Cashback Offer from 20th to 31st January 2021. Get Flat 10% Cashback credited to your account for a minimum transaction of $80. Post Your Question Today!

Question DetailsNormal
$ 14.00

The trial balance of the Parton Wholesale Company contained the following accounts at

Question posted by
Online Tutor Profile
request

complete solution correct answer key

The trial balance of the Parton Wholesale Company contained the following accounts at December 31, 2010 the end of the companys calendar year.
PARTON WHOLESALE COMPANY
Trial Balance
31-Dec-10
Debit
$34,400
$36,600
$62,400
$92,000
$197,000

Cash
Accounts Receivable
Merchandise Inventory (Beginning)
Land
Buildings
Accumulated Depreciation-Buildings
Equipment
Accumulated Depreciation-Equipment
Notes Payable
Accounts Payable
Common Stock
Retained Earnings
Dividends
Sales
Sales Discounts
Purchases
Purchase Discounts
Freight-in
Salaries Expense
Utilities Expense
Repair Expense
Gas and Oil Expense
Insurance Expense

Credit

$54,000
$83,500
$42,400
$50,000
$37,500
$200,000
$67,800
$10,000
$886,100
$4,600
$725,100
$16,000
$12,400
$69,800
$9,400
$5,900
$7,200
$3,500
$1,353,800

$1,353,800

Adjustment data:
1. Depreciation is $10,000 on buildings and $9,000 on equipment. (Both are administrative expenses.)
2. Interest of $7,000 is unpaid on notes payable at December 31.
Other data:
1. Merchandise inventory on hand at December 31, 2010 is $90,000.
2. Salaries are 80% selling and 20% administrative.
3. Utilities expense, repair expense, and insurance expense are 100% administrative.
4. $15,000 of the notes payable are payable next year.
5. Gas and oil expense is a selling expense.
6. The beginning balance of accounts receivable is $34,750.
7. The amount of total assets at the beginning of the year is $469,225.
Instructions
1) Journalize the adjusting entries.
Particulars
Depreication Expenses A/c----------Dr
To Accumulated Depreciation Building A/c

Amount
$10,000

Amount
$10,000

Depreication Expenses A/c----------Dr
To Accumulated Depreciation Equipment A/c

$9,000

Interest Expenses A/c-------------------------Dr
To Interest payable A/c

$7,000

$9,000

$7,000

2) Prepare a multiple-step income statement and a retained earnings statement for the year ended, as well as a classified balance sheet as of December 31, 2010.
Solution: Computation of the Income Statement
Income statement
December 31, 2010.
PARTON WHOLESALE COMPANY
Particulars
Amount
Amount
Sales
$886,100
Sales Discounts
$(4,600)
Net Sales
$881,500
Merchandise Inventory (Beginning)
$62,400
Purchases
$725,100
Purchase Discounts
$(16,000)
Merchandise inventory on hand at December 31
$(90,000)
Cost of good sold
$681,500
Gross income
$200,000
Add: Admistration Exp
Freight-in
$12,400
Salaries Expense
$13,960
Utilities Expense
$9,400
Dep Exp Building
$10,000
Dep Exp Equipment
$9,000
Repair Expense
$5,900
Insurance Expense
$3,500
$64,160
Operating profit
$135,840
Add: Selling Exp
Salaries Expense
$55,840
Gas and Oil Expense
$7,200
$63,040
EBIT
$72,800
Interest Exp
$(7,000)
Net income
$65,800
Retained Earnings
December 31, 2010.
PARTON WHOLESALE COMPANY
Particulars
Amount
Retained Earnings Opening
Add: Net Income
Less: Dividend
Retained Earning Ending

Balance sheet
December 31, 2010.
PARTON WHOLESALE COMPANY
Particulars
Amount
Cash
$34,400
Accounts Receivable
$36,600
Merchandise Inventory (Ending)
$90,000
Total Current Assets
Land
Buildings
$197,000
Accumulated Depreciation-Buildings
$(64,000)
Equipment
$83,500
Accumulated Depreciation-Equipment
$(51,400)
T otal Assets
Notes Payable
Interest Payable
Accounts Payable
Current Liabilities
Long term Debts
Notes Payable
Common Stock
Retained Earnings
T otal Liabilities and Share holders
3)

Amount
$67,800
$65,800
$(10,000)
$123,600

Amount

$161,000
$92,000
$133,000
$32,100
$418,100

$15,000
$7,000
$37,500
$59,500
$35,000
$200,000
$123,600

$323,600
$418,100

Prepare the following ratios and show all support for your computations:

a) Current Ratio

161,000/59,000=
2.71:1
The ratio of 2.71 means that for every dollar of
current liabilities, Parton has $2.71 of current
assets.

b) Quick Ratio

c) Working Capital
d) Accounts Receivable Turnover
e) Average Collection Period
f) Inventory Turnover
g) Days in Inventory
h) Debt to Total Assets Ratio
i) Gross Profit Ratio
j) Profit Margin Ratio
k) Return on Assets Ratio
l) Asset Turnover Ratio
4) Based on the ratios computed in 3) above, answer the following questions and use the financial statement ratios to support your answers where appropriate:
·

Do you feel that the company is able to meet its current and long term obligations as they become due?

·

Comment on the profitability of the company with respect to the various profitability ratios that you computed.

·

Would you lend money to this company for the long term?

·

Comment on the ability of the company to collect its receivables and mange inventory.
2007

Liquidity
Current
Quick
Working Capital
Leverage
Debt to Total Assets (%)
Times Interest Earned
Activity
Inventory Turnover (sales)
Fixed Asset Turnover
Total Asset Turnover
Average Collection Period (days)
Accounts Receivable Turnover
Days in Inventory
Profitability
Gross Profit Margin (%)
Net Profit (%)
Return on Total Assets (%)
Return on Equity (%)
Payout Ratio (%)

2.39
1.1
$98,750.00

2008

2009 Industry Average

2.68
2.9
3.12
1.16
1.21
1.56
$100,450.00 $103,000.00 $110,000.00

20.97%
8.75

21.98%
9.12

22.89%
9.56

20.89%
10.22

821.00%
343.00%
215.00%
1495.00%
2408.00%
44.46

991.00%
351.00%
220.00%
1469.00%
2450.00%
36.83

1012.00%
359.00%
225.00%
1442.00%
2497.00%
36.07

1052.00%
364.00%
256.00%
1428.00%
2521.00%
43.21

21.10%
6.89%
15.50%
20.15%
15.10%

22.50%
7.25%
16.10%
21.89%
15.84%

24.03%
7.89%
16.24%
22.15%
16.09%

24.56%
8.03%
16.07%
22.06%
16.86%


a) Current Ratio

b) Quick Ratio
c) Working Capital
d) Accounts Receivable Turnover
e) Average Collection Period
f) Inventory Turnover
g) Days in Inventory
h) Debt to Total Assets Ratio
i) Gross Profit Ratio
j) Profit Margin Ratio
k) Return on Assets Ratio
l) Asset Turnover Ratio

Available Answer
$ 14.00

[Solved] The trial balance of the Parton Wholesale Company contained the following accounts at

  • This solution is not purchased yet.
  • Submitted On 29 Jul, 2015 10:24:21
Answer posted by
Online Tutor Profile
solution
complete solution correct answer key The trial balance of the Parton Wholesale Company contained the following accounts at December 31, 2010 the end of the companys calendar year. PARTON WHOLESALE COMPANY Trial Balance 31-Dec-10 Debit $34,400 $36,600 $62,400 $92,000 $197,000 Cash Accounts Receivable Merchandise Inventory (Beginning) Land Buildings Accumulated Depreciation-Buildings Equipment Accumulated Depreciation-Equipment Notes Payable Accounts Payable Common Stock Retained Earnings Dividends Sales Sales Discounts Purchases Purchase Discounts Freight-in Salaries Expense Utilities Expense Repair Expense Gas and Oil Expense Insurance Expense Credit $54,000 $83,500 $42,400 $50,000 $37,500 $200,000 $67,800 $10,000 $886,100 $4,600 $725,100 $16,000 $12,400 $69,800 $9,400 $5,900 $7,200 $3,500 $1,353,800 $1,353,800 Adjustment data: 1. Depreciation is $10,000 on buildings and $9,000 on equipment. (Both are administrative expenses.) 2. Interest of $7,000 is unpaid on notes payable at December 31. Other data: 1. Merchandise inventory on hand at December 31, 2010 is $90,000. 2. Salaries are 80% selling and 20% administrative. 3. Utilities expense, repair expense, and insurance expense are 100% administrative. 4. $15,000 of the notes payable are payable next year. 5. Gas and oil expense is a selling expense. 6. The beginning balance of accounts receivable is $34,750. 7. The amount of total assets at the beginning of the year i...
Buy now to view the complete solution
Other Similar Questions
User Profile
Beam7...

The trial balance of CX Trading as at 31 December 20x5 showed a difference

Please see attached Thank you!............................
User Profile
Beam7...

The trial balance of YTP Supplies Pte Ltd (“YTP”) was given as at 31 December 20X6

Please see attached Thank you!.....................................
User Profile
Beam7...
User Profile
Beam7...

The trial balance of Blues Traveler Corporation does not balance.

Please see attached Thank you!...............................
User Profile
Beam7...

The trial balance of Bellemy Fashion Center contained the following accounts at November 30

Please see attached Thank you!...............................

The benefits of buying study notes from CourseMerit

homeworkhelptime
Assurance Of Timely Delivery
We value your patience, and to ensure you always receive your homework help within the promised time, our dedicated team of tutors begins their work as soon as the request arrives.
tutoring
Best Price In The Market
All the services that are available on our page cost only a nominal amount of money. In fact, the prices are lower than the industry standards. You can always expect value for money from us.
tutorsupport
Uninterrupted 24/7 Support
Our customer support wing remains online 24x7 to provide you seamless assistance. Also, when you post a query or a request here, you can expect an immediate response from our side.
closebutton

$ 629.35