Question

Credits 200.000 100 000 $410,000 The Sha c hing Story 2001.the Jan 2 Lent 20.000 employee by accepting a note d in months 5 Purchased 300 metry on count for $35.000 (5110 wach with terms 1/10.30 Returned 100 s t ory chased on January 5. 15 Sold 3.300 inventory on account for 420.000 15130 m 2/10.30 17 Customers returned 200 is sold on January 15. These units were initially purchased by the company on January. The placed inventory to be sold in the future 20 Deceved cash o ut on accounts receivable. This amount includes $36.000 from 2020 plus amount recebe one of 2.700 units sold on January 15 21 wroter accounts re t rom 2020 24 Paid on the amount includes the amount owed at the beginning of the period plus the amount w hom purchase of 3.100 units on January 5. 28 Pachor r ingar $28.000 29 Podcashfor d ring January 10.000 30 dies $3.000 1. Record each of the transactions listed here in the General Journal' tab these are shown as items 1-10) assuming a perpetual FIRO ventory system. Purchases and sales of inventory are recorded using the gross Bethod for cash discount Review the General Ledger and the Trial Balance'tabs to see the effect of the 2. Record i ng entries on January 31 in the General Journal" tab these are shown as items 11-14) 2. Of the remaining accounts receivable, the company estimates that 10 will not be collected h. Accrued interest revenue o s receivable for January c. Accrued interest expense on notes payable for January d. Accrued income taxes at the end of January for $5.000 e. Depreciation on the building. 52,000 3. Review the adjusted Trial Balance as of January 31, 2021, in the 'Trial Balance' tab. 4. Prepare a multiple-dep income statement for the period ended January 31, 2021. in the "Income Statement tab 5. Prepare a classified balance sheet as of January 31, 2021, in the Balance Sheet' tab 6. Record closing entries in the 'General Journal' tab (these are shown as items 15-16). 7. Using the information from the requirements above, complete the "Analysis tab a. Calculate the inventory turnover ratio for the month of January. If the industry average of the inventor turnover ratio for the month of January is 4.5 times, is the company selling its inventory more or less quickly than other companies in the same industry? b. Calculate the gross profit ratio for the month of January. If the industry average gross profit ratio is 33%, is the company more or less profitable per dollar of sales than other companies in the same industry? c. Used together, what might the inventory turnover ratio and gross profit ratio suggest about the company's business strategy? Is the company's strategy to sell a higher volume of less equive items or does the company appear to be selling a lower volume of more expensive items?

Answer 1

Tripley Company Journal Enteries Date Particulars 2.1.2021 Note Receivable a/c Dr. To Cash (Loan provided to employee) Debit in $ Credit in $ 20000 20000 Dr. 385000 5.1.2021 Inventory a/c To Accounts Payable (Inventory on account) 385000 11000 8.1.2021 Accounts Payable a/c Dr. To Inventory (Inventory returned) 100 x 110 11000 Dr. 429000 15.1.2021 Accounts Receivable a/c To Sales (Sales on account) 429000 360000 Cost of goods sold a/c Dr. To Inventory (To record cost of goods sold) 360000 Dr. 26000 17.1.2021 Sales Return a/c To Accounts Receivable (Goods returned by customer) 130 x 200 26000 22000 Inventory a/c Dr. To Cost of goods sold (Cost of goods sold returned) 22000 36000 20.1.2021 Cash a/c Dr. To Accounts Receivable (Cash from debtors) 36000 343980 7020 Cash a/c Dr. Sales Discount a/c Dr. To Accounts Receivable (Cash from debtors) 351000 x 2% = 7020 2700 x 130 = 351000 351000 4000 21.1.2021 Allowance for Uncolectible accounts Dr. To Accounts Receivable (Uncollectibles written off) 4000

4200 Adjusting Enteries Date Particulars Debit in $ Credit in $ 31.1.2021 Bad Debts Expense a/c Dr. 4200 To Allowance for Uncolectible accounts (Bad debts expense esitmated) 40000 + 429000-26000 - 36000 - 351000 - 4000 = 52000 x 10% = 5200 Allowance for Uncolectible accounts = 5000 - 4000 = 1000 5200 - 1000 = 4200 100 31.1.2021 Interest Receivable a/c Dr. To Interest Revenue (Interest revenue accrued) 20000 x 6% x 1/12 100 240 31.1.2021 Interest Expense a/c Dr. To Interest Payable (Interest accrued) 36000 x 8% x 1/12 240 5000 31.1.2021 Income Tax Expence a/c Dr. To Income Tax Payable (Income tax expense accrued) 5000 Dr. 2000 31.1.2021 Depreciation Expense - Build a/c To Accum. Depre - Build (To record Depreciation) 2000 Closing Enteries Date Particulars 31.1.2021 Income Summary a/c Dr. To Sales Return To Sales Discount To Cost of goods sold To Bad Debts Expense To Depreciation Expense - Build To Interest Expense To Income Tax Expense (Expense accounts closed) Debit in $ Credit in $ 382460 26000 7020 338000 4200 2000 240 5000 Dr. Dr. 100 429000 31.1.2021 Interest Revenue a/c Sales a/c To Income Summary (Revenue accounts closed) 429100 Dr. 46640 31.1.2021 Income Summary a/c ne Summary a/c To Retained Earnings (Profits Transferred) 46640

FIFO Perpetual Purchases Cost of goods sold Per unit cost Total Cost Units Per unit cost Total Cost Units Date Jan-01 Jan-05 3500110 385000 Units 300 300 3500 300 3400 400 Balance Per unit cost Total Cost 100 30000 100 30000 110 385000 100 30000 110 374000 110 44000 Jan-08 11000 Jan-15 300 3000 100 110 30000 330000 200 110 22000 110 Jan-17 Jan-31 600 600 110 Ending 66000 66000 66000 Purchases 407000 COGS 371000

Work sheet For the month ending 31.1.2021 Particulars Cash Note Receivable Interest Receivable Accounts Receivable Allowance for Uncolectible accounts Inventory Land Building Accum. Depre - Build Accounts Payable Interest Payable Income Tax Payable Note Payable @ 8% Common Stock Retained Earnings Interest Revenue Sales Sales Return Sales Discount Cost of goods sold Bad Debts Expense Depreciation Expense - Build Interest Expense Income Tax Expense Totals Unadjusted Adjustments Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 429980 429980 429980 20000 20000 20000 100 100 100 52000 52000 52000 1000 4200 5200 5200 66000 66000 66000 200000 200000 200000 70000 70000 70000 10000 2000 12000 12000 394000 394000 394000 240 240 240 5000 5000 5000 36000 36000 36000 100000 100000 100000 239000 239000 285640 100 100 429000 429000 26000 26000 7020 7020 338000 338000 4200 4200 2000 2000 240 240 5000 5000 1209000 1209000 11540 115401220540 1220540 838080 838080

Statement of Income For the month ending 31.1.2021 Sales Sales Return Sales Discount Net Sales Cost of goods sold Gross Profit 429000 -26000 -7020 395980 -338000 57980 4200 2000 Operating Expenses: Bad Debts Expense Depreciation Expense - Build Operating Income Non Operating Items: Interest Revenue Interest Expense 6200 51780 100 -240 -140 51640 -5000 46640 Income Tax Expense Net Income Statement of Retained Earnings For the month ending 31.1.2021 Beginning Balance 239000 Net Income 46640 285640

Amounts in $ Amounts in $ Balance sheet As at 31.1.2021 Assets Amounts in $ Amounts in $ Liabilities Current Assets Current Liabilities Cash 429980 Accounts Payable Note Receivable 20000 Interest Payable Interest Receivable 100 Income Tax Payable Accounts Receivable 52000 Allowance for Uncolectible -5200 Non Current Liabilities Inventory 66000 562880 Note Payable @ 8% 394000 240 5000 399240 36000 Non Current Assets Land Building Accum. Depre - Build Total Assets 70000 - 12000 200000 Shareholders Equity Common Stock 100000 58000 Retained Earnings 285640 820880 Total Liabilities & Shareholders Equity 385640 820880