Question

The Artisan Wines is a retail store selling vintage wines. On December 31, 2019, the firm’s general ledger contained the accounts and balances below. All account balances are normal.

Artisan Wines Worksheet Year Ended December 31, 2019
		Trial Balance						Adjustments						Adjusted Trial Balance						Income Statement						Balance Sheet
Account Name		Debit			Credit			Debit			Credit			Debit			Credit			Debit			Credit			Debit			Credit
Cash	$	29,086.00											$	29,086.00											$	29,086.00
Accounts Receivable		570.00												570.00												570.00
Prepaid Advertising		900.00									300.00			600.00												600.00
Supplies		370.00									235.00			135.00												135.00
Merchandise Inventory		15,700.00						12,700.00			15,700.00			12,700.00												12,700.00
Store Equipment		28,500.00												28,500.00												28,500.00
Accumulated Depreciation—Store Equipment					3,700.00						3,300.00						7,000.00												7,000.00
Office Equipment		5,700.00												5,700.00												5,700.00
Accumulated Depreciation—Office Equipment					1,570.00						1,070.00						2,640.00												2,640.00
Notes Payable, due 2020					23,500.00												23,500.00												23,500.00
Accounts Payable					3,405.00												3,405.00												3,405.00
Wages Payable											600.00						600.00												600.00
Social Security Tax Payable											37.20						37.20												37.20
Medicare Tax Payable											8.70						8.70												8.70
Unearned Seminar Fees					8,100.00			5,400.00									2,700.00												2,700.00
Interest Payable											117.50						117.50												117.50
Vincent Arroyo, Capital					31,230.00												31,230.00												31,230.00
Vincent Arroyo, Drawing		14,810.00												14,810.00												14,810.00
Income Summary								15,700.00			12,700.00			15,700.00			12,700.00			15,700.00			12,700.00
Sales					160,970.00												160,970.00						160,970.00
Sales Discounts		270.00												270.00						270.00
Seminar Fee Income											5,400.00						5,400.00						5,400.00
Purchases		94,500.00												94,500.00						94,500.00
Purchases Returns and Allowances					1,070.00												1,070.00						1,070.00
Freight In		295.00												295.00						295.00
Rent Expense		13,900.00												13,900.00						13,900.00
Wages Expense		24,700.00						600.00						25,300.00						25,300.00
Payroll Taxes Expense		4,024.00						45.90						4,069.90						4,069.90
Depreciation Expense—Store Equipment								3,300.00						3,300.00						3,300.00
Depreciation Expense—Office Equipment								1,070.00						1,070.00						1,070.00
Advertising Expense								300.00						300.00						300.00
Supplies Expense								235.00						235.00						235.00
Interest Expense		220.00						117.50						337.50						337.50
Totals	$	233,545.00		$	233,545.00		$	39,468.40		$	39,468.40		$	251,378.40		$	251,378.40		$	159,277.40		$	180,140.00		$	92,101.00		$	71,238.40
Net Income																				20,862.60									20,862.60
																			$	180,140.00		$	180,140.00		$	92,101.00		$	92,101.00

Prepare a classified income statement for the year ended December 31, 2019. The company does not classify its operating expenses as selling expenses and general and administrative expenses. (Round your answers to 2 decimal places.)

	ARTISAN WINES Income Statement Operating revenue Net sales Cost of goods sold Merchandise inventory, January 1, 2019 Delivered cost of purchases $0.00 Net delivered cost of purchases Goods available for sale 0.00 Cost of goods sold $0.00 Operating expenses Total operating expenses 0.00 Income from operations $0.00 Other income 0.00 Other expenses 0.00 Net nonoperating income 0.00 $0.00

Prepare a statement of owner’s equity for the year ended December 31, 2019. No additional investments were made during the year. (Round your answers to 2 decimal places.)

	ARTISAN WINES Statement of Owner's Equity $0.00 $0.00

repare a classified balance sheet as of December 31, 2019. (Round your answers to 2 decimal places.)

	ARTISAN WINES Balance Sheet Assets Current assets: Total current assets $0.00 Plant and equipment: Store equipment Office equipment Total plant and equipment 0.00 Total assets $0.00 Liabilities and Owner's Equity Current liabilities: Total current liabilities $0.00 Owner's equity: Total liabilities and owner's equity $0.00

What is the inventory turnover for Artisan Wines? (Round your answer to 2 decimal places.)

	Inventory turnover times

Answer 1

1.

ARTISAN WINES
Income Statement
For the Year Ended December 31, 2019
Operating revenue
Sales			160970.00
Less: Sales discounts			270.00
Net sales			160700.00
Cost of goods sold
Merchandise inventory, January 1, 2019		15700.00
Add: Purchases	94500.00
Freight-in	295.00
Delivered cost of purchases	94795.00
Less: Purchase returns and allowances	1070.00
Net delivered cost of purchases		93725.00
Goods available for sale		109425.00
Less: Merchandise inventory, December 31, 2019		12700.00
Cost of goods sold			96725.00
Gross profit			63975.00
Operating expenses
Rent expense		13900.00
Wages expense		25300.00
Payroll taxes expense		4069.90
Depreciation expense-store equipment		3300.00
Depreciation expense-office equipment		1070.00
Advertising expense		300.00
Supplies expense		235.00
Total operating expenses			48174.90
Income from operations			15800.10
Other income
Seminar fee income		5400.00
			5400.00
Other expenses
Interest expense		337.50
			337.50
Net nonoperating income			5062.50
Net income			20862.60

2.

ARTISAN WINES
Statement of Owner's Equity
For the Year Ended December 31, 2019
Vincent Arroyo, Capital, January 1, 2019		31230.00
Add Net income	20862.60
Less Drawings	14810.00
Net change during the year		6052.60
Vincent Arroyo, Capital, December 31, 2019		37282.60

3.

ARTISAN WINES
Balance Sheet
Decemebr 31, 2019
Assets
Current assets:
Cash		29086.00
Accounts receivable		570.00
Prepaid advertising		600.00
Supplies		135.00
Merchandise inventory		12700.00
Total current assets			43091.00
Plant and equipment:
Store equipment	28500.00
Less: Accumulated depreciation-store equipment	7000.00	21500.00
Office equipment	5700.00
Less: Accumulated depreciation-office equipment	2640.00	3060.00
Total plant and equipment			24560.00
Total assets			67651.00
Liabilities and Owner's Equity
Current liabilities:
Notes payable, due 2020		23500.00
Accounts payable		3405.00
Wages payable		600.00
Social security tax payable		37.20
Medicare tax payable		8.70
Unearned seminar fees		2700.00
Interest payable		117.50
Total current liabilities			30368.40
Owner's equity:
Vincent Arroyo, Capital			37282.60
Total liabilities and owner's equity			67651.00

Analyze:

Inventory turnover

6.81

times

Inventory turnover = Cost of goods sold/Average inventory = $96725/$14200 = 6.81

Average inventory = (Beginning inventory + Ending inventory)/2 = ($15700 + $12700)/2 = $28400/2 = $14200