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4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2017. (Round your answers to 2 decimal places.) Current ratio :1 Acid-test ratio Gross margin ratio :1 :1

4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2017. (Round your answers to 2 decimal places.) Current ratio :1 Acid-test ratio Gross margin ratio :1 :1

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company. NELSON COMPANY Unadjusted Trial Balance January 31, 2017 Debit Credit Cash $ 28,400 Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-Store equipment Accounts payable J. Nelson, Capital J. Nelson, Withdrawals Sales 15,000 5,900 2,300 42,900 $ 17,350 15,000 15,000 2,250 144,650 Sales discounts 2,050 Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Salaries expense Insurance expense Rent expense Store supplies expense Advertising expense 2,200 38,000 27,800 16,000 9,200 Totals $192,000 $192,000 Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system. Additional Information: a. Store supplies still available at fiscal year-end amount to $2,000. b. Expired insurance, an administrative expense, for the fiscal year is $1,650. c. Depreciation expense on store equipment, a selling expense, is $1,575 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,800 of inventory is still available at fiscal year-end.
Transcribed Image Text:The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company. NELSON COMPANY Unadjusted Trial Balance January 31, 2017 Debit Credit Cash $ 28,400 Merchandise inventory Store supplies Prepaid insurance Store equipment Accumulated depreciation-Store equipment Accounts payable J. Nelson, Capital J. Nelson, Withdrawals Sales 15,000 5,900 2,300 42,900 $ 17,350 15,000 15,000 2,250 144,650 Sales discounts 2,050 Sales returns and allowances Cost of goods sold Depreciation expense-Store equipment Salaries expense Insurance expense Rent expense Store supplies expense Advertising expense 2,200 38,000 27,800 16,000 9,200 Totals $192,000 $192,000 Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system. Additional Information: a. Store supplies still available at fiscal year-end amount to $2,000. b. Expired insurance, an administrative expense, for the fiscal year is $1,650. c. Depreciation expense on store equipment, a selling expense, is $1,575 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,800 of inventory is still available at fiscal year-end.
2,200 38,000 Cost of goods sold Depreciation expense-Store equipment Salaries expense 27,800 Insurance expense Rent expense 16,000 Store supplies expense Advertising expense 9,200 Totals $192,000 $192,000 Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system. Additional Information: a. Store supplies still available at fiscal year-end amount to $2,000. b. Expired insurance, an administrative expense, for the fiscal year is $1,650. c. Depreciation expense on store equipment, a selling expense, is $1,575 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,800 of inventory is still available at fiscal year-end. Problem 5-5A Part 4 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2017. (Round your answers to 2 decimal places.) Current ratio :1 Acid-test ratio :1 :1 Gross margin ratio
Transcribed Image Text:2,200 38,000 Cost of goods sold Depreciation expense-Store equipment Salaries expense 27,800 Insurance expense Rent expense 16,000 Store supplies expense Advertising expense 9,200 Totals $192,000 $192,000 Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system. Additional Information: a. Store supplies still available at fiscal year-end amount to $2,000. b. Expired insurance, an administrative expense, for the fiscal year is $1,650. c. Depreciation expense on store equipment, a selling expense, is $1,575 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,800 of inventory is still available at fiscal year-end. Problem 5-5A Part 4 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2017. (Round your answers to 2 decimal places.) Current ratio :1 Acid-test ratio :1 :1 Gross margin ratio
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