(L. OBJ. 4, 5, 6) Making closing entries, preparing financial statements, and computing...

(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 Big Brother’s Music Company at January 31, 2012, follows:

Requirements

1. Journalize Big Brother’s closing entries.

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

3. Compute the gross profit percentage and the rate of inventory turnover for the fiscal year ending January 31, 2012. Inventory on hand one year age, at January 31, 2011, was $12,200.

4. For the year ended January 31, 2011, Big Brother’s gross profit percentage was 50%, and Inventory turnover was 4.9 times. Did the results for the year ended January 31, 2012 suggest improvement or deterioration in profitability over last year?