Quarter 4 Opening Entries: 1. Sold 100 shares of preferred stock (par value $15,

Question

Quarter 4 Opening Entries: 1. Sold 100 shares of preferred stock (par value $15, 10% dividend) for $25 each. 2. Prepay rent for the next year for $120. 3. Purchase supplies of $30 4. Collect $300 on accounts receivable 5. Pay $400 towards accounts payable 6. Invest another $200 into your investment account 7. Purchase another 15 units for $15 on account 8. Purchase back 30 shares of common stock for $15 each 9. Write off a bad debt (A/R) of $20 10. Collect another $300 from customers as a deposit towards future rent.Quarter 4 Final Entries: 1. Sold 20 on account for $25 each 2. Customer returned 3 units on account. 3. Company declared a $300 dividend. End of quarter work: 1. Transfer all transactions into t-accounts and determine ending balance. 2. Prepare the trial balance on your worksheet 3. Do the following adjustments: worksheet and journal a. Supplies used = $25 b. COGS – use LIFO c. Interest on all loans and investments d. Depreciation on all houses, hotels, equipment, building, trains, solar plants e. Bad debt expense = 6% of net sales f. Amount earned from “unearned revenue” account = $200 g. Prepaid rent and prepaid insurance – record the amount expired this last quarter h. Amortization on your intangible 4. Finish the worksheet 5. Do the following ratios: a. EPS b. Current ratio and working capital c. Debt/Equity d. Inventory turnover e. A/P Turnover f. Fixed Asset turnover g. Quick Ratio

Explanation / Answer

Solution:

(A). Earning Per Share:

Earning Per Share = 500 - 300 / 100

   = $ 2

(B). Current Ratio:

Current Ratio = 280 / 400 ( A/R $20 Bad Debts)

= 0.7%

(C). Debt/Equity Ratio:   

Debt/Equity Ratio = 400 / 760

   = 0.526%

(D). Inventory Turnover Ratio:

   Inventory Turnover Ratio = 480 / 225

= 2.13%

(E). Fixed Asset Turniver Ratio:

Fixed Asset Turniver = 500 / 150

   = 3.33%

(F).Quick Ratio:

Quick Ratio = 300 / 400

= 0.75%

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