Marco Polo sells outdoor sporting equipment. You have been working for the company since its inception a few years ago and have been promoted to be their accounting manager. They use the perpetual inventory system and use the weigted average method to determine value for the inventory

The opening balances for the month of September are as follows:

Assets

Cash $26,800

Accounts Payable $18,700

Accounts Receivable 18,000

Bank Loan 25,000

Merchandise Inventory 12,750

Total

Liabilities $43,700

Equipment 120,000

Shareholders' Equity Accumulated Depreciation -40,000

Common Shares 62,000

Retained Earnings 31,850

Total Assets $137,550

Total Liabilities & Shareholders' Equity $137,550

CR DR General Ledger Accounts Account: Cash Date Description Opening Balance GL No: 101 Balance (DR or CR) 26,800.00 DR PR Account: Date CR GL No: 105 Balance (DR or CR) 0.00 DR PR DR Petty Cash Description Opening Balance Account: Date CR GL NO: 110 Balance (DR or CR) 18,000.00 DR PR DR Accounts Receivable Description Opening Balance OR CR Account: Date Merchandise Inventory Description PR Opening Balance GL No: 120 Balance (DR or CR) 12,750.00 DR Account: Date CR GL No: 125 Balance (DR or CR) 0.00 DR DR PR Prepaid Insurance Description Opening Balance Account: Date CR DR PR GL No: 140 Balance (DR OF CR) 120,000.00 DR Equipment Description Opening Balance CR DR Account: Date GL No: 145 Balance (DR or CR) 40,000.00 CR Accumulated Depreciation Description PR Opening Balance Account: CR GL No: 200 Balance (DR or CR) 18,700.00 CR PR DR Accounts Payable Description Opening Balance Date Account: Date CR GL No: 205 Balance (DR or CR) 0.00 CR DR PR Interest Payable Description Opening Balance Account: Date CR GL No: 220 Balance (DR or CR) 0.00 CR PR DR CPP Payable Description Opening Balance CR Account: Date DR PR GL No: 225 Balance (DR or CR) 0.00 CR El Payable Description Opening Balance Account: Date CR GL No: 230 Balance (DR or CR) 0.00 CR Income Tax Payable Description Opening Balance DR PR 235 Account: Salaries Payable Description Opening Balance Date CR GL No: Balance (DR or CR) 0.00 CR PR DR Account: Unearned Revenue Description Opening Balance Date PR DR CR GL No: 240 Balance (DR or CR) 0.00 CR Account: Date Bank Loan Description Opening Balance PR DR CR GL No: 245 Balance (DR or CR) 25,000.00 CR Account: Date Common Shares Description Opening Balance PR DR CR GL No: 300 Balance (DR or CR) 62,000.00 CR Account: Date DR PR Retained Earnings Description Opening Balance CR GL No: 305 Balance (DR or CR) 31,850.00 CR Account: Date Sales Revenue Description GL No: 400 Balance (DR or CR) DR CR PR GL No: 405 Balance (DR or Account: Date Sales Discounts Description PR DR CR GL No: 410 Balance (DR or CR) Account: Date Sales Returns and Allowances Description PR DR CR Account: Cost of Goods Sold Description GL No: 500 Balance (DR or CR) CR DR CR PR Date 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) CR DR PR Account: Date Insurance Expense Description GL No: 520 Balance (DR or CR) PR DR CR 525 Account: Date Interest Expense Description GL No: 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 545 Account: Date Bank Charges Expense Description GL No: Balance (DR or CR) PR DR CR Account: Date Entertainment Expense Description PR GL No: 555 Balance (DR or CR) DR CR Use this chart to keep track of inventory values Purchases Date Quantity Unit Cost Value Sales Unit Cost Value Quantity Balance Unit Cost Value 25.50 12,750.00 Quantity 500 Note: You need to deduct the cost of any goods returned to inventory from the Purchases(Value)and Balance Value) columns above. Your staff accountant goes through the mail and opens the bank statement for the month of October provided by Fanshawe Local Bank. It is shown below. Date Oct 2 Oct 5 Oct 8 Oct 8 Oct 11 Oct 31 Fanshawe Local Bank Prepared for Marco Polo Information Withdrawal Deposit Opening Balance Deposit 14,200.00 Chql143 1,200.00 Deposit 66,500.00 Deposit 5,000.00 Chqw8240 2,400.00 Service Char 60.00 Balance 12,600.00 26,800.00 25,600.00 92,100.00 97,100.00 94,700.00 94,640.00 101 DR General Ledger Accounts Account: Cash Date Description PR Opening Balance Oct 5 Paid Cha#1463 Oct 5 Paid inventdG13 Oct 7 Return of in G3 Oct 8 Received pa G3 Oct 10 Received pa G3 GL No: CR Balance (DR or CR) 26,800.00 DR 1,200.00 25,600.00 DR 15,000.00 10,600.00 ICR 15,600.00 CR 16,500.00 CR 83,000.00 DR 5,000.00 900.00 66,500.00 Additional Information: a) The $14,200 is already recorded in the ledger last month. b) Cheque number of the company has only three (3) digits. Required: Prepare the October bank reconciliation for Marco Polo 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. Marco Polo Bank Reconciliation Statement October 31, 2019 Balance per Balance per books Bank Explanation $18,700 Assets Cash Accounts Receivable Merchandise Inventory Equipment Accumulated Depreciation Marco Polo Balance Sheet As at September 30, 2020 Liabilities $26,800 Accounts Payable $18,000 Bank Loan $12,750 Total Liabilities $120,000 Shareholders' Equity 540.000 Common Shares Retained Earnings $137,55 Total Liabilities & Shareholders' Equity $43,700 so $62,000 $31.859 538750 Total Assets 1) Prepare a multistep income statement. Marco Polo Income Statement For the Month Ended October 31, 2020 2) Prepare a calculation of retained earnings Calculation of Retained Earnings For the Month Ended October 31, 2020 3) Prepare a statement of shareholders' equity Marco Polo Statement of Shareholders' Equity For the Month Ended October 31, 2020 4) Prepare a balance sheet. Assume that $6,250 of the bank loan will be paid off in the next year. Marco Polo Balance Sheet As at October 31, 2020 Based on the information above, answer the following questions. a) Calculate the current ratio as at October 31, 2020 b) Does Marco Polo have a good or bad current ratio? Explain why or why not c) Calculate the inventory days on hand ratio as at October 31, 2020. (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 October 31, 2020. f) Calculate the gross profit margin as at October 31, 2020. B) Last month, the gross profit margin percentage was 75%. What could have caused this decrease in gross margin percentage? h) Calculate the inventory turnover as at October 31, 2020. i) If inventory turnover last month was 0.837, is the company holding on to inventory for a longer or shorter period of time? CR DR General Ledger Accounts Account: Cash Date Description Opening Balance GL No: 101 Balance (DR or CR) 26,800.00 DR PR Account: Date CR GL No: 105 Balance (DR or CR) 0.00 DR PR DR Petty Cash Description Opening Balance Account: Date CR GL NO: 110 Balance (DR or CR) 18,000.00 DR PR DR Accounts Receivable Description Opening Balance OR CR Account: Date Merchandise Inventory Description PR Opening Balance GL No: 120 Balance (DR or CR) 12,750.00 DR Account: Date CR GL No: 125 Balance (DR or CR) 0.00 DR DR PR Prepaid Insurance Description Opening Balance Account: Date CR DR PR GL No: 140 Balance (DR OF CR) 120,000.00 DR Equipment Description Opening Balance CR DR Account: Date GL No: 145 Balance (DR or CR) 40,000.00 CR Accumulated Depreciation Description PR Opening Balance Account: CR GL No: 200 Balance (DR or CR) 18,700.00 CR PR DR Accounts Payable Description Opening Balance Date Account: Date CR GL No: 205 Balance (DR or CR) 0.00 CR DR PR Interest Payable Description Opening Balance Account: Date CR GL No: 220 Balance (DR or CR) 0.00 CR PR DR CPP Payable Description Opening Balance CR Account: Date DR PR GL No: 225 Balance (DR or CR) 0.00 CR El Payable Description Opening Balance Account: Date CR GL No: 230 Balance (DR or CR) 0.00 CR Income Tax Payable Description Opening Balance DR PR 235 Account: Salaries Payable Description Opening Balance Date CR GL No: Balance (DR or CR) 0.00 CR PR DR Account: Unearned Revenue Description Opening Balance Date PR DR CR GL No: 240 Balance (DR or CR) 0.00 CR Account: Date Bank Loan Description Opening Balance PR DR CR GL No: 245 Balance (DR or CR) 25,000.00 CR Account: Date Common Shares Description Opening Balance PR DR CR GL No: 300 Balance (DR or CR) 62,000.00 CR Account: Date DR PR Retained Earnings Description Opening Balance CR GL No: 305 Balance (DR or CR) 31,850.00 CR Account: Date Sales Revenue Description GL No: 400 Balance (DR or CR) DR CR PR GL No: 405 Balance (DR or Account: Date Sales Discounts Description PR DR CR GL No: 410 Balance (DR or CR) Account: Date Sales Returns and Allowances Description PR DR CR Account: Cost of Goods Sold Description GL No: 500 Balance (DR or CR) CR DR CR PR Date 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) CR DR PR Account: Date Insurance Expense Description GL No: 520 Balance (DR or CR) PR DR CR 525 Account: Date Interest Expense Description GL No: 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 545 Account: Date Bank Charges Expense Description GL No: Balance (DR or CR) PR DR CR Account: Date Entertainment Expense Description PR GL No: 555 Balance (DR or CR) DR CR Use this chart to keep track of inventory values Purchases Date Quantity Unit Cost Value Sales Unit Cost Value Quantity Balance Unit Cost Value 25.50 12,750.00 Quantity 500 Note: You need to deduct the cost of any goods returned to inventory from the Purchases(Value)and Balance Value) columns above. Your staff accountant goes through the mail and opens the bank statement for the month of October provided by Fanshawe Local Bank. It is shown below. Date Oct 2 Oct 5 Oct 8 Oct 8 Oct 11 Oct 31 Fanshawe Local Bank Prepared for Marco Polo Information Withdrawal Deposit Opening Balance Deposit 14,200.00 Chql143 1,200.00 Deposit 66,500.00 Deposit 5,000.00 Chqw8240 2,400.00 Service Char 60.00 Balance 12,600.00 26,800.00 25,600.00 92,100.00 97,100.00 94,700.00 94,640.00 101 DR General Ledger Accounts Account: Cash Date Description PR Opening Balance Oct 5 Paid Cha#1463 Oct 5 Paid inventdG13 Oct 7 Return of in G3 Oct 8 Received pa G3 Oct 10 Received pa G3 GL No: CR Balance (DR or CR) 26,800.00 DR 1,200.00 25,600.00 DR 15,000.00 10,600.00 ICR 15,600.00 CR 16,500.00 CR 83,000.00 DR 5,000.00 900.00 66,500.00 Additional Information: a) The $14,200 is already recorded in the ledger last month. b) Cheque number of the company has only three (3) digits. Required: Prepare the October bank reconciliation for Marco Polo 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. Marco Polo Bank Reconciliation Statement October 31, 2019 Balance per Balance per books Bank Explanation $18,700 Assets Cash Accounts Receivable Merchandise Inventory Equipment Accumulated Depreciation Marco Polo Balance Sheet As at September 30, 2020 Liabilities $26,800 Accounts Payable $18,000 Bank Loan $12,750 Total Liabilities $120,000 Shareholders' Equity 540.000 Common Shares Retained Earnings $137,55 Total Liabilities & Shareholders' Equity $43,700 so $62,000 $31.859 538750 Total Assets 1) Prepare a multistep income statement. Marco Polo Income Statement For the Month Ended October 31, 2020 2) Prepare a calculation of retained earnings Calculation of Retained Earnings For the Month Ended October 31, 2020 3) Prepare a statement of shareholders' equity Marco Polo Statement of Shareholders' Equity For the Month Ended October 31, 2020 4) Prepare a balance sheet. Assume that $6,250 of the bank loan will be paid off in the next year. Marco Polo Balance Sheet As at October 31, 2020 Based on the information above, answer the following questions. a) Calculate the current ratio as at October 31, 2020 b) Does Marco Polo have a good or bad current ratio? Explain why or why not c) Calculate the inventory days on hand ratio as at October 31, 2020. (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 October 31, 2020. f) Calculate the gross profit margin as at October 31, 2020. B) Last month, the gross profit margin percentage was 75%. What could have caused this decrease in gross margin percentage? h) Calculate the inventory turnover as at October 31, 2020. i) If inventory turnover last month was 0.837, is the company holding on to inventory for a longer or shorter period of time