preparing adjusting entries and income statements; and computing gross margin, acid-test, and current ratios

ACCTIIOI Introduction to Financial Accounting Chapter 5 P5-3B - Preparing adjusting entries and income statements; and computing gross margin, acid-test, and current ratios The following unadjusted trial balance is prepared at finarrial year-end for FAB Products Company. FAB PRODUCTS COMPANY Unadjusted Trial Balance October 31. 2015 Cash Merchandise inventory Store supplies Prepaid instrance Store equipment 7 Accurnulated Store Accounts payable Fab. Capital A. Fab, Withdrawals Sales Sales discounts 12 13 19 20 21 Sales returns and Cost of goods sold Depreciation expenseStore equiprnent Salaries expetwe Insurance experBe Rent expense Stcre supplies expense Advertising Totals Debit S 4,400 9,600 a. 600 2,000 74,800 0 0 28 mo 0 19,800 $318,000 Cred it s 30,000 16.000 64,000 318.000 Required 1. Prepare adjusting journal entries to reflect each of the following. a. Store supplies still available at financial year-end amount to $3,300. b. Expired insurance, an administrative expense, for the financial year is $3,0. c. Depreciation expense on store equipment, a selling expense, is $2,800 for the financial year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $22,200 of inventory is still available at financial year-end. 2. Prepare an income statement for financial year 2015. 3. Compute the current ratio, acid-test ratio, and gross margin ratio as at October 31, 2015.