Making closing entries, preparing financial statements, and computing gross profit percent...

Making closing entries, preparing financial statements, and computing gross profit percentage, inventory turnover, and days in inventory [20-30 min]

The adjusted trial balance of Big Papi Music Company at June 30, 2012, follows:

Requirements

1. Journalize Big Papi’s closing entries.

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2. Prepare Big Papi’s single-step income statement for the year.

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3. Compute the gross profit percentage, the rate of inventory turnover, and the days in inventory for the fiscal year ending June 30, 2012. Inventory on hand one year ago, at June 30, 2011, was $12,200.

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4. For the year ended June 30, 2011, Big Papi’s gross profit percentage was 50%, and inventory turnover was 4.9 times. Did the results for the year ended June 30, 2012, suggest improvement or deterioration in profitability over last year?