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On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances:

Accounts	Debit				Credit
Cash	$	26,200
Accounts Receivable		48,400
Allowance for Uncollectible Accounts					$	5,300
Inventory		21,100
Land		57,000
Equipment		20,500
Accumulated Depreciation						2,600
Accounts Payable						29,600
Notes Payable (6%, due April 1, 2022)						61,000
Common Stock						46,000
Retained Earnings						28,700
Totals	$	173,200			$	173,200

During January 2021, the following transactions occur:

January		2		Sold gift cards totaling $10,200. The cards are redeemable for merchandise within one year of the purchase date.
January		6		Purchase additional inventory on account, $158,000.
January		15		Firework sales for the first half of the month total $146,000. All of these sales are on account. The cost of the units sold is $79,300.
January		23		Receive $126,500 from customers on accounts receivable.
January		25		Pay $101,000 to inventory suppliers on accounts payable.
January		28		Write off accounts receivable as uncollectible, $5,900.
January		30		Firework sales for the second half of the month total $154,000. Sales include $17,000 for cash and $137,000 on account. The cost of the units sold is $85,000.
January		31		Pay cash for monthly salaries, $53,100.

6. Record closing entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
  

Answer 1

ACME Fireworks Journal Enteries Date Particulars 2.1.2021 Cash a/c To Unearned Revenue (Sold gift cards) Dr. Debit in $ Credit in $ 10200 10200 158000 6.1.2021 Inventory a/c Dr. To Accounts Payable (Inventory purchased on account) 158000 Dr. 146000 15.1.2021 Accounts Receivable a/c To Sales Revenue (Sales on account) 146000 79300 Cost of goods sold a/c Dr. To Inventory (To record cost of goods sold) 79300 Dr. 20.1.2021 Warranty Payable a/c To Cash (Warranty claim paid) Dr. 126500 23.1.2021 Cash a/c To Accounts Receivable (Cash from debtors) 126500 Dr. 101000 25.1.2021 Accounts Payable a/c To Cash (Cash paid to Creditors) 101000 5900 28.1.2021 Allowance for Uncollectible Accounts a/c Dr. To Accounts Receivable (Uncollectibles written off) 5900 17000 137000 Dr. 30.1.2021 Cash a/c Dr. Accounts Receivable a/c To Sales Revenue (Sales made) 154000 85000 Cost of goods sold a/c Dr. To Inventory (To record cost of goods sold) 85000 Dr. 53100 31.1.2021 Salaries Expense a/c To Cash (Salaries paid) 53100

Adjusting Enteries Trans. Particulars Depreciation Expense a/c Dr. To Accum. Depre - Equip (To record Depreciation) ( 20500 - 4300 )/2 = 8100 / 12 = 675 Debit in $ Credit in $ 675 675 b. Dr. Warranty Expense a/c To Warranty Liability (Warranty estimated) No Journal entry required d. No Journal entry required e. 12510 Bad debts Expense a/c Dr. 12510 To Allowance for Uncollectible Accounts (To record bad debts) 22000 x 30% = 6600 + 5310 = 11910 + 600 = 12510 48400 + 146000 - 126500-5900 + 137000 - 22000 = 177000 177000 x 3% = 5310 Allowance for Uncollectible Accounts = 5300 - 5900 =-600 305 Interest Expense a/c Dr. To Interest Payable (Interest accrued)61000 x 6% x 1/12 305 Dr. 14100 Income Tax Expense a/c To Income Tax Payable (Income Tax accrued) 14100 Dr. 4100 Unearned Revenue a/c To Sales Revenue (Revenue recognized) 4100 Dr. Closing Enteries Date Particulars 31.1.2021 Income Summary a/c To Cost of goods sold To Salaries Expense To Depreciation Expense To Bad debts Expense To Interest Expense To Income Tax Expense (Expense accounts closed) Debit in $ Credit in $ 244990 164300 53100 675 12510 305 14100 Dr. 304100 31.1.2021 Sales Revenue a/c To Income Summary (Revenue accounts closed) 304100 Dr. 59110 31.1.2021 Income Summary a/c To Retained Earnings (Profits Transferred) 59110

Worksheet For the Month Ending 31.1.2021 Unadjusted Adjustments Adjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 25800 25800 199000 199000 -600 12510 11910 14800 14800 57000 57000 20500 20500 2600 675 3275 86600 86600 10200 4100 6100 0 305 Particulars Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Equipment Accumulated Depreciation Accounts Payable Unearned Revenue Warranty Payable Interest Payable Income Tax Payable Notes Payable (6%, due April 1, 2019) Common Stock Retained Earnings Sales Revenue Cost of goods sold Salaries Expense Depreciation Expense Bad debts Expense Interest Expense Warranty Expense Income Tax Expense Totals 305 14100 61000 46000 28700 300000 14100 61000 46000 28700 304100 4100 164300 53100 675 12510 164300 53100 675 12510 305 0 14100 562090 305 0 14100 31690 534500 534500 31690 562090

304100 -164300 139800 Statement of Income For the Month Ending 31.1.2021 Sales Revenue Cost of goods sold Gross Margin Warranty Expense Salaries Expense 53100 Depreciation Expense 675 Bad debts Expense 12510 Operating Income Non Operating Items: Interest Expense 66285 73515 -305 73210 -14100 59110 Income Tax Expense Net Income Statement of Retained Earnings For the Month Ending 31.1.2021 Beginning 28700 Net Income 59110 87810

Amounts in $ Amounts in $ Balance sheet As at 31.1.2021 Assets Amounts in $ Amounts in $ Liabilities Current Assets Current Liabilities Cash 25800 Accounts Payable Accounts Receivable 199000 Unearned Revenue Allowance for Uncolle -11910 Interest Payable Inventory 14800 227690 Income Tax Payable Warranty Payable 86600 6100 305 14100 107105 Non Current Liabilities 57000 Notes Payable 61000 Non Current Assets Land Equipment Accumulated Depreci 20500 -3275 46000 17225 Shareholders Equity Common Stock Retained Earnings 301915 Total Liabilities & Equity 87810 133810 301915 Total Assets