as at February 28, 2021 2) Last month, the gross profit margin percentage was 72. What could have caused this decrease in gross margin percentage