C. 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. 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 ADJUSTMENTS INCOME STATEMENT DEBIT CREDIT BALANCE SHEET DEBIT CREDIT ACCOUNT NAME DEBIT CREDIT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Cash Accounts Receivable Merchandise Inventory Supplies Prepaid Insurance Prepaid Advertising Store Equipment Accumulated Deprec. - Store Equip. Accounts Payable Wages Payable Sales Tax Payable T. 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 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Net Income 36 37 Horizontal Analysis Express Fashion Comparative Income Statement For the Months Ended October 31, 2019 and October 31, 2020 Dollar Dollar Change Percent Change Oct-19 Oct-20 S Sales Revenue: Sales Sales Returns & Allowances Sales Discounts 44,890.00 (1,030.00) $ 43,860.00 $ 18,410.00 11,860.00 (415.00) (205.00) 11,240.00 330.00 Vertical Analysis Express Fashion Income Statement For the Months Ended October 31, 2019 and October 31, 2020 Oct-20 Oct-19 Oct-19 Dollar Percentag Oct-20 Amount Amount e Percentage Sales Revenue: : Sales $ 44,890.00 L 100% 100% Sales Returns & Allowances (1,030.00) Sales Discounts Net Sales $ 43,860.00 $ Cost of Goods Sold: Beginning Inventory 18,410.00 Purchases 11,860.00 Purchases Returns & Allowance (415.00) Purchases Discounts (205.00) Net Purchases 11,240.00 Freight in 330.00 Delivered Cost of Purchases 11,570.00 Cost of Goods Available for Sale 29,980.00 Ending Inventory 23,235.00 Cost of Goods Sold $ 6,745.00 $ Gross Profit $ 37,115.00 5 Operating Expenses: Rent Expense 7,200.00 L Advertising Expense 1,500.00 Depreciation Exp.-Store Equip 940.00 Depreciation Exp.-Office Equip 315.00 L Janitorial Services Expense 880.00! Wages Expense 4,620.00 Phone Expense 415.00 Utilities Expense 1,525.00 Bad Debt Expense 145.00 Supplies Expense 880.00 Insurance Expense 100.00 L Total Operating Expense: $ 18,520.00 $ Net Income $ 18,595.00 $ 11,570.00 29,980.00 23,235.00 6,745.00 37,115.00 S $ $ Net Sales Cost of Goods Sold: Beginning Inventory Purchases Purchases Returns & Allowances Purchases Discounts Net Purchases Freight In Delivered Cost of Purchases Cost of Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Rent Expense Advertising Expense Depreciation Exp.-Store Equip Depreciation Exp.-Office Equip Janitorial Services Expense Wages Expense Phone Expense Utilities Expense Bad Debt Expense Supplies Expense Insurance Expense Total Operating Expenses Net Income S 7,200.00 1,500.00 940.00 F L 315.00 880.00 4,620.00 L 415.00 1,525.00 145.00 880.00 100.00 $ $ 18,520.00 18,595.00 $ $ Horizontal Analysis Express Fashion Comparative Balance Sheet For the Months October 31, 2019 and October 31, 2020 Vertical Analysis Express Fashion Balance Sheet For the Months October 31, 2019 and October 31, 2020 Oct-19 Oct-20 Dollar Dollar Oct-19 Oct-20 Amount Amount Percentage Percentage Assets: Dollar Change Percent Change Oct-19 Oct-20 Assets: $ 38,500.00 4,200.00 (145.00) 11,225.00 750.00 1,100.00 Cash $ 38,500.00 Accounts Receivable 4,200.00 Allowance for Doubtful Accounts (145.00) Merchandise Inventory 11,225.00 Supplies 750.00 Prepaid Insurance 1,100.00 Prepaid Advertising Store Equipment 18,500.00 Accum. Dep. - Store Equipment (3,025.00 Office Equipment 7,525.00 Accum. Dep. - Office Equipment (2,120.00) Total Assets $ 76,510.00 $ Liabilities: Accounts Payable 7,250.00 Sales Tax Payable 1,030.00 Wages Payable 975.00 Total Liabilities $ 9,255.00 $ Owner's Equity: T. Lashay, Capital 67,255.00 Total Liabilities & Owner's Equity $ 76,510.00 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 18,500.00 (3,025.00) 7,525.00 (2.120.00) $ 76,510.00 $ 100% 100% 7,250.00 1,030.00 975.00! $ 9,255.00 $ 67.255.00 $ 76,510.00 100% 100% 1. Current Ratio Formula: Current Assets / Current Liabilities (show as a ratio - ex. 1.43 to 1) Oct-19) Oct-20 2. Quick Ratio Oct-19) Cash + Short-Term Investments +A/R Current Liabilities (show as a ratio - ex. 1.43 to 1) Oct-20 MON 3. Debt Ratio Total Liabilities/Total Assets (show as a percent to two decimal places) Oct-19 Oct-20 4. Equity Ratio Oct-19) Oct-20 Total Equity / Total Assets (show as a percent to two decimal places) 5. Debt-to-Equity Ratio Oct-19 Total Liabilities/Total Equity (show as a percent to two decimal places) Oct-20 6. Profit Margin Oct-19 Oct-20 Net Income (or Loss) / Revenue (show as a percent to two decimal places) 7 Return on Assets Oct-19 Oct-20 Net Income (or Net Loss) / Average Total Assets (show as a percent to two decimal places) C. 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. 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 ADJUSTMENTS INCOME STATEMENT DEBIT CREDIT BALANCE SHEET DEBIT CREDIT ACCOUNT NAME DEBIT CREDIT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Cash Accounts Receivable Merchandise Inventory Supplies Prepaid Insurance Prepaid Advertising Store Equipment Accumulated Deprec. - Store Equip. Accounts Payable Wages Payable Sales Tax Payable T. 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 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Net Income 36 37 Horizontal Analysis Express Fashion Comparative Income Statement For the Months Ended October 31, 2019 and October 31, 2020 Dollar Dollar Change Percent Change Oct-19 Oct-20 S Sales Revenue: Sales Sales Returns & Allowances Sales Discounts 44,890.00 (1,030.00) $ 43,860.00 $ 18,410.00 11,860.00 (415.00) (205.00) 11,240.00 330.00 Vertical Analysis Express Fashion Income Statement For the Months Ended October 31, 2019 and October 31, 2020 Oct-20 Oct-19 Oct-19 Dollar Percentag Oct-20 Amount Amount e Percentage Sales Revenue: : Sales $ 44,890.00 L 100% 100% Sales Returns & Allowances (1,030.00) Sales Discounts Net Sales $ 43,860.00 $ Cost of Goods Sold: Beginning Inventory 18,410.00 Purchases 11,860.00 Purchases Returns & Allowance (415.00) Purchases Discounts (205.00) Net Purchases 11,240.00 Freight in 330.00 Delivered Cost of Purchases 11,570.00 Cost of Goods Available for Sale 29,980.00 Ending Inventory 23,235.00 Cost of Goods Sold $ 6,745.00 $ Gross Profit $ 37,115.00 5 Operating Expenses: Rent Expense 7,200.00 L Advertising Expense 1,500.00 Depreciation Exp.-Store Equip 940.00 Depreciation Exp.-Office Equip 315.00 L Janitorial Services Expense 880.00! Wages Expense 4,620.00 Phone Expense 415.00 Utilities Expense 1,525.00 Bad Debt Expense 145.00 Supplies Expense 880.00 Insurance Expense 100.00 L Total Operating Expense: $ 18,520.00 $ Net Income $ 18,595.00 $ 11,570.00 29,980.00 23,235.00 6,745.00 37,115.00 S $ $ Net Sales Cost of Goods Sold: Beginning Inventory Purchases Purchases Returns & Allowances Purchases Discounts Net Purchases Freight In Delivered Cost of Purchases Cost of Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Rent Expense Advertising Expense Depreciation Exp.-Store Equip Depreciation Exp.-Office Equip Janitorial Services Expense Wages Expense Phone Expense Utilities Expense Bad Debt Expense Supplies Expense Insurance Expense Total Operating Expenses Net Income S 7,200.00 1,500.00 940.00 F L 315.00 880.00 4,620.00 L 415.00 1,525.00 145.00 880.00 100.00 $ $ 18,520.00 18,595.00 $ $ Horizontal Analysis Express Fashion Comparative Balance Sheet For the Months October 31, 2019 and October 31, 2020 Vertical Analysis Express Fashion Balance Sheet For the Months October 31, 2019 and October 31, 2020 Oct-19 Oct-20 Dollar Dollar Oct-19 Oct-20 Amount Amount Percentage Percentage Assets: Dollar Change Percent Change Oct-19 Oct-20 Assets: $ 38,500.00 4,200.00 (145.00) 11,225.00 750.00 1,100.00 Cash $ 38,500.00 Accounts Receivable 4,200.00 Allowance for Doubtful Accounts (145.00) Merchandise Inventory 11,225.00 Supplies 750.00 Prepaid Insurance 1,100.00 Prepaid Advertising Store Equipment 18,500.00 Accum. Dep. - Store Equipment (3,025.00 Office Equipment 7,525.00 Accum. Dep. - Office Equipment (2,120.00) Total Assets $ 76,510.00 $ Liabilities: Accounts Payable 7,250.00 Sales Tax Payable 1,030.00 Wages Payable 975.00 Total Liabilities $ 9,255.00 $ Owner's Equity: T. Lashay, Capital 67,255.00 Total Liabilities & Owner's Equity $ 76,510.00 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 18,500.00 (3,025.00) 7,525.00 (2.120.00) $ 76,510.00 $ 100% 100% 7,250.00 1,030.00 975.00! $ 9,255.00 $ 67.255.00 $ 76,510.00 100% 100% 1. Current Ratio Formula: Current Assets / Current Liabilities (show as a ratio - ex. 1.43 to 1) Oct-19) Oct-20 2. Quick Ratio Oct-19) Cash + Short-Term Investments +A/R Current Liabilities (show as a ratio - ex. 1.43 to 1) Oct-20 MON 3. Debt Ratio Total Liabilities/Total Assets (show as a percent to two decimal places) Oct-19 Oct-20 4. Equity Ratio Oct-19) Oct-20 Total Equity / Total Assets (show as a percent to two decimal places) 5. Debt-to-Equity Ratio Oct-19 Total Liabilities/Total Equity (show as a percent to two decimal places) Oct-20 6. Profit Margin Oct-19 Oct-20 Net Income (or Loss) / Revenue (show as a percent to two decimal places) 7 Return on Assets Oct-19 Oct-20 Net Income (or Net Loss) / Average Total Assets (show as a percent to two decimal places)