Question

Problem 4-5A Preparing adjusting entries and income statements; computing gross margin, acid-test, and current ratios LO A1, A2, P3, P4

[The following information applies to the questions displayed below.]
  
The following unadjusted trial balance is prepared at fiscal year-end for Nelson Company.  
  

NELSON COMPANY Unadjusted Trial Balance January 31, 2017
	Debit			Credit
Cash	$	1,000
Merchandise inventory		12,500
Store supplies		5,800
Prepaid insurance		2,400
Store equipment		42,900
Accumulated depreciation—Store equipment				$	15,250
Accounts payable					10,000
Common stock					5,000
Retained earnings					27,000
Dividends		2,200
Sales					111,950
Sales discounts		2,000
Sales returns and allowances		2,200
Cost of goods sold		38,400
Depreciation expense—Store equipment		0
Salaries expense		35,000
Insurance expense		0
Rent expense		15,000
Store supplies expense		0
Advertising expense		9,800
Totals	$	169,200		$	169,200

  
Rent expense and salaries expense are equally divided between selling activities and general and administrative activities. Nelson Company uses a perpetual inventory system.
  
Additional Information:

Store supplies still available at fiscal year-end amount to $1,750.

Expired insurance, an administrative expense, for the fiscal year is $1,400.

Depreciation expense on store equipment, a selling expense, is $1,525 for the fiscal year.

To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $10,900 of inventory is still available at fiscal year-end.

Problem 4-5A Part 4

4. Compute the current ratio, acid-test ratio, and gross margin ratio as of January 31, 2017. (Round your answers to 2 decimal places.)

Answer 1