Cese. DITO Shopper - Solutions DITO Shoppee owned by Graham Smith, is a freestyle clothing rear 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 lanuary 21, 2021, las presented below DITO Shoppe Classified Balance Sheet As at January 31, 2021 Assets Cash $22.400 Accounts Receivable 16.820 Merchandise inventory 37,200 Prepaid Insurance 2.200 Total Current Assets Long-Term Assets Equipment 345,000 Accumulated Depreciation -40.000 Total Assets 29.530 105.000 5194.620 Linbilities Current Liabilities Accounts Payable Unearned Revenue Salaries Payable Current Portion of Bank Loan Total Current Liabilities Non-Current Linbilitiet Non-Current Portion of Bank Loan Total Liabilities $13,100 59.200 $3.400 10.560 San.280 19.440 SSS 700 Shareholders' Equity Common Shares Retained Earnings Tatal Shareholders' Equity Total Liabilities & Equity 72.000 66920 138.920 $184 520 The bank loan has an annual interest rate of 85 and has monthly principal payment of $820 The inventory figure includes 1.200 units purchased at $31.00 each Account # 105 400 405 410 420 430 The Chart of Accounts (GL no. is shown below: Account Description Account # ASSETS Cash 101 Petty Cash Accounts Receivable 110 Merchandise Inventory 120 Prepaid Insurance 125 Equipment 140 Accumulated Depreciation 145 LIABILITIES Accounts Payable 200 Interest Payable 205 CPP Payable 220 El 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 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 $25 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, niet 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, Elis $231 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. Date General Journal Account Title and Explanation PR Page 3 CR DR General Journal Account Title and Explanation Date Page 3 CR PR DR General Led Account Account Date Opening balance PR DR CR GLI 101 Iancu ( DC) 32.100.00 D Accounts Date Petty Cash Description Opening Balance PR DR CR GL 105 Balance (OR OF CR 0.00 DR Account Date Accounts Receivable Description Opening Balance PR DR CR GL 110 Balance (OR or CR 16,820.00 DR Account Date Merchandise Inventory Description PR Opening Balance DR CR GL NO 120 Balance (OR or CR) 17,200.00 DR Accounts Date Prepaid Insurance Description Opening Balance PR DR CR GL los 125 Balance (OR 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 OR 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 Noe 220 Balance (DR or CR) 0.00 CR Account: Date El Payable Description PR DR CR GL NO: 225 Balance (DR or CR OOCR Opening Balance Account: Date Income Tax Payable Description Opening Balance PR DR CR GL NO: 230 Balance DR or CR 0.00TOR Account: Salaries Payable GL. No: 235 Date PR DR CR Description Opening Balance Balance (DR CRI 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 PR DR CR GL NO 245 Balance (OR or CR) 30,000.00 CR Opening Balance Account: Date Common Shares Description Opening Balance PR OR CR Glas 300 Balance (DR or CR) 72,000.00 CR Account Date Retained Earnings Description Opening Balance PR DR CR GE No: 305 Balance OR or CR) 66,920.00 OR Account: Date Sales Revenue Description GL Nos 400 Balance (DR or CR) PR DR OR Account: Date Sales Discounts Description PR DR CR GL No: 405 Balance (DR or CR Account Date Sales Returns and Allowances Description PR DR 18 GL No: 410 Balance (DR or CR Account Date Interest Revenue Description GL No: 420 Balance DR or CRI PR DR CR Account: Date Cost of Goods Sold Description GL NO: 500 Balance (DR or CR) PR OR 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 PR DR GL No: 520 Balance (DR or CR) 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 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 Date Quantity Unit Cost Value Sales Unit Cost Quantity Value Quantity 1,200 Balance Unit Cost Value 31.00 37,200.00 Your accountant goes through the mail and opens the bank statement for the month of February provided by Wel shown below Wells Fargo Local Bank Prepared for DITO Shoppee. Date Information Withdrawal Deposit Opening Balance Feb 1 Cho2315 500.00 Feb Deposit 9,540.00 Feb 14 Ch 2316 13.440.00 Feb 17 Deposit 69 112.50 Feb 18 Ch#2317 25,200.00 Feb 19 Chw10428 2,400.00 Feb 25 Petty Cash Cha2318 255.00 Feb 28 Auto debit loan payment 1,080.00 Feb 28 Service Charge 150.00 Feb 28 interest 212.00 Balance 22.860.00 22:360.00 31.900.00 1860.00 87,572.50 67.372.50 59.972 50 59,717.50 53,637.50 58 487 50 58.699.50 101 DR General Ledger Accounts Account: Cash Date Description PR Opening Balance Feb 1 Paid On 2314 G13 Feb 1 Paid C#2315 G13 Feb 13 Paid Cha2316 GB Feb 17 Received payment GE Feb 18 Paid Inventory Chow2317 GB Feb 20 Received payment GB Feb 25 Patty Cash Cho2318 G3 Feb 28 Paid loan GB Glos CR Balance (DRO CR 32,400.00 520.00 31 98000 DR 500 31 380.00 IDR 13.440.00 17.900.00 IDR 89 112.50 87052.50 DR 25,200.00 61 892 50 IDR 1,000.00 62.85250 DR 255 62.597.50 IDR 1.000.00 61 517.50 DR Additional Information a) The 59,540 is already recorded in the ledger last month. b) Cheque number of the company has only three (4) digts Required. Prepare the February bunk reconciliation for DITO Shoppe using the bank statement and general ledger provided. Compare the information in the general ledger to the bank statement Once reconciled, record the relevant joumal 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 Balance per Bank Explanation 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 19,440 555,700 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 multitap income statement DITO Shoppe Income Statement For the Month Ended February 212021 2) Prepare a calculation of retained earnings Calculation of Retained laming For the Month Ended February 28, 2021 3) Prepare a cassified balance sheet. Assume that 510,560 of the bank loan will be paid off in the 12 months. DITO Shoppee 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 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 f Calculate the gross profit marginas at February 28, 2021 Last month, the gross profit margin percentage was 72%. 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 0.745, is the company holding on to inventory for a longer or shorter period of time? Cese. DITO Shopper - Solutions DITO Shoppee owned by Graham Smith, is a freestyle clothing rear 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 lanuary 21, 2021, las presented below DITO Shoppe Classified Balance Sheet As at January 31, 2021 Assets Cash $22.400 Accounts Receivable 16.820 Merchandise inventory 37,200 Prepaid Insurance 2.200 Total Current Assets Long-Term Assets Equipment 345,000 Accumulated Depreciation -40.000 Total Assets 29.530 105.000 5194.620 Linbilities Current Liabilities Accounts Payable Unearned Revenue Salaries Payable Current Portion of Bank Loan Total Current Liabilities Non-Current Linbilitiet Non-Current Portion of Bank Loan Total Liabilities $13,100 59.200 $3.400 10.560 San.280 19.440 SSS 700 Shareholders' Equity Common Shares Retained Earnings Tatal Shareholders' Equity Total Liabilities & Equity 72.000 66920 138.920 $184 520 The bank loan has an annual interest rate of 85 and has monthly principal payment of $820 The inventory figure includes 1.200 units purchased at $31.00 each Account # 105 400 405 410 420 430 The Chart of Accounts (GL no. is shown below: Account Description Account # ASSETS Cash 101 Petty Cash Accounts Receivable 110 Merchandise Inventory 120 Prepaid Insurance 125 Equipment 140 Accumulated Depreciation 145 LIABILITIES Accounts Payable 200 Interest Payable 205 CPP Payable 220 El 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 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 $25 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, niet 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, Elis $231 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. Date General Journal Account Title and Explanation PR Page 3 CR DR General Journal Account Title and Explanation Date Page 3 CR PR DR General Led Account Account Date Opening balance PR DR CR GLI 101 Iancu ( DC) 32.100.00 D Accounts Date Petty Cash Description Opening Balance PR DR CR GL 105 Balance (OR OF CR 0.00 DR Account Date Accounts Receivable Description Opening Balance PR DR CR GL 110 Balance (OR or CR 16,820.00 DR Account Date Merchandise Inventory Description PR Opening Balance DR CR GL NO 120 Balance (OR or CR) 17,200.00 DR Accounts Date Prepaid Insurance Description Opening Balance PR DR CR GL los 125 Balance (OR 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 OR 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 Noe 220 Balance (DR or CR) 0.00 CR Account: Date El Payable Description PR DR CR GL NO: 225 Balance (DR or CR OOCR Opening Balance Account: Date Income Tax Payable Description Opening Balance PR DR CR GL NO: 230 Balance DR or CR 0.00TOR Account: Salaries Payable GL. No: 235 Date PR DR CR Description Opening Balance Balance (DR CRI 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 PR DR CR GL NO 245 Balance (OR or CR) 30,000.00 CR Opening Balance Account: Date Common Shares Description Opening Balance PR OR CR Glas 300 Balance (DR or CR) 72,000.00 CR Account Date Retained Earnings Description Opening Balance PR DR CR GE No: 305 Balance OR or CR) 66,920.00 OR Account: Date Sales Revenue Description GL Nos 400 Balance (DR or CR) PR DR OR Account: Date Sales Discounts Description PR DR CR GL No: 405 Balance (DR or CR Account Date Sales Returns and Allowances Description PR DR 18 GL No: 410 Balance (DR or CR Account Date Interest Revenue Description GL No: 420 Balance DR or CRI PR DR CR Account: Date Cost of Goods Sold Description GL NO: 500 Balance (DR or CR) PR OR 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 PR DR GL No: 520 Balance (DR or CR) 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 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 Date Quantity Unit Cost Value Sales Unit Cost Quantity Value Quantity 1,200 Balance Unit Cost Value 31.00 37,200.00 Your accountant goes through the mail and opens the bank statement for the month of February provided by Wel shown below Wells Fargo Local Bank Prepared for DITO Shoppee. Date Information Withdrawal Deposit Opening Balance Feb 1 Cho2315 500.00 Feb Deposit 9,540.00 Feb 14 Ch 2316 13.440.00 Feb 17 Deposit 69 112.50 Feb 18 Ch#2317 25,200.00 Feb 19 Chw10428 2,400.00 Feb 25 Petty Cash Cha2318 255.00 Feb 28 Auto debit loan payment 1,080.00 Feb 28 Service Charge 150.00 Feb 28 interest 212.00 Balance 22.860.00 22:360.00 31.900.00 1860.00 87,572.50 67.372.50 59.972 50 59,717.50 53,637.50 58 487 50 58.699.50 101 DR General Ledger Accounts Account: Cash Date Description PR Opening Balance Feb 1 Paid On 2314 G13 Feb 1 Paid C#2315 G13 Feb 13 Paid Cha2316 GB Feb 17 Received payment GE Feb 18 Paid Inventory Chow2317 GB Feb 20 Received payment GB Feb 25 Patty Cash Cho2318 G3 Feb 28 Paid loan GB Glos CR Balance (DRO CR 32,400.00 520.00 31 98000 DR 500 31 380.00 IDR 13.440.00 17.900.00 IDR 89 112.50 87052.50 DR 25,200.00 61 892 50 IDR 1,000.00 62.85250 DR 255 62.597.50 IDR 1.000.00 61 517.50 DR Additional Information a) The 59,540 is already recorded in the ledger last month. b) Cheque number of the company has only three (4) digts Required. Prepare the February bunk reconciliation for DITO Shoppe using the bank statement and general ledger provided. Compare the information in the general ledger to the bank statement Once reconciled, record the relevant joumal 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 Balance per Bank Explanation 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 19,440 555,700 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 multitap income statement DITO Shoppe Income Statement For the Month Ended February 212021 2) Prepare a calculation of retained earnings Calculation of Retained laming For the Month Ended February 28, 2021 3) Prepare a cassified balance sheet. Assume that 510,560 of the bank loan will be paid off in the 12 months. DITO Shoppee 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 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 f Calculate the gross profit marginas at February 28, 2021 Last month, the gross profit margin percentage was 72%. 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 0.745, is the company holding on to inventory for a longer or shorter period of time
