Chapter 04 – Reporting and Analyzing Merchandising Operations
Serial Problem — SP 4 (Continued)
Sales Discounts Acct. No. 415
Date Explanation PR Debit Credit Balance
Jan. 22 47 47
Date Explanation PR Debit Credit Balance
Wages Expense Acct. No. 623
Date Explanation PR Debit Credit Balance
Jan. 4 125 125
31 1,250 1,375
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Financial Accounting, 7th Edition
62
Date Explanation PR Debit Credit Balance
Feb. 5 600 600
Mileage Expense Acct. No. 676
Date Explanation PR Debit Credit Balance
Feb. 27 192 192
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Financial Accounting, 7th Edition
64
Expenses
Cost of goods sold …………………………………………….. $14,052
Depreciation expense—Office equipment …………… 400
Depreciation expense—Computer equipment ……….. 1,250
Wages expense …………………………………………………. 3,250
Insurance expense …………………………………………….. 555
For Three Months Ended March 31, 2014
Retained earnings, Dec. 31, 2013………………. $ 7,148
Plus: Net income ……………………………………… 18,686
25,834
Less: Dividends ……………………………………….. 4,800
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Solutions Manual, Chapter 4
65
Computer supplies ……………………………………………… 2,005
Prepaid insurance ………………………………………………. 1,110
Prepaid rent ……………………………………………………….. 825
Total current assets ……………………………………………. 105,209
Plant assets
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Financial Accounting, 7th Edition
66
1. Compute cost of sales for 2012 as follows ($ millions)
September 24, 2011 inventory………………………… $ 776
2.
2012
2011
($ millions)
Current
Ratio
Acid–Test
Ratio
Current
Ratio
Acid–Test
Ratio
Current assets
Cash and equivalents ………….…
$10,746
$10,746
$9,815
$9,815
Short–term marketable sec ………
18,383
18,383
16,137
16,137
Accounts receivables, net …….…
10,930
10,930
5,369
5,369
Inventories, net …………………..…
791
776
Deferred tax assets ……………..…
2,583
2,014
Vendor non–trade receivables ..…
7,762
6,348
Other current assets ………………
6,458
________
4,529
________
Total current assets ……………..…
$57,653
$44,988
Total quick assets ………………..…
$40,059
$31,321
Total current liabilities ………………
$38,542
$38,542
$27,970
$27,970
Ratio ……………………………………
1.50
1.04
1.61
1.12
Interpretation: The current ratio decreased from 1.61 in 2011 to 1.50 in
2012. The acid-test ratio decreased from 1.12 in 2011 to 1.04 in 2012. The
of 1.5 but below the rule-of-thumb ratio of 2.0. A similar interpretation
3. Solution depends on the financial statement data obtained.