P5-31A The adjusted trial balance of Big Papi Music Company at June 30, 2012, follows:

Price: $3.99


P5-31A Making closing entries, preparing financial statements, and computing
gross profit percentage, inventory turnover, and days in inventory [20–30 min]
The adjusted trial balance of Big Papi Music Company at June 30, 2012, follows:

BIG PAPI MUSIC COMPANY
Adjusted Trial Balance
June 30, 2012
Cash
Accounts receivable
Inventory
Supplies
Furniture
Accumulated depreciation
Accounts payable
Salary payable
Unearned sales revenue
Note payable, long–term
Papi, capital
Papi, drawing
Sales revenue
Sales returns
Cost of goods sold
Selling expense
General expense
Interest expense
Total
Account Credit
$ 8,400
13,300
1,200
6,700
15,000
36,000
180,000
$ 260,600
Debit
$ 3,600
38,800
17,200
200
40,000
40,500
5,000
82,500
19,200
12,000
1,600
$ 260,600

Requirements

1. Journalize Big Papi’s closing entries.

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

3. Compute the gross profit percentage, the rate of inventory turnover, and the days
in inventory for the fiscal year ending June 30, 2012. Inventory on hand one year
ago, at June 30, 2011, was $12,200.

4. For the year ended June 30, 2011, Big Papi’s gross profit percentage was 50%,
and inventory turnover was 4.9 times. Did the results for the year ended June 30,
2012, suggest improvement or deterioration in profitability over last year?