Chapter 5, Problem 6BPSB

Problem 5-6B^E

Refer to the data and information in Problem 5-5B.

Preparing a work sheet for a merchandiser

Required

Prepare and complete the entire 10-column work sheet for Foster Products Company. Follow the structure of Exhibit 5B.1 in Appendix 5B.

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

Required

1. Prepare adjusting journal entries to reflect each of the following.
1. Store supplies still available at fiscal year-end amount to $3,700.
2. Expired insurance, an administrative expense, for the fiscal year is $2,800.
3. Depreciation expense on store equipment, a selling expense, is $3,000 for the fiscal year.
4. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $21,300 of inventory is still available at fiscal year-end.

Prepare a multiple-step income statement for fiscal year 2015.

Prepare a single-step income statement for fiscal year 2015.

Compute the current ratio, acid-test ratio, and gross margin ratio as of October 31, 2015. (Round ratios to two decimals.)

EXHIBIT 5B.1

Work Sheet for Merchandiser (using a perpetual system)