Question
Using the information on your August financial statements calculate the following ratios for your company using an Excel spreadsheet: Gross Profit Percentage Accounts Receivable Turnover
Using the information on your August financial statements calculate the following ratios for your company using an Excel spreadsheet:
- Gross Profit Percentage
- Accounts Receivable Turnover Ratio
- Days Sales in Receivables
- Debt Ratio
- Debt to Equity Ratio
- Profit Margin Ratio
- Rate of Return on Total Assets
- Asset Turnover Ratio
Show the information in your spreadsheet in three columns:
Ratio Name Formula/Amounts Ratio Value
- Gross Profit Percentage
- Accounts Receivable Turnover Ratio
- Days Sales in Receivables
- Debt Ratio
- Debt to Equity Ratio
- Profit Margin Ratio
- Rate of Return on Total Assets
- Asset Turnover Ratio
These are the journal entries:
Step 1: Entries
Date | Account Titles | Ref. | Debit | Credit |
Aug | Raw Materials Inventory` | $3,100 | ||
Accounts Payable | $3,100 | |||
(To record purchase of raw materials on account) | ||||
Aug | Selling and Administrative Expenses | $1,200 | ||
Cash | $1,200 | |||
(To record selling and administrative expenses paid) | ||||
Aug | Work in Process | $3,900 | ||
Raw Materials Inventory` | $3,900 | |||
(To raw materials used in production) | ||||
Aug | Factory Overhead | $300 | ||
Raw Materials Inventory` | $300 | |||
(To record use of indirect materials) | ||||
Aug | Work in Process | $3,600 | ||
Factory Overhead | $400 | |||
Accounts Payable | $4,000 | |||
(To record direct and indirect wages incurred, 4,000 x 90% = 3,600 and 4,000 x 10% = 400, respectively) | ||||
Aug | Factory Overhead | $1,300 | ||
Accounts Payable | $1,300 | |||
(To record factory overhead incurred) | ||||
Aug | Work in Process | $2,160 | ||
Factory Overhead | $2,160 | |||
(To record factory overhead assigned to work in process at 60% of direct labor cost; 3,600 x 60% = $2,160) | ||||
Aug | Finished Goods Inventory | $10,000 | ||
Work in Process | $10,000 | |||
(To record cost of products completed) | ||||
Aug | Accounts Receivable | $17,500 | ||
Sales | $17,500 | |||
Aug | Cost of Goods Sold | $9,500 | ||
Finished Goods Inventory | $9,500 | |||
(To record cost of goods sold) | ||||
Step 2: | ||||
Adjustment for over or under allocated overhead: | ||||
Aug-31 | Factory Overhead | $160 | ||
Cost of Goods Sold | $160 | |||
(To record adjustment for over-applied factory overhead) |
(over applied overhead = 2,160 - (300 + 400 + 1,300) = $160)
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