Calculating inventory turnover and the gross profit percentage to evaluate the business [1...

Calculating inventory turnover and the gross profit percentage to evaluate the business [10-15 min]

Review the data in Exercise.

Requirements

1. Compute the rate of inventory turnover for the fiscal year ended March 31, 2012, assuming $22,000 in average inventory.

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2. The inventory turnover rate for the fiscal year ended March 31, 2011, was 3.8 times. Did the inventory turnover rate improve or deteriorate from 2011 to 2012?

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3. Calculate the gross profit percentage.

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4. The gross profit percentage for the fiscal year ended March 31, 2011, was 62%. Did the gross profit percentage improve or deteriorate during the fiscal year ended March 31, 2012?

Journalizing closing entries [10-15 min]

The trial balance and adjustments columns of the worksheet of Budget Business Systems, Co., at March 31, 2012, follow:

Requirements

1. Compute the adjusted balance for each account that must be closed.

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2. Journalize the required closing entries at March 31, 2012.

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3. How much was Budget’s net income or net loss?