The adjusted trial balance of Big Papi Music Company at June 30, 2012, follows: Requirements 1. Journalize
Question:
Requirements
1. Journalize Big Papis closing entries.
2. Prepare Big Papis single-step income statement for the year.
3. Compute the gross profit percentage, the rate of inventory turnover, and the days in inventory for the fiscal year ending June 30, 2012. Inventory on hand one year ago, at June 30, 2011, was $12,200.
4. For the year ended June 30, 2011, Big Papis gross profit percentage was 50%, and inventory turnover was 4.9 times. Did the results for the year ended June 30, 2012, suggest improvement or deterioration in profitability over lastyear?
BIG PAPI MUSIC COMPANY Adjusted Trial Balance June 30, 2012 Debit Credit Account Cash 3,600 Accounts receivable Inventory Supplies 38,800 17,200 200 40,000 Furniture Accumulated depreciation Accounts payable Salary payable Unearned sales revenue 8,400 13,300 1,200 6,700 Note payable, long-term Common stock 15,000 4,900 Retained earnings Dividends Sales revenue 31,100 40,500 180,000 Sales returns 5,000 Cost of goods sold Selling expense General expense 82,500 19,200 12,000 Interest expense 1,600 Total $ 260,600 S 260,600
Step by Step Answer:
Req 1 Journal DATE ACCOUNTS AND EXPLANATIONS POSTREF DEBIT CREDIT Jun 30 Sales revenue 180000 Sales ...View the full answer
Financial and Managerial Accounting
ISBN: 978-0132497978
3rd Edition
Authors: Horngren, Harrison, Oliver
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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