Case: SquareFit - Student SquareFit owned by Chandler Bing, 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. SquareFit Classified Balance Sheet As at January 31, 2021 Assets Cash $35,600 Accounts Receivable 18,190 Merchandise Inventory 46,720 Prepaid Insurance 4.400 Total Current Assets Long-Term Assets Equipment 162,000 Accumulated Depreciation -52,000 Total Assets 104,910 110,000 $214,910 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 $14,800 $8,800 $5,700 11.160 $40,460 23.840 $64,300 Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity 81,000 69.610 150,610 $214,910 The bank loan has an annual interest rate of 9% and has monthly principal payment of $930. The inventory figure includes 1,460 units purchased at $32.00 each. Account # 400 405 410 420 430 500 510 The Chart of Accounts (GL no.) is shown below: Account Description Account # ASSETS Cash 101 Petty Cash 105 Accounts Receivable 110 Merchandise Inventory 120 Prepaid Insurance 125 Equipment 140 Accumulated Depreciation 145 LIABILITIES Accounts Payable 200 Interest Payable 205 CPP Payable 220 EI Payable 225 Income Tax Payable 230 Salaries Payable 235 Unearned Revenue 240 Bank Loan 245 SHAREHOLDERS' EQUITY Common Shares 300 Retained Earnings 305 Account Description REVENUE Sales Revenue Sales Discounts Sales Returns and Allowances Interest Revenue Other Income EXPENSES Cost of Goods Sold Employee Benefits Expense Depreciation Expense Insurance Expense Interest Expense Office Supplies Expense Rent Expense Salaries Expense Bank Charges Expense Maintenance Expense Entertainment Expense Shipping Expense Cash Over and Short 515 520 525 530 535 540 545 550 555 560 565 Transactions for the month of February Feb 1 Paid rent for February amounting to $660, Cheque #3354 Feb 1 SquareFit decided to establish a petty cash fund for the office. A cheque #3355 of $600 was issued and cashed. Purchased merchandise from Arrow on account, invoice #425; 1100 units at $28 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. Feb 5 Feb 7 Sold mechandise to Prada, 800 units at $75 each with invoice #2341. The invoice terms were 3/10, net 30, FOB Destination. Feb 9 Some of goods purchased from Arrow was defective. Arrow agreed to a 5% allowance on the total purchased. Note: You will need to adjust the Inventory Valuation to reflect the above allowance Feb 12 Paid total liability with a cheque #3356 to Arrow for the February 5 purchased. Feb 15 The employees are paid bi-weekly. Paid the payroll for the first half of February. Gross pay is $12,500, CPP is $638, El is $235 and income tax is $2,500. Use the general journal to record this. Use cheque #3357. Feb 15 Record the employer's share of CPP (100%) and El (140%) of what was deducted from employees. Feb 17 Feb 18 Prada paid invoice #2341 on time and took advantage of the early payment discount. Note: You will need to adjust the Inventory Valuation to reflect the discount. Bought inventory from MaxMara with cheque #3358, 1400 units at $30 per unit. Sold 600 units at $90 each with invoice #2342 to ZARA. The invoice term 3/10, net 30, FOB shipping point Received $2,230 from Gucci for a sale on account last month. Feb 20 Feb 20 Feb 25 The remaining balance of the petty cash account was $266. Total expenses incurred using the petty cash fund this month amounting to $261. In this amount, it includes the shipping cost incurred on Feb 7 in the amount of $55 and the other costs are for the office supplies expense. Prepare the entry to replenish the petty cash fund with Chq#3359. Made monthly bank loan payment of $1,193 which includes $930 principal and $263 interest. Feb 28 Note: You need to debit the non-current portion of the bank loan for the principal payment. The current portion due will remain the same as the due date for the loan is greater than 12 months from balance sheet date. At the end of February, the following adjustment had to be journalized to properly report the balances of the company's accounts: Feb 28 Prepared the payroll for the second half of February to be paid on March 5. Gross pay is $13,900, CPP is $709, El is $261 and income tax is $2,780. The cheque will be prepared later. Use the general journal to record this. Inhro Record the employer's share of CPP (100%) and El (140%) of what was deducted from I EU 20 Jemployees. Feb 28 Balance of Prepaid Insurance represents 11 months left on the policy. Record the adjustment of $400 to the current month expense. Feb 28 of the beginning balance of unearned revenue, $2,640 still remains unearned. Feb 28 Monthly depreciation on the equipment was $2,000. Required: a) Prepare the journal entries for the month of February b) Enter the opening balances of the accounts from the opening balance sheet and post the above journal entries to the account. c) Complete the bank reconciliation report. d) Post journal entries from the bank reconciliation to general ledger accounts e) Complete the 10-column worksheet. e) Post the adjusting entries to the accounts f) Journalize and post the adjustments 8) Prepare the multistep income statement, calculation of retained earnings, classified balance sheet h)Answer the analysis questions from 'a' to 'i'. General Journal Account Title and Explanation Page 3 CR Date PR DR Date Account Title and Explanation PR DR CR Adjusting Entries Date Account Title and Explanation PR DR CR General Ledger Accounts Account: Cash Date Description Opening Balance PR DR CR GL No: 101 Balance (DR or CR) 35,600.00 DR Account: Petty Cash Date Description Opening Balance PR DR CR GL No: 105 Balance (DR or CR) 0.00 DR Account: Date Accounts Receivable Description Opening Balance PR DR CR GL No: 110 Balance (DR or CR) 18,190.00 DR Account: Date Merchandise Inventory Description PR Opening Balance DR CR GL No: 120 Balance (DR or CR) 46,720.00 DR Account: Prepaid Insurance Date Description GL No: 125 Balance (DR or CR) PR DR CR Opening Balance 4,400.00 DR Account: Equipment Date Description Opening Balance PR DR CR GL No: 140 Balance (DR or CR) 162,000.00 DR Account: Accumulated Depreciation Date Description PR Opening Balance DR CR GL No: 145 Balance (DR or CR) 52,000.00 CR Account: Date Accounts Payable Description Opening Balance PR DR CR GL No: 200 Balance (DR or CR) 14,800.00 CR Account: Interest Payable Date 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 El 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 Date Description Opening Balance PR DR CR GL No: 235 Balance (DR or CR) 5,700.00 CR Account: Date Unearned Revenue Description Opening Balance PR DR CR GL No: 240 Balance (DR or CR) 8,800.00 CR Account: Date Bank Loan Description Opening Balance PR DR CR GL No: 245 Balance (DR or CR) 35,000.00 CR Account: Date Common Shares Description Opening Balance PR DR CR GL No: 300 Balance (DR or CR) 81,000.00 CR Account: Date Retained Earnings Description Opening Balance PR DR CR GL No: 305 Balance (DR or CR) 69,610.00 CR Sales Revenue Account: Date GL No: 400 Balance (DR or CR) Description PR DR CR Account: Date Sales Discounts Description GL No: 405 Balance (DR or CR) PR DR CR Account: Date Sales Returns and Allowances Description PR GL No: 410 Balance (DR or CR) DR CR Account: Interest Revenue Date Description GL No: 420 Balance (DR or CR) PR DR CR Account: Date Cost of Goods Sold Description GL No: 500 Balance (DR or CR) PR DR CR Account: Employee Benefits Expense Date Description PR GL No: 510 Balance (DR or CR) DR CR Account: Depreciation Expense Date Description GL No: 515 Balance (DR or CR) PR DR CR Account: Date Insurance Expense Description GL No: 520 Balance (DR or CR) PR DR CR Account: Interest Expense GL No: 525 Date Description PR DR CR Balance (DR or CR) Account: Office Supplies Expense Description PR GL No: 530 Balance (DR or CR) Date DR CR Account: Rent Expense Description GL No: 535 Balance (DR or CR) Date PR DR CR 540 Account: Salaries Expense Date Description GL No: Balance (DR or CR) PR DR CR Account: Date Bank Charges Expense Description PR GL No: 545 Balance (DR or CR) DR CR Account: Date Entertainment Expense Description PR GL No: 555 Balance (DR or CR) DR CR Account: Shipping Expense Date Description GL No: 560 Balance (DR or CR) PR 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 Sales Balance Date Quantity Unit Cost Value Quantity Unit Cost Value Quantity Unit Cost Value 1,460 32.00 46,720.00 Your accountant goes through the mail and opens the bank statement for the month of February provided by Bank of Canada. It is shown below. Date Feb 1 Feb 8 Feb 14 15-Feb Feb 17 Feb 18 Feb 19 Feb 25 Feb 28 Feb 28 Feb 28 Bank of Canada Prepared for SquareFit Information Withdrawal Deposit Opening Balance Paid Chq#3355 600.00 Deposit 11,300.00 Paid Chq#3356 28,089.60 Paid Cha#3357 9,127.00 Deposit 58,200.00 Chq#3358 42,000.00 Chq#11140 3,390.00 Chq#3359 334.00 Auto debit loan payment 1,193.00 Service Charge 340.00 Interest 290.00 Balance 24,300.00 23,700.00 35,000.00 6,910,401 -2,216.60 55,983.40 13,983,40 10,593.40 10,259.40 9,066.40 8,726.401 9,016.40 101 General Ledger Accounts Account: Cash Date Description PR Opening Balance Feb 1 Paid Chq#3354 GJ3 Feb 1 Paid Chq#3355 GJ3 Feb 12 Paid Chq#3356 Feb 15 Paid Chq#3357 GJ3 Feb 17 Received payment GJ3 Feb 18 Paid inventory Chq#3358 G13 Feb 20 Received payment GJ3 Feb 25 Petty Cash Chq#3359 GJ3 Feb 28 Paid loan GJ3 GJ3 GL No: DR CR Balance (DR OF CR) 35,600.00 DR 660.000 34,940.00 DR 600 34,340.00 DR 28,089.60 6,250.40 DR 9,127.00 -2,876.60 CR 58,200.00 55,323.40 DR 42,000.00 13,323.40 DR 2,230.00 15,553.40 DR 334 15,219.40 DR 1,193.00 14,026.40 DR Additional Information: a) The $11,300 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 SquareFit using the bank statement and general 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. SquareFit Bank Reconciliation Statement February 28, 2021 Balance per books Explanation Balance per Bank SquareFit Worksheet February 28, 2021 Adjusted Trial Adjustments Balance Income Statement Balance Sheet Unadjusted Trial Balance DR CR DR CR DR CR DR CR DR CR Account Titles Cash Petty Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Equipment Accumulated Depreciation Accounts Payable Interest Payable CPP Payable El Payable Income Tax Payable Salaries Payable Unearned Revenue Bank Loan Common Shares Retained Earnings Adjustments Adjusted Trial Balance Income Statement Balance Sheet Unadjusted Trial Balance DR CR DR CR DR CR DR CR DR CR Account Titles Sales Revenue Sales Discounts Sales Returns and Allowance Interest Revenue Other Income Cost of Goods Sold Employee Benefits Expense Depreciation Expense Insurance Expense interest Expense Office Supplies Expense Rent Expense Salaries Expense Bank Charges Expense Maintenance Expense Entertainment Expense Shipping Expense Cash Over and Short Total SquareFit Classified Balance Sheet As at January 31, 2021 Assets Cash $35,600 Accounts Receivable $18,190 Merchandise Inventory $46,720 Prepaid Insurance $4,400 Total Current Assets Long-Term Assets Equipment 162,000 Accumulated Depreciation -52,000 Total Assets 104,910 110,000 $214,910 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 $14,800 $8,800 $5,700 $11,160 $40,460 23.840 $64,300 Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity 81,000 69.610 150,610 $214,910 Required: Using the balances of the General Ledger accounts as of Feb. 28, complete the financial statements. 1) Prepare a multistep income statement. SquareFit 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 $11,160 of the bank loan will be paid off in the 12 months. SquareFit Balance Sheet As at February 28, 2021 Based on the information above, answer the following questions. a) Calculate the current ratio as at February 28, 2021 b) Does SquareFit 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 39 days. Has the ratio improved? Why or why not? e) Calculate the debt to equity ratio as at February 28, 2021. f) Calculate the gross profit margin as at February 28, 2021. 8) Last month, the gross profit margin percentage was 70%. What could have caused this decrease in gross margin percentage? h) Calculate the inventory turnover as at February 28, 2021. ) If inventory turnover last month was 0.81, is the company holding on to inventory for a longer or shorter period of time? Case: SquareFit - Student SquareFit owned by Chandler Bing, 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. SquareFit Classified Balance Sheet As at January 31, 2021 Assets Cash $35,600 Accounts Receivable 18,190 Merchandise Inventory 46,720 Prepaid Insurance 4.400 Total Current Assets Long-Term Assets Equipment 162,000 Accumulated Depreciation -52,000 Total Assets 104,910 110,000 $214,910 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 $14,800 $8,800 $5,700 11.160 $40,460 23.840 $64,300 Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity 81,000 69.610 150,610 $214,910 The bank loan has an annual interest rate of 9% and has monthly principal payment of $930. The inventory figure includes 1,460 units purchased at $32.00 each. Account # 400 405 410 420 430 500 510 The Chart of Accounts (GL no.) is shown below: Account Description Account # ASSETS Cash 101 Petty Cash 105 Accounts Receivable 110 Merchandise Inventory 120 Prepaid Insurance 125 Equipment 140 Accumulated Depreciation 145 LIABILITIES Accounts Payable 200 Interest Payable 205 CPP Payable 220 EI Payable 225 Income Tax Payable 230 Salaries Payable 235 Unearned Revenue 240 Bank Loan 245 SHAREHOLDERS' EQUITY Common Shares 300 Retained Earnings 305 Account Description REVENUE Sales Revenue Sales Discounts Sales Returns and Allowances Interest Revenue Other Income EXPENSES Cost of Goods Sold Employee Benefits Expense Depreciation Expense Insurance Expense Interest Expense Office Supplies Expense Rent Expense Salaries Expense Bank Charges Expense Maintenance Expense Entertainment Expense Shipping Expense Cash Over and Short 515 520 525 530 535 540 545 550 555 560 565 Transactions for the month of February Feb 1 Paid rent for February amounting to $660, Cheque #3354 Feb 1 SquareFit decided to establish a petty cash fund for the office. A cheque #3355 of $600 was issued and cashed. Purchased merchandise from Arrow on account, invoice #425; 1100 units at $28 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. Feb 5 Feb 7 Sold mechandise to Prada, 800 units at $75 each with invoice #2341. The invoice terms were 3/10, net 30, FOB Destination. Feb 9 Some of goods purchased from Arrow was defective. Arrow agreed to a 5% allowance on the total purchased. Note: You will need to adjust the Inventory Valuation to reflect the above allowance Feb 12 Paid total liability with a cheque #3356 to Arrow for the February 5 purchased. Feb 15 The employees are paid bi-weekly. Paid the payroll for the first half of February. Gross pay is $12,500, CPP is $638, El is $235 and income tax is $2,500. Use the general journal to record this. Use cheque #3357. Feb 15 Record the employer's share of CPP (100%) and El (140%) of what was deducted from employees. Feb 17 Feb 18 Prada paid invoice #2341 on time and took advantage of the early payment discount. Note: You will need to adjust the Inventory Valuation to reflect the discount. Bought inventory from MaxMara with cheque #3358, 1400 units at $30 per unit. Sold 600 units at $90 each with invoice #2342 to ZARA. The invoice term 3/10, net 30, FOB shipping point Received $2,230 from Gucci for a sale on account last month. Feb 20 Feb 20 Feb 25 The remaining balance of the petty cash account was $266. Total expenses incurred using the petty cash fund this month amounting to $261. In this amount, it includes the shipping cost incurred on Feb 7 in the amount of $55 and the other costs are for the office supplies expense. Prepare the entry to replenish the petty cash fund with Chq#3359. Made monthly bank loan payment of $1,193 which includes $930 principal and $263 interest. Feb 28 Note: You need to debit the non-current portion of the bank loan for the principal payment. The current portion due will remain the same as the due date for the loan is greater than 12 months from balance sheet date. At the end of February, the following adjustment had to be journalized to properly report the balances of the company's accounts: Feb 28 Prepared the payroll for the second half of February to be paid on March 5. Gross pay is $13,900, CPP is $709, El is $261 and income tax is $2,780. The cheque will be prepared later. Use the general journal to record this. Inhro Record the employer's share of CPP (100%) and El (140%) of what was deducted from I EU 20 Jemployees. Feb 28 Balance of Prepaid Insurance represents 11 months left on the policy. Record the adjustment of $400 to the current month expense. Feb 28 of the beginning balance of unearned revenue, $2,640 still remains unearned. Feb 28 Monthly depreciation on the equipment was $2,000. Required: a) Prepare the journal entries for the month of February b) Enter the opening balances of the accounts from the opening balance sheet and post the above journal entries to the account. c) Complete the bank reconciliation report. d) Post journal entries from the bank reconciliation to general ledger accounts e) Complete the 10-column worksheet. e) Post the adjusting entries to the accounts f) Journalize and post the adjustments 8) Prepare the multistep income statement, calculation of retained earnings, classified balance sheet h)Answer the analysis questions from 'a' to 'i'. General Journal Account Title and Explanation Page 3 CR Date PR DR Date Account Title and Explanation PR DR CR Adjusting Entries Date Account Title and Explanation PR DR CR General Ledger Accounts Account: Cash Date Description Opening Balance PR DR CR GL No: 101 Balance (DR or CR) 35,600.00 DR Account: Petty Cash Date Description Opening Balance PR DR CR GL No: 105 Balance (DR or CR) 0.00 DR Account: Date Accounts Receivable Description Opening Balance PR DR CR GL No: 110 Balance (DR or CR) 18,190.00 DR Account: Date Merchandise Inventory Description PR Opening Balance DR CR GL No: 120 Balance (DR or CR) 46,720.00 DR Account: Prepaid Insurance Date Description GL No: 125 Balance (DR or CR) PR DR CR Opening Balance 4,400.00 DR Account: Equipment Date Description Opening Balance PR DR CR GL No: 140 Balance (DR or CR) 162,000.00 DR Account: Accumulated Depreciation Date Description PR Opening Balance DR CR GL No: 145 Balance (DR or CR) 52,000.00 CR Account: Date Accounts Payable Description Opening Balance PR DR CR GL No: 200 Balance (DR or CR) 14,800.00 CR Account: Interest Payable Date 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 El 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 Date Description Opening Balance PR DR CR GL No: 235 Balance (DR or CR) 5,700.00 CR Account: Date Unearned Revenue Description Opening Balance PR DR CR GL No: 240 Balance (DR or CR) 8,800.00 CR Account: Date Bank Loan Description Opening Balance PR DR CR GL No: 245 Balance (DR or CR) 35,000.00 CR Account: Date Common Shares Description Opening Balance PR DR CR GL No: 300 Balance (DR or CR) 81,000.00 CR Account: Date Retained Earnings Description Opening Balance PR DR CR GL No: 305 Balance (DR or CR) 69,610.00 CR Sales Revenue Account: Date GL No: 400 Balance (DR or CR) Description PR DR CR Account: Date Sales Discounts Description GL No: 405 Balance (DR or CR) PR DR CR Account: Date Sales Returns and Allowances Description PR GL No: 410 Balance (DR or CR) DR CR Account: Interest Revenue Date Description GL No: 420 Balance (DR or CR) PR DR CR Account: Date Cost of Goods Sold Description GL No: 500 Balance (DR or CR) PR DR CR Account: Employee Benefits Expense Date Description PR GL No: 510 Balance (DR or CR) DR CR Account: Depreciation Expense Date Description GL No: 515 Balance (DR or CR) PR DR CR Account: Date Insurance Expense Description GL No: 520 Balance (DR or CR) PR DR CR Account: Interest Expense GL No: 525 Date Description PR DR CR Balance (DR or CR) Account: Office Supplies Expense Description PR GL No: 530 Balance (DR or CR) Date DR CR Account: Rent Expense Description GL No: 535 Balance (DR or CR) Date PR DR CR 540 Account: Salaries Expense Date Description GL No: Balance (DR or CR) PR DR CR Account: Date Bank Charges Expense Description PR GL No: 545 Balance (DR or CR) DR CR Account: Date Entertainment Expense Description PR GL No: 555 Balance (DR or CR) DR CR Account: Shipping Expense Date Description GL No: 560 Balance (DR or CR) PR 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 Sales Balance Date Quantity Unit Cost Value Quantity Unit Cost Value Quantity Unit Cost Value 1,460 32.00 46,720.00 Your accountant goes through the mail and opens the bank statement for the month of February provided by Bank of Canada. It is shown below. Date Feb 1 Feb 8 Feb 14 15-Feb Feb 17 Feb 18 Feb 19 Feb 25 Feb 28 Feb 28 Feb 28 Bank of Canada Prepared for SquareFit Information Withdrawal Deposit Opening Balance Paid Chq#3355 600.00 Deposit 11,300.00 Paid Chq#3356 28,089.60 Paid Cha#3357 9,127.00 Deposit 58,200.00 Chq#3358 42,000.00 Chq#11140 3,390.00 Chq#3359 334.00 Auto debit loan payment 1,193.00 Service Charge 340.00 Interest 290.00 Balance 24,300.00 23,700.00 35,000.00 6,910,401 -2,216.60 55,983.40 13,983,40 10,593.40 10,259.40 9,066.40 8,726.401 9,016.40 101 General Ledger Accounts Account: Cash Date Description PR Opening Balance Feb 1 Paid Chq#3354 GJ3 Feb 1 Paid Chq#3355 GJ3 Feb 12 Paid Chq#3356 Feb 15 Paid Chq#3357 GJ3 Feb 17 Received payment GJ3 Feb 18 Paid inventory Chq#3358 G13 Feb 20 Received payment GJ3 Feb 25 Petty Cash Chq#3359 GJ3 Feb 28 Paid loan GJ3 GJ3 GL No: DR CR Balance (DR OF CR) 35,600.00 DR 660.000 34,940.00 DR 600 34,340.00 DR 28,089.60 6,250.40 DR 9,127.00 -2,876.60 CR 58,200.00 55,323.40 DR 42,000.00 13,323.40 DR 2,230.00 15,553.40 DR 334 15,219.40 DR 1,193.00 14,026.40 DR Additional Information: a) The $11,300 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 SquareFit using the bank statement and general 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. SquareFit Bank Reconciliation Statement February 28, 2021 Balance per books Explanation Balance per Bank SquareFit Worksheet February 28, 2021 Adjusted Trial Adjustments Balance Income Statement Balance Sheet Unadjusted Trial Balance DR CR DR CR DR CR DR CR DR CR Account Titles Cash Petty Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Equipment Accumulated Depreciation Accounts Payable Interest Payable CPP Payable El Payable Income Tax Payable Salaries Payable Unearned Revenue Bank Loan Common Shares Retained Earnings Adjustments Adjusted Trial Balance Income Statement Balance Sheet Unadjusted Trial Balance DR CR DR CR DR CR DR CR DR CR Account Titles Sales Revenue Sales Discounts Sales Returns and Allowance Interest Revenue Other Income Cost of Goods Sold Employee Benefits Expense Depreciation Expense Insurance Expense interest Expense Office Supplies Expense Rent Expense Salaries Expense Bank Charges Expense Maintenance Expense Entertainment Expense Shipping Expense Cash Over and Short Total SquareFit Classified Balance Sheet As at January 31, 2021 Assets Cash $35,600 Accounts Receivable $18,190 Merchandise Inventory $46,720 Prepaid Insurance $4,400 Total Current Assets Long-Term Assets Equipment 162,000 Accumulated Depreciation -52,000 Total Assets 104,910 110,000 $214,910 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 $14,800 $8,800 $5,700 $11,160 $40,460 23.840 $64,300 Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Equity 81,000 69.610 150,610 $214,910 Required: Using the balances of the General Ledger accounts as of Feb. 28, complete the financial statements. 1) Prepare a multistep income statement. SquareFit 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 $11,160 of the bank loan will be paid off in the 12 months. SquareFit Balance Sheet As at February 28, 2021 Based on the information above, answer the following questions. a) Calculate the current ratio as at February 28, 2021 b) Does SquareFit 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 39 days. Has the ratio improved? Why or why not? e) Calculate the debt to equity ratio as at February 28, 2021. f) Calculate the gross profit margin as at February 28, 2021. 8) Last month, the gross profit margin percentage was 70%. What could have caused this decrease in gross margin percentage? h) Calculate the inventory turnover as at February 28, 2021. ) If inventory turnover last month was 0.81, is the company holding on to inventory for a longer or shorter period of time