(L. OBJ. 4, 5, 6) Making closing entries, preparing financial statements, and computing gross profit percentage and inventory turnover [20—30 min]
The adjusted trial balance of Gamut Music Company at February 29, 2012, follows:
Requirements
1. Journalize Gamut’s closing entries.
2. Prepare Gamut’s single-step income statement for the year.
3. Compute the gross profit percentage and the rate of inventory turnover for 2012. Inventory on hand one year ago, at February 28, 2011, was $12,800.
4. For the year ended February 28, 2011, Gamut’s gross profit percentage was 50%, and inventory turnover was 4.9 times. Did the results for the year ended February 29, 2012 suggest improvement or deterioration in profitability over last year?
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