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Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31. (Round your answers to 2 decimal places.) Provided Income Statement (image below) to assist in calculating the current ratio, acid-test ratio, and gross margin ratio.

Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31. (Round your answers to 2 decimal places.) Provided Income Statement (image below) to assist in calculating the current ratio, acid-test ratio, and gross margin ratio.

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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Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31. (Round your answers to 2 decimal places.)

Provided Income Statement (image below) to assist in calculating the current ratio, acid-test ratio, and gross margin ratio.

For Year Ended January 31 **Sales** - Total sales: $118,550 **Less Deductions:** - Sales discounts: $1,850 - Sales returns and allowances: $2,100 **Net Sales:** - $112,800 **Cost of Goods Sold:** - $40,300 **Gross Profit:** - $72,500 **Expenses:** **Selling Expenses:** - Depreciation expense—Store equipment: $1,675 - Sales salaries expense: $14,050 - Rent expense—Selling space: $7,000 - Store supplies expense: $4,300 - Advertising expense: $8,400 **Total Selling Expenses:** - $36,425 **General and Administrative Expenses:** - Office salaries expense: $14,050 - Insurance expense: $1,450 - Rent expense—Office space: $7,000 **Total General and Administrative Expenses:** - $22,500 **Total Expenses:** - $58,925 **Net Income:** - $13,375 This financial statement outlines the income and expenses for a company over the fiscal year ending January 31. The components include sales, various expense categories, and the resulting net income. The statement is divided into sections for selling expenses and general/administrative expenses, providing a detailed view of where funds were allocated.
Transcribed Image Text:For Year Ended January 31 **Sales** - Total sales: $118,550 **Less Deductions:** - Sales discounts: $1,850 - Sales returns and allowances: $2,100 **Net Sales:** - $112,800 **Cost of Goods Sold:** - $40,300 **Gross Profit:** - $72,500 **Expenses:** **Selling Expenses:** - Depreciation expense—Store equipment: $1,675 - Sales salaries expense: $14,050 - Rent expense—Selling space: $7,000 - Store supplies expense: $4,300 - Advertising expense: $8,400 **Total Selling Expenses:** - $36,425 **General and Administrative Expenses:** - Office salaries expense: $14,050 - Insurance expense: $1,450 - Rent expense—Office space: $7,000 **Total General and Administrative Expenses:** - $22,500 **Total Expenses:** - $58,925 **Net Income:** - $13,375 This financial statement outlines the income and expenses for a company over the fiscal year ending January 31. The components include sales, various expense categories, and the resulting net income. The statement is divided into sections for selling expenses and general/administrative expenses, providing a detailed view of where funds were allocated.
### NELSON COMPANY **Unadjusted Trial Balance** **January 31** | Account | Debit | Credit | |--------------------------------------------|-------------|------------| | Cash | $28,750 | | | Merchandise Inventory | 12,500 | | | Store Supplies | 6,000 | | | Prepaid Insurance | 2,800 | | | Store Equipment | 42,680 | | | Accumulated Depreciation–Store Equipment | | $18,850 | | Accounts Payable | | 14,000 | | Common Stock | | 4,000 | | Retained Earnings | | 27,000 | | Dividends | 2,100 | | | Sales | | 116,550 | | Sales Discounts | 1,886 | | | Sales Returns and Allowances | 2,100 | | | Cost of Goods Sold | 38,880 | | | Depreciation Expense–Store Equipment | 0 | | | Sales Salaries Expense | 14,050 | | | Office Salaries Expense | 14,650 | | | Insurance Expense | 0 | | | Rent Expense–Selling Space | 7,800 | | | Rent Expense–Office Space | 3,200 | | | Store Supplies Expense | 0 | | | Advertising Expense | 8,400 | | | **Totals** | **$179,696**|**$179,696**| #### Additional Information: a. Store supplies still available at fiscal year-end amount to $1,700. b. Expired insurance, an administrative expense, is $1,450 for the fiscal year. c. Depreciation expense on store equipment, a selling expense, is $1,675 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,200 of inventory is still available at fiscal year-end. --- ### Problem 4-5A (Algo) Part 4 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31
Transcribed Image Text:### NELSON COMPANY **Unadjusted Trial Balance** **January 31** | Account | Debit | Credit | |--------------------------------------------|-------------|------------| | Cash | $28,750 | | | Merchandise Inventory | 12,500 | | | Store Supplies | 6,000 | | | Prepaid Insurance | 2,800 | | | Store Equipment | 42,680 | | | Accumulated Depreciation–Store Equipment | | $18,850 | | Accounts Payable | | 14,000 | | Common Stock | | 4,000 | | Retained Earnings | | 27,000 | | Dividends | 2,100 | | | Sales | | 116,550 | | Sales Discounts | 1,886 | | | Sales Returns and Allowances | 2,100 | | | Cost of Goods Sold | 38,880 | | | Depreciation Expense–Store Equipment | 0 | | | Sales Salaries Expense | 14,050 | | | Office Salaries Expense | 14,650 | | | Insurance Expense | 0 | | | Rent Expense–Selling Space | 7,800 | | | Rent Expense–Office Space | 3,200 | | | Store Supplies Expense | 0 | | | Advertising Expense | 8,400 | | | **Totals** | **$179,696**|**$179,696**| #### Additional Information: a. Store supplies still available at fiscal year-end amount to $1,700. b. Expired insurance, an administrative expense, is $1,450 for the fiscal year. c. Depreciation expense on store equipment, a selling expense, is $1,675 for the fiscal year. d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,200 of inventory is still available at fiscal year-end. --- ### Problem 4-5A (Algo) Part 4 4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31
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