Question

_{Un January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Accounts Payable Notes Payable (8%, due in 3 years) Common Stock Retained Earnings Totals Debit Credit $ 22,500 38,000 $ 3,700 33,000 66,100 30,900 33,000 59,000 33,000 $159,600 $159, 600 The $33,000 beginning balance of inventory consists of 330 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1,200 units for $129,600 on account ($108 each). January 8 Purchase 1,300 units for $146,900 on account ($113 each). January 12 Purchase 1,400 units for $165,200 on account ($118 each). January 15 Return 115 of the units purchased on January 12 because of defects. January 19 Sell 4,000 units on account for $600,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $577,000 from customers on accounts receivable. January 24 Pay $407,000 to inventory suppliers on accounts payable. January 27 Write off accounts receivable as uncollectible, $2,800. January 31 Pay cash for salaries during January, $117,000. The following information is available on January 31, 2021.}

Answer 1

Big Blast Fireworks Journal Enteries Particulars 3.1.2021 Inventory a/c Debit in $Credit in $ Date Dr. 129600 To Accounts Payable 129600 (Inventory purchased on account) 8.1.2021 Inventory a/c Dr. 146900 To Accounts Payable 146900 (Inventory purchased on account) 12.1.2021 Inventory a/c 165200 Dr. To Accounts Payable 165200 (Inventory purchased on account) 15.1.2021 Accounts Payable a/c Dr 13570 To Inventory (Inventory returned to supplier) 13570 19.1.2021 Accounts Receivable a/c Dr 600000 To Sales 600000 (Sales made on account) Cost of goods sold a/c Dr. 447560 To Inventory 447560 |(Cost of goods sold charged to inventory) 22.1.2021 Cash a/c Dr. 577000 To Accounts Receivable 577000 (Cash received from debors) 24.1.2021 Accounts Payable a/c 407000 Dr. To Cash 407000 (Cash paid to Suppliers) 27.1.2021 Allowance for Uncollectible Accounts a/c Dr 2800 To Accounts Receivable 2800 (receivables written off) 31.1.2021 Salaries Expense a/c Dr. 117000 To Cash 117000 (Salaries paid in cash)

Adjustment Enteries Particulars Debit in $Credit in $ Date 31.1.2021 Cost of goods sold a/c Dr. 2070 To Inventory 2070 (Loss in inventory charged to Inventory) 31.1.2021 Bad Debts a/c 3085 Dr. To Allowance for Uncollectible accounts 3085 (Bad debts estimated) 31.1.2021 Interest Expense a/c Dr. 220 To Interest Payable (Interest expense accrued) 33000 x 8% x 1/12 220 31.1.2021 Income Tax Expense a/c Dr. 12600 To Income Tax Payable 12600 (Income Tax accrued) Closing Enteries Particulars Debit in $ Credit in $ Date 31.1.2021 Income Summary a/c Dr. 582535 To Cost of goods sold 449630 To Salaries Expense 117000 To Bad Debts 3085 To Interest Expense 220 To Income Tax Expense 12600 (Expense accounts closed) a/c 31.1.2021 Sales Dr. 600000 To Income Summary 600000 (Revenue accounts closed 31.1.2021 Income Summary a/c Dr. 17465 To Retained Earnings (Income Summary closed) 17465

FIFO Perpetual Purchase Cost of goods sold Balance Total Units Unit Cost Total Units Unit Cost Total Units Unit Cost Date 33000 1.1.2021 330 100 3.1.2021 1200 108 129600 330 100 33000 1200 108 129600 8.1.2021 1300 113 146900 330 100 33000 1200 108 129600 1300 113 146900 12.1.2021 1400 165200 118 330 100 33000 1200 108 129600 130 113 146 1400 165200 118 15.1.2021 115 118 13570 330 100 33000 1200 129600 108 146900 1300 113 1285 118 151630 13570 19.1.2021 330 100 33000 115 118 1200 129600 108 1300 113 146900 138060 1170 118 100 31 115 11500 11500 115 100 Purchase Ending 441700 COGS 447560 11500 Accounts Receivable 474700 38000 Cash Bal 577000 461130 600000 Bad debts w/off Sales 2800 13570 -2070 Bal. 58200 638000 638000 Allowance for Uncollectible accounts 2800 Bal Accounts Receivable 3700 Bad Debts 3085 Bal 3985 6785 6785 Uncollectibles 4300 x 30% 1290 (58200 - 4300) x 5% 2695 3985 Cr. Bal 900 Bad debts 3085

Worksheet For the month ending 31.1.2021 Post Closing Unadusted Adjustment Adjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Particulars Cash 75500 75500 75500 Accounts Receivable 58200 58200 58200 Allowance for Uncollectible Accounts 3985 900 3085 3985 2070 Inventory Land 13570 11500 11500 66100 66100 66100 Accounts Payable Interest Payable 52030 52030 52030 220 220 220 Income Tax Payable 12600 12600 Notes Payable (9%, due in 3 years) 33000 33000 33000 Common Stock 59000 59000 59000 Retained Earnings 33000 33000 50465 Sales 600000 600000 Cost of goods sold 449630 447560 2070 Salaries Expense 117000 117000 Bad Debts 3085 3085 Interest Expense 220 220 Income Tax Expense 12600 12600 Totals 17975 793835 211300 777930 777930 17975 93835 11300

Statement of Income For the month ending 31.1.2021 Sales 600000 Cost of goods sold -449630 Gross Margin 150370 Less: Salaries Expense 117000 Bad Debts 3085 Interest Expense 220 Income Tax Expense 12600 132905 Net Income 17465 Statement of Retained Earnings For the month ending 31.1.2021 Beginning 33000 Net Income 17465 50465

Balance sheet As at 31.1.2021 Amounts i Amounts in $ Liabilities Amounts in $ Amounts in $ Assets Current Liabilities Current Assets Cash Accounts Payable 75500 52030 Interest Payable Accounts Receivable 58200 220 Allowance for Uncollec Income Tax Payable -3985 12600 64850 Inventory 11500 141215 Non Current Liabilities Notes Payable (12%, due in 3 years) Non Current Assets 33000 Land 66100 Shareholders Equity Common Stock 59000 Retained Earnings 50465 109465 207315 Total Liabilities & Equity Total Assets 207315