Question

On January 1, 2018, the general ledger of Grand Finale Fireworks includes the following account balances: Credit Debit $ 43,000 45,100 7,800 67,000 Accounts Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Common Stock, $1 par value Paid-in Capital-Excess of Par Retained Earnings Totals $ 9,300 14,900 13,000 83,000 42,700 $ 162,900 $ 162,900 During January 2018, the following transactions occur: January 2 Issue an additional 2,200 shares of $1 par value common stock for $44,000. January 9 Provide services to customers on account, $15, 100. January 10 Purchase additional supplies on account, $5,200. January 12 Repurchase 1,100 shares of treasury stock for $18 per share. January 15 Pay cash on accounts payable, $16,800. January 21 Provide services to customers for cash, $49,400. January 22 Receive cash on accounts receivable, $16,900. January 29 Declare a cash dividend of $0.40 per share to all shares outstanding on January 29. The dividend is payable on February 15. (Hint: Grand Finale Fireworks had 13,000 shares outstanding on January 1, 2018 and dividends are not paid on treasury stock.) January 30 Reissue 900 shares of treasury stock for $20 per share. January 31 Pay cash for salaries during January, $42,300. The following information is available on January 31, 2018.

Answer 1

Credit Debit $44,000 $2,200 $41,800 $15,100 $15,100 $5,200 $5,200 $19,800 $19,800 $16,800 Step 1 Transation for Jan 2021 Sr. No. Date Particulars 1 2 -Jan-21 Cash Common Stock Additional Paid-in Capital (To record issue of common stock) 2 9-Jan-21 Accounts Receivable Service Revenue (To record service revenue) 10-Jan-21 Supplies Accounts Payable (To record purchase of supplies) 12-Jan-21 Treasury Stock Cash (To record purchase of treasury stock) 15-Jan-21 Accounts Payable Cash (To record payment to account payable) 21-Jan-21 Cash Service Revenue (To record service revenue) 7 22-Jan-21 Cash Accounts Receivable (To Record collection of accounts receivable) 8 29-Jan-21 Retained Earnings Dividend payable (To record declaration of dividend) 30-Jan-21 Cash Common Stock Paid in Capital Treasury Stock (To record reissue of treasuy stock) 31-Jan-21 Salary Expense Cash (To Record salary expense) $16,800 $49,400 $49,400 $16,900 $16,900 $5,640 $5,640 $18,000 $900 $17,100 $42,300 $42,300

Credit Debit $6,500 $6,500 $7,600 $7,600 $1,575 Step 2 Adjusting Entry Date Particulars 31-Jan-21 Utilities Expense Accounts Payable (To record accrual of utilities expense) 31-Jan-21 Supplies Expense Supplies (To record supplies expense) 31-Jan-21 Depreciation Accumulated Depreciation (To Record depreciation on equipment) 31-Jan-21 Income Tax Income Tax Payable (To Record income tax provision) Working Supplies Expense Beginning Supplies as on Jan 1, 2021 Add: Purchase Less: Ending Supplies as in Jan 31, 2021 Supplies Expense $1,575 $2,300 $2,300 $7,800 $5,200 ($5,400) $7,600 2 Depreciation Cost Less: Salvage Value Net Useful life (in years) Per Year Depreciation ($56700/3] Depreciation for January ($18900/12] $67,000 ($10,300) $56,700 $18,900 $1,575

Step 31 Grand Finale Fireworks Trial Balance | January 1, 2021 Entry Adjustment Debit Credit Debit Credit $43,000 $128,300 $78,900 $45,100 $15,100 $16,900 $7,800 $5,200 $7,600 $67,000 $9,300 $1,575 $14,900 $11,700 SOV $16 $2,300 $5,640 Particulars Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Income Tax Payable Dividend Payable Common Stock Additional Paid-in Capital Paid in Capital Treasury Stock Treasury Stock Retained Earnings Service Revenue Salary Expense Utilities Expense Supplies Expense Depreciation Income Tax $13,000 $83,000 $3,100 Adjusted Trail Balance January 31, 2021 Debit Credit $92,400 $43,300 $5,400 $67,000 $10,875 $9,800 $2,300 $5,640 $16,100 $124,800 $17,100 $19,800 $37,060 $64,500 $42,300 $6,500 $7,600 $1,575 $2,300 $42,700 $42,300 $6,500 57,600 $1,575 $2,300 $162,900 $162,900 $251,115 $251,115 $288,175 $288,175

Amount $64,500 Step 4 Grand Finale Fireworks Income Statement For the year month 31st January 2021 Particulars Amount Service Revenue Less: Operating Expense Salary Expense $42,300 Utilities Expense $6,500 Supplies Expense $7,600 Depreciation $1,575 Total Operating Expense Net Income Before Tax Less: Income Tax Net Income ($57,975) $6,525 ($2,300) $4,225 Step 5 Grand Finale Fireworks Statement of Retained Earnings For the year month 31st January 2021 Particulars Amount Beginning Balance $42,700 Add: Net Income $4.225 $46,925 Less: Dividend ($5,640) Ending Balance $41,285

Step 6 Assets Cash Accounts Receivable Supplies Total Current Assets Grand Finale Fireworks Classified Balance Sheet January 31, 2021 Amount Amount Liabilities $92,400 Accounts Payable $43,300 Dividend Payable $5,400 Income Tax Payable $141,100 Total Current Liabilities Amount $9,800 $5,640 $2,300 $17,740 Non Current Assets Equipment Less: Accumulated Depreciation $67,000 ($10,875) Shareholders' Equity Common Stock $56,125 Additional Paid-in Capital Paid in Capital Treasury Stock Retained Earnings Less: Treasury Stock Total Shareholders' Equity $16,100 $124,800 $17,100 $41,285 ($19,800) $179,485 Total Assets $197,225 Total Liabilities and Shareholder's Equity $197,225 (a) 2.35% Analysis The return on equity ($4225/$179485] Return on Equity = Net Income / Shareholders' Euqity The company is less profitable than other compnay's (b) The number of common shares outstanding as of January 31, 2021 is 15000 (13000+2200-1100-900) (c) Earning Per share - Net Income / Avergae Share outstading Average Share Ourstanding ((13000+15000)/2] Earning Per share = [$4225/14000] $0.30 Earning per share for January 2021 is better than the last year's average.