Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The question is Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2013. (Round your answers to 2 decimal places.)?

The question is

Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2013. (Round your answers to 2 decimal places.)?

Current ratio

Acid-test ratio

Gross margin ratio

NELSON COMPANY Unadjusted Trial Balance January 31, 2013
Debit Credit
Cash $ 24,600
Merchandise inventory 12,500
Store supplies 5,900
Prepaid insurance 2,300
Store equipment 42,900
Accumulated depreciationStore equipment $ 19,950
Accounts payable 13,000

J. Nelson, Capital

39,000
J. Nelson, Withdrawals 2,100

Sales

115,200
Sales discounts 2,000
Sales returns and allowances 2,250
Cost of goods sold 38,000
Depreciation expenseStore equipment 0
Salaries expense 31,300
Insurance expense 0
Rent expense 14,000
Store supplies expense 0
Advertising expense 9,300
Totals $ 187,150 $ 187,150

Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. Nelson Company uses a perpetual inventory system.

a. Store supplies still available at fiscal year-end amount to $2,800.
b. Expired insurance, an administrative expense, for the fiscal year is $1,500.
c. Depreciation expense on store equipment, a selling expense, is $1,675 for the fiscal year.
d.

To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,300 of inventory is still available at fiscal year-end.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Management A Strategic Emphasis

Authors: Edward Blocher, David E. Stout, Gary Cokins, Kung Chen

4th Edition

0073128155, 978-0073128153

More Books

Students also viewed these Accounting questions

Question

Calculate the sequence where x 0 = 1 and {Xn}=0

Answered: 1 week ago