Question
Problem 4-5A (Static) Preparing adjusting entries and income statements; computing gross margin, acid-test, and current ratios LO A1, P3, P4 [The following information applies to
Problem 4-5A (Static) Preparing adjusting entries and income statements; computing gross margin, acid-test, and current ratios LO A1, P3, P4
[The following information applies to the questions displayed below.] The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company. Nelson Company uses a perpetual inventory system. It categorizes the following accounts as selling expenses: Depreciation ExpenseStore Equipment, Sales Salaries Expense, Rent ExpenseSelling Space, Store Supplies Expense, and Advertising Expense. It categorizes the remaining expenses as general and administrative.
NELSON COMPANY | ||
Unadjusted Trial Balance | ||
January 31 | ||
Debit | Credit | |
---|---|---|
Cash | $ 1,000 | |
Merchandise inventory | 12,500 | |
Store supplies | 5,800 | |
Prepaid insurance | 2,400 | |
Store equipment | 42,900 | |
Accumulated depreciationStore equipment | $ 15,250 | |
Accounts payable | 10,000 | |
Common stock | 5,000 | |
Retained earnings | 27,000 | |
Dividends | 2,200 | |
Sales | 111,950 | |
Sales discounts | 2,000 | |
Sales returns and allowances | 2,200 | |
Cost of goods sold | 38,400 | |
Depreciation expenseStore equipment | 0 | |
Sales salaries expense | 17,500 | |
Office salaries expense | 17,500 | |
Insurance expense | 0 | |
Rent expenseSelling space | 7,500 | |
Rent expenseOffice space | 7,500 | |
Store supplies expense | 0 | |
Advertising expense | 9,800 | |
Totals | $ 169,200 | $ 169,200 |
Additional Information:
- Store supplies still available at fiscal year-end amount to $1,750.
- Expired insurance, an administrative expense, is $1,400 for the fiscal year.
- Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year.
- To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still available at fiscal year-end.
Problem 4-5A (Static) Part 4
4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31. (Round your answers to 2 decimal places.)
Current ratio
Acid-test ratio
Gross margin ratio
Problem 4-5A (Static) Part 4 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31. (Round your answers to 2 decimal places.) Current ratio :1 :1 Acid-test ratio Gross margin ratio :1
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