Response:
a. The remaining store supplies at the end of the fiscal year total $2,550.
Debit Supplies expense 2,550
Credit Supplies 2,550
b. For the fiscal year, the amount for expired insurance, categorized as an administrative expense, is $1,720.
Debit Insurance expense 1,720
Credit Prepaid insurance 1,720
c. The depreciation expense associated with store equipment, classified as a selling expense, totals $6,500 for the fiscal year.
Debit Depreciation expense 6,500
Credit Accumulated depreciation, equipment 6,500
d. To gauge shrinkage, a physical inventory count taken at fiscal year-end indicates $10,720 of merchandise is still on hand.
Debit Cost of goods sold 2,280
Credit Merchandise inventory 2,280
Cash $22,150
Merchandise inventory 10,720
Store supplies 2,550
Prepaid insurance 1,080
Store equipment 42,800
Accumulated depreciation—Store equipment $25,750
Accounts payable 17,000
Common stock 4,000
Retained earnings 25,000
Dividends 2,100
Sales 115,900
Sales discounts 2,100
Sales returns and allowances 2,000
Cost of goods sold 40,280
Depreciation expense—Store equipment 6,500
Sales salaries expense 12,900
Office salaries expense 12,900
Insurance expense 1,720
Rent expense—Selling space 8,000
Rent expense—Office space 8,000
Store supplies expense 2,550
Advertising expense 9,300
Totals $187,425 $187,425
a) The current ratio is calculated as current assets divided by current liabilities, resulting in $36,050 / $17,000 = 2.12
c) Nelson company
Income Statement
For the month ending January 31, 202x
Revenues:
Expenses:
- Cost of goods sold $40,280
- Depreciation expense - equipment $6,500
- Sales salaries expense $12,900
- Office salaries expense $12,900
- Insurance expense $1,720
- Rent expense - Selling space $8,000
- Rent expense - Office space $8,000
- Store supplies expense $2,550
- Advertising expense $9,300 ($102,150)
Operating income $9,650
b) Nelson company
Income Statement
For the month ending January 31, 202x
Sales:
- Total sales $115,900
- Sales discounts ($2,100
)
- Sales returns and allowances ($2,000
) $111,800
Cost of goods sold ($40,280)
Gross profit $71,520
Selling expenses:
- Depreciation expense - equipment $6,500
- Sales salaries expense $12,900
- Rent expense - Selling space $8,000
- Store supplies expense $2,550
- Advertising expense $9,300 ($39,250)
S&A expenses:
- Office salaries expense $12,900
- Insurance expense $1,720
Rent expense - Office space $8,000
($22,620)</ul>
Operating income $9,650
