Case Tees R Us Solutions Tees R Us, set up as a privately held corporation, operating as a t shirt retailer, of which 100 of the Common Shares are owned by Tamara Green You were hired to account for transactions for the month of February 2021, complete month endprocessing, prepare the financial statements and perform a financial ratio analysis as of the end of that month They use 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 Tees R Us Classified Balance Sheet As at January 31, 2021 Assets Cash $35,600 Accounts Receivable 16,870 Merchandise Inventory 12,500 Prepaid Insurance Total Current Assets Long Term Assets Equipment 162,000 Accumulated Depreciation 52,000 Total Assets 4,400 69,370 110,000 $179,370 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 $12,000 $9,000 $5,700 11 160 $37,860 23 840 $61,700 Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities Equity 81,000 36,670 117,670 $179,370 Notes Relating to Balances Als $0 $7,500 $4,500 $12,000 Customers and balances Suppliers and Balances Columbia $3,200 Henley Arrow $6,400 Dickies $4,250 Fabrica Martin $2,100 Total Short $920 $16,870 The bank loan has an annual interest rate of 5 and has monthly principal payment of $930 The inventory figure includes 500 units purchased at $25 00 each Total Papr Account 400 405 410 420 430 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 500 510 515 520 525 530 535 540 545 550 555 560 565 Transactions for the month of February Feb 1 Feb 1 Instructions a) Prepare the journal entries for the following transactions for the month of February You will also need to update the inventory in the table for each purchase and sale, return or allowance, found under the Inventory Valuation tab of this workbook Paid rent for February amounting to $660, Cheque 3354 Tees R Us decided to establish a petty cash fund for the office A cheque 3355 of $500 was issued and cashed Purchased merchandise from Henley on account, invoice 425 1100 units at $28 each Terms of Feb 5 the purchase were 4 10, net 30, FOB Destination The seller paid the shipping cost amounting to $55 Note Update the Inventory Valuation table after each purchase Sold mechandise on accout to Arrow, 800 units at $75 each with invoice 2341 The invoice terms Feb 7 were 3 10, net 30, FOB Destination Note Update the Inventory Valuation table after each sale some of goods purchased from Henley were defective Henley agreed to a 5 allowance on the total purchased Feb 9 Note You will need to update the Inventory Valuation table to reflect the allowance as it reduces the value of the inventory Paid total liability with a cheque 3356 to Henley for the February 5 purchase less the allowance from Feb 9 Feb 12 Note You will need to update the Merchandise Inventory account to reflect any discount for early payment to supplier The employees are paid bi weekly Paid the payroll for the first half of February, cheque 3357 Feb 15 Gross pay is $12,500, CPP is $638, El is $235 and income tax is $2,500 Use the general journal to record this Feb 15 Record the employer's share of CPP (100 ) and El (140 ) of what was deducted from employees Feb 17 Feb 18 Feb 20 Feb 20 Arrow paid invoice 2341 on time and took advantage of the early payment discount Bought inventory from Fabrica with cheque 3358, 1400 units at $30 per unit Note Update Inventory Valuation table to reflect purchase Sold 600 units on account at $90 each with invoice 2342 to Martin The invoice term 3 10, net 30, FOB shipping point Note Update Inventory Valuation table Received $3,200 from Columbia for a sale on account last month The remaining balance of the petty cash account was $150 Total expenses incurred using the petty cash fund this month amounting to $345 In this amount, it includes the shipping cost incurred on Feb in the amount of $55 and the other costs are for the office supplies expense Prepare the entry to replenish the potty cash fund with Ch 3359 Made monthly bank loan payment of $1,076 which includes $930 principal and $146 interest 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 Feb 25 Feb 28 b)Enter the opening balances of the accounts from the January 31, 2021 Balance Sheet and post the above journal entries to the accounts c) d)Complete the bank reconciliation report and record post journal entries e) Complete the 10 column worksheet (using information for adjustments shown below) The following information needs to be used first to record the adjustments on the worksheet Prepared the payroll for the second half of February to be paid on March 5 Gross pay is $15,000, Feb 28 CPP is $765, El is $282 and income tax is $3,000 The cheque will be prepared later Feb 28 Record the employer's share of CPP (100 ) and El (140 ) of what was deducted from employees Feb 28 For Prepaid Insurance, record the adjustment of $440 for the current month expense 28 For Unearned Revenue, $2,700 still remains unearned at the end of February Feb 28 Monthly depreciation on the equipment was $1,500 f) Record the adjustments in the General Journal and then post to the General Ledger accounts g) Prepare the multistep income statement, calculation of retained earnings, classified balance sheet h)Answer the analysis questions from 'a' to 'i' (found at bottom on Financial Statements tab) General Journal Account Title and Explanation Page 3 CR PR DR Date 2021 General Ledger Accounts Account Cash Date Description Opening Balance GL No 101 Balance (DR or CR) PR DR CR Account Date Petty Cash Description Opening Balance PR DR CR GL No 105 Balance (DR or CR) 0 00 Account Date Accounts Receivable Description Opening Balance PR DR CR GL No 110 Balance (DR or CR) DR Account Date Merchandise Inventory Description PR Opening Balance GL No 120 Balance (DR or CR) DR CR Account Prepaid Insurance Description Opening Balance Date GL No 125 Balance (DR or CR) PR DR CR Account Date Equipment Description Opening Balance GL No 140 Balance (DR or CR) PR DR CR Account Date Accumulated Depreciation Description PR Opening Balance GL No 145 Balance (DR or CR) DR CR Account Accounts Payable Description Opening Balance GL No 200 Balance (DR or CR) Date PR DR CR Account Date Interest Payable Description Opening Balance GL No 205 Balance (DR or CR) PR DR 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 Date Salaries Payable Description Opening Balance GL No 235 Balance (DR or CR) PR DR CR Account Date Unearned Revenue Description Opening Balance GL No 240 Balance (DR or CR) PR DR CR Account Date Bank Loan Description Opening Balance GL No 245 Balance (DR or CR) PR DR CR Account Date Common Shares Description Opening Balance GL No 300 Balance (DR or CR) PR DR CR Account Date Retained Earnings Description Opening Balance GL No 305 Balance (DR or CR) PR DR CR Account Date Sales Revenue Description GL No 400 Balance (DR or CR) 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 Date Interest Revenue 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 Date Employee Benefits Expense Description PR GL No 510 Balance (DR or CR) DR CR Account Date Depreciation Expense 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 Date Interest Expense Description GL No 525 Balance (DR or CR) PR DR CR Account Date Office Supplies Expense Description PR GL No 530 Balance (DR or CR) DR CR Account Date Rent Expense Description GL No 535 Balance (DR or CR) PR DR 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 Shipping Expense Description GL No 560 Balance (DR or CR) Date 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 Date Quantity Unit Cost Value Jan 31 Sales Unit Cost Quantity Value Quantity 500 Balance Unit Cost Value 25 00 12,500 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 Feb 15 Feb 17 Feb 18 Feb 19 Feb 25 Feb 28 Feb 28 Feb 28 Bank of Canada Prepared for Tees R Us Information Withdrawal Deposit Opening Balance Paid Chq 3355 500 00 Deposit 11,300 00 Paid Chq 3356 28,089 60 Paid Ch 3357 9,127 00 Deposit 58,200 00 Ch 3358 42,000 00 Ch 11140 3,390 00 Chq 3359 350 00 Auto debit loan payment 1,076 00 Service Charge 34 00 Interest 290 00 Balance 24,300 00 23,800 00 35,100 00 7,010 40 2,116 60 56,083 40 14,083 40 10,693 40 10,343 40 9,267 40 9,233 40 9,523 40 101 PR DR General Ledger Accounts Account Cash Date Description Opening Balance Feb 1 Paid Ch 3354 Feb 1 Paid Cha 3355 Feb 12 Paid Chq 3356 Feb 15 Paid Chq 3357 Feb 17 Received payment Feb 18 Paid inventory Ch 3358 Feb 20 Received payment Feb 25 Petty Cash Chq 3359 Feb 28 Paid loan GJ3 GJ3 GJ3 GJ3 GJ3 GJ3 GJ3 GJ3 GJ3 GL No CR Balance (DR or CR) 35,600 00 DR 660 00 34,940 00 DR 500 00 34,440 00 DR 28,089 60 6,350 40 DR 9,127 00 2 776 60 CR 58,200 00 55,423 40 DR 42,000 00 13,423 40 DR 3,200 00 16,623 40 DR 350 00 16,273 40 DR 1,076 00 15,197 40 DR Additional Information a) The $11,300 is already recorded in the ledger last month b) Cheque number of the company has (4) digits Required Prepare the February bank reconciliation for Tees R Us 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 Tees R Us Bank Reconciliation Statement February 28, 2021 Balance per books Balance per Bank Explanation Balance per records Tees R Us Worksheet February 28, 2021 Adjustments Adjusted Trial 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 Sales Revenue Sales Discounts Sales Returns and Allowand 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 Tees R Us Classified Balance Sheet As at January 31, 2021 Assets Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Total Current Assets Long Term Assets Cquipment Accumulated Depreciation Total Assets $35,600 $16,870 $12,500 $4,400 69,370 162,000 52,000 110,000 $179,370 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 $12,000 $9,000 $5,700 $11,160 $37,860 23,840 $61,700 shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities Equity 81,000 36 670 117,670 $179,370 Required g)Using the balances of the General Ledger accounts as of Feb 28, complete the financial statements 1) Prepare a multistep income statement Tees R Us Income Statement For the Month Ended February 28, 2021 Sales Revenue Sales Discounts Net Sales Cost of Goods Sold Gross Profit Operating Expenses Employee Benefits Expense Depreciation Expense Insurance Expense Office Supplies Expense Rent Expense Salaries Expense Bank Charges Expense Shipping Expense Cash Over Short Total Operating Expenses Operating Income Other Income and Expenses Interest Expense Interest Revenue Total Other Income and Expenses Net Income 2) Prepare a calculation of retained earnings Calculation of Retained Earnings For the Month Ended February 28, 2021 Retained Earnings, Beginning Add Net Income Less Dividends Retained Earnings, End 3) Prepare a classified balance sheet Assume that $ of the bank loan will be paid off in the 12 months Tees R Us Balance Sheet As at February 28, 2021 Assets Current Assets Cash Petty Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Total Current Assets Long Term Assets Equipment Accumulated Depreciation Total Assets Liabilities Current Liabilities Accounts Payable CPP Payable El Payable Income Tax Payable Salaries Payable Unearned Revenue Current Portion of Bank Loan Total Current Liabilities Non Current Liabilities Non Current Portion of Bank Loan Total Liabilities Shareholders' Equity Common Shares Retained Earnings Total Liabilities Shareholders' Equity h)Based on the information above, answer the following questions a) Calculate the current ratio as at February 28, 2021 b) Does Tees R Us have a good or bad current ratio Explain why or why not DIV 0 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 g) 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 i) If inventory turnover last month was 0 81, is the company holding on to inventory for a longer or shorter period of time

Question

Case  Tees R Us   Solutions Tees R Us, set up as a privately held corporation, operating as a t shirt retailer, of which 100  of the Common Shares are owned by Tamara Green  You were hired to account for transactions for the month of February 2021, complete month endprocessing, prepare the financial statements and perform a financial ratio analysis as of the end of that month  They use 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  Tees R Us Classified Balance Sheet As at January 31, 2021 Assets Cash $35,600 Accounts Receivable 16,870 Merchandise Inventory 12,500 Prepaid Insurance Total Current Assets Long Term Assets Equipment 162,000 Accumulated Depreciation  52,000 Total Assets 4,400 69,370 110,000 $179,370 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 $12,000 $9,000 $5,700 11 160 $37,860 23 840 $61,700 Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities   Equity 81,000 36,670 117,670 $179,370 Notes Relating to Balances  Als $0 $7,500 $4,500 $12,000 Customers and balances Suppliers and Balances Columbia $3,200 Henley Arrow $6,400 Dickies $4,250 Fabrica Martin $2,100 Total Short $920 $16,870 The bank loan has an annual interest rate of 5  and has monthly principal payment of $930  The inventory figure includes 500 units purchased at $25 00 each  Total Papr Account   400 405 410 420 430 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 500 510 515 520 525 530 535 540 545 550 555 560 565 Transactions for the month of February Feb 1 Feb 1 Instructions  a) Prepare the journal entries for the following transactions for the month of February  You will also need to update the inventory in the table for each purchase and sale, return or allowance, found under the Inventory Valuation tab of this workbook Paid rent for February amounting to $660, Cheque  3354 Tees R Us decided to establish a petty cash fund for the office  A cheque  3355 of $500 was issued and cashed  Purchased merchandise from Henley on account, invoice  425  1100 units at $28 each  Terms of Feb 5 the purchase were 4 10, net 30, FOB Destination  The seller paid the shipping cost amounting to $55  Note  Update the Inventory Valuation table after each purchase  Sold mechandise on accout to Arrow, 800 units at $75 each with invoice  2341  The invoice terms Feb 7 were 3 10, net 30, FOB Destination  Note  Update the Inventory Valuation table after each sale  some of goods purchased from Henley were defective  Henley agreed to a 5  allowance on the total purchased Feb 9 Note  You will need to update the Inventory Valuation table to reflect the allowance as it reduces the value of the inventory  Paid total liability with a cheque  3356 to Henley for the February 5 purchase less the allowance from Feb  9  Feb 12 Note  You will need to update the Merchandise Inventory account to reflect any discount for early payment to supplier  The employees are paid bi weekly  Paid the payroll for the first half of February, cheque  3357  Feb 15 Gross pay is $12,500, CPP is $638, El is $235 and income tax is $2,500  Use the general journal to record this  Feb 15 Record the employer's share of CPP (100 ) and El (140 ) of what was deducted from employees  Feb 17 Feb 18 Feb 20 Feb 20 Arrow paid invoice  2341 on time and took advantage of the early payment discount  Bought inventory from Fabrica with cheque  3358, 1400 units at $30 per unit  Note  Update Inventory Valuation table to reflect purchase Sold 600 units on account at $90 each with invoice  2342 to Martin  The invoice term 3 10, net 30, FOB shipping point  Note  Update Inventory Valuation table  Received $3,200 from Columbia for a sale on account last month  The remaining balance of the petty cash account was $150  Total expenses incurred using the petty cash fund this month amounting to $345  In this amount, it includes the shipping cost incurred on Feb   in the amount of $55 and the other costs are for the office supplies expense  Prepare the entry to replenish the potty cash fund with Ch 3359 Made monthly bank loan payment of $1,076 which includes $930 principal and $146 interest  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  Feb 25 Feb 28 b)Enter the opening balances of the accounts from the January 31, 2021 Balance Sheet and post the above journal entries to the accounts  c)   d)Complete the bank reconciliation report and record post journal entries  e) Complete the 10 column worksheet (using information for adjustments shown below) The following information needs to be used first to record the adjustments on the worksheet Prepared the payroll for the second half of February to be paid on March 5  Gross pay is $15,000, Feb 28 CPP is $765, El is $282 and income tax is $3,000  The cheque will be prepared later  Feb 28 Record the employer's share of CPP (100 ) and El (140 ) of what was deducted from employees  Feb 28 For Prepaid Insurance, record the adjustment of $440 for the current month expense  28 For Unearned Revenue, $2,700 still remains unearned at the end of February  Feb 28 Monthly depreciation on the equipment was $1,500  f) Record the adjustments in the General Journal and then post to the General Ledger accounts  g) Prepare the multistep income statement, calculation of retained earnings, classified balance sheet h)Answer the analysis questions from 'a' to 'i' (found at bottom on Financial Statements tab) General Journal Account Title and Explanation Page 3 CR PR DR Date 2021 General Ledger Accounts Account  Cash Date Description Opening Balance GL No  101 Balance (DR or CR) PR DR CR Account  Date Petty Cash Description Opening Balance PR DR CR GL No  105 Balance (DR or CR) 0 00 Account  Date Accounts Receivable Description Opening Balance PR DR CR GL No  110 Balance (DR or CR) DR Account  Date Merchandise Inventory Description PR Opening Balance GL No  120 Balance (DR or CR) DR CR Account  Prepaid Insurance Description Opening Balance Date GL No  125 Balance (DR or CR) PR DR CR Account  Date Equipment Description Opening Balance GL No  140 Balance (DR or CR) PR DR CR Account  Date Accumulated Depreciation Description PR Opening Balance GL No  145 Balance (DR or CR) DR CR Account  Accounts Payable Description Opening Balance GL No  200 Balance (DR or CR) Date PR DR CR Account  Date Interest Payable Description Opening Balance GL No  205 Balance (DR or CR) PR DR 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  Date Salaries Payable Description Opening Balance GL No  235 Balance (DR or CR) PR DR CR Account  Date Unearned Revenue Description Opening Balance GL No  240 Balance (DR or CR) PR DR CR Account  Date Bank Loan Description Opening Balance GL No  245 Balance (DR or CR) PR DR CR Account  Date   Common Shares Description Opening Balance GL No  300 Balance (DR or CR) PR DR CR Account  Date Retained Earnings Description Opening Balance GL No  305 Balance (DR or CR) PR DR CR Account  Date Sales Revenue Description GL No  400 Balance (DR or CR) 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  Date Interest Revenue 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  Date Employee Benefits Expense Description PR GL No  510 Balance (DR or CR) DR CR Account  Date Depreciation Expense 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  Date Interest Expense Description GL No  525 Balance (DR or CR) PR DR CR Account  Date Office Supplies Expense Description PR GL No  530 Balance (DR or CR) DR CR Account  Date Rent Expense Description GL No  535 Balance (DR or CR) PR DR 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  Shipping Expense Description GL No  560 Balance (DR or CR) Date 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 Date Quantity Unit Cost Value Jan 31 Sales Unit Cost Quantity Value Quantity 500 Balance Unit Cost Value 25 00 12,500 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 Feb 15 Feb 17 Feb 18 Feb 19 Feb 25 Feb 28 Feb 28 Feb 28 Bank of Canada Prepared for Tees R Us Information Withdrawal Deposit Opening Balance Paid Chq 3355 500 00 Deposit 11,300 00 Paid Chq 3356 28,089 60 Paid Ch 3357 9,127 00 Deposit 58,200 00 Ch 3358 42,000 00 Ch 11140 3,390 00 Chq 3359 350 00 Auto debit loan payment 1,076 00 Service Charge 34 00 Interest 290 00 Balance 24,300 00 23,800 00 35,100 00 7,010 40  2,116 60 56,083 40 14,083 40 10,693 40 10,343 40 9,267 40 9,233 40 9,523 40 101 PR DR General Ledger Accounts Account  Cash Date Description Opening Balance Feb 1 Paid Ch 3354 Feb 1 Paid Cha 3355 Feb 12 Paid Chq 3356 Feb 15 Paid Chq 3357 Feb 17 Received payment Feb 18 Paid inventory Ch 3358 Feb 20 Received payment Feb 25 Petty Cash Chq 3359 Feb 28 Paid loan GJ3 GJ3 GJ3 GJ3 GJ3 GJ3 GJ3 GJ3 GJ3 GL No  CR Balance (DR or CR) 35,600 00 DR 660 00 34,940 00 DR 500 00 34,440 00 DR 28,089 60 6,350 40 DR 9,127 00 2 776 60 CR 58,200 00 55,423 40 DR 42,000 00 13,423 40 DR 3,200 00 16,623 40 DR 350 00 16,273 40 DR 1,076 00 15,197 40 DR Additional Information  a) The $11,300 is already recorded in the ledger last month  b) Cheque number of the company has (4) digits  Required  Prepare the February bank reconciliation for Tees R Us 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  Tees R Us Bank Reconciliation Statement February 28, 2021 Balance per books Balance per Bank Explanation Balance per records Tees R Us Worksheet February 28, 2021 Adjustments Adjusted Trial 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 Sales Revenue Sales Discounts Sales Returns and Allowand 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 Tees R Us Classified Balance Sheet As at January 31, 2021 Assets Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Total Current Assets Long Term Assets Cquipment Accumulated Depreciation Total Assets $35,600 $16,870 $12,500 $4,400 69,370 162,000  52,000 110,000 $179,370 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 $12,000 $9,000 $5,700 $11,160 $37,860 23,840 $61,700 shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities   Equity 81,000 36 670 117,670 $179,370 Required  g)Using the balances of the General Ledger accounts as of Feb  28, complete the financial statements  1) Prepare a multistep income statement Tees R Us Income Statement For the Month Ended February 28, 2021 Sales Revenue Sales Discounts Net Sales Cost of Goods Sold Gross Profit Operating Expenses Employee Benefits Expense Depreciation Expense Insurance Expense Office Supplies Expense Rent Expense Salaries Expense Bank Charges Expense Shipping Expense Cash Over   Short Total Operating Expenses Operating Income Other Income and Expenses Interest Expense Interest Revenue Total Other Income and Expenses Net Income 2) Prepare a calculation of retained earnings Calculation of Retained Earnings For the Month Ended February 28, 2021 Retained Earnings, Beginning Add  Net Income Less  Dividends Retained Earnings, End 3) Prepare a classified balance sheet  Assume that $ of the bank loan will be paid off in the 12 months  Tees R Us Balance Sheet As at February 28, 2021 Assets Current Assets Cash Petty Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Total Current Assets Long Term Assets Equipment Accumulated Depreciation Total Assets Liabilities Current Liabilities Accounts Payable CPP Payable El Payable Income Tax Payable Salaries Payable Unearned Revenue Current Portion of Bank Loan Total Current Liabilities Non Current Liabilities Non Current Portion of Bank Loan Total Liabilities Shareholders' Equity Common Shares Retained Earnings Total Liabilities   Shareholders' Equity h)Based on the information above, answer the following questions  a) Calculate the current ratio as at February 28, 2021 b) Does Tees R Us have a good or bad current ratio  Explain why or why not   DIV 0  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  g) 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  i) If inventory turnover last month was 0 81, is the company holding on to inventory for a longer or shorter period of time

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Case: Tees R Us - Solutions Tees R Us, set up as a privately held corporation, operating as a t-shirt retailer, of which 100% of

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