Calculating inventory turnover and the gross profit percentage to evaluate the businessRev...

Calculating inventory turnover and the gross profit percentage to evaluate the business

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?

Exercise

Journalizing closing entries

The trial balance and adjustments columns of the worksheet of Budget Business Systems 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?