Dominique Fouque owns and operates Dominique’s Doll House. She has a small shop in which she sells new and antique dolls. She is particularly well known for her collection of antique Ken and Barbie dolls. A completed work sheet for 20-3 is shown on the next page. Fouque made no additional investments during the year and the long-term note payable is due in 20-9. No portion of the long-term note is due within the next year. Net credit sales for 20-3 were $35,300, and receivables on January 1 were $2,500.
1. Prepare a multiple-step income statement.
2. Prepare a statement of owner’s equity.
3. Prepare a balance sheet.
4. Compute the following measures of performance and financial condition for 20-3:
(a) Current ratio
(b) Quick ratio
(c) Working capital
(d) Return on owner’s equity
(e) Accounts receivable turnover and average number of days required to collect receivables
(f) Inventory turnover and the average number of days required to sell inventory
5. Prepare adjusting entries and indicate which should be reversed and why.
6. Prepare closing entries.
7. Prepare reversing entries for the adjustments where appropriate.