The following unadjusted trial balance is prepared at fiscal year-end for FAB Products Company.

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

Required
1. Prepare adjusting journal entries to reflect each of the following.
a. Store supplies still available at fiscal year-end amount to $3,300.
b. Expired insurance, an administrative expense, for the fiscal year is $3,000.
c. Depreciation expense on store equipment, a selling expense, is $2,800 for the fiscal year.
d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $22,200 of inventory is still available at fiscal year-end.
2. Prepare a multiple-step income statement for fiscal year 2011.
3. Prepare a single-step income statement for fiscal year 2011.
4. Compute the current ratio, acid-test ratio, and gross margin ratio as of October 31,2011.

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FAB PRODUCTS COMPANY Unadjusted Trial Balance October 31, 2011 Debit Credit $ 4,400 Cash Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-Store equipment Accounts payable A. Fab, Capital A. Fab, Withdrawals Sales Sales discounts Sales returns and allowances Cost of goods solo Depreciation expense-Store equipment Salaries expense Insurance expense Rent expense Store supplies expense Advertising expense Totals 23,000 9,600 4,600 83.800 $ 30,000 16,000 64,000 2,000 208,000 2,000 4,000 74,800 62.000 28,000 19,800 $318,000 $318,000