Question

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

Accounts

Debit

Credit

Cash

$

44,700

Accounts Receivable

48,500

Supplies

9,500

Equipment

84,000

Accumulated Depreciation

$

11,000

Accounts Payable

16,600

Common Stock, $1 par value

20,000

Additional Paid-in Capital

100,000

Retained Earnings

39,100

Totals

$

186,700

$

186,700

During January 2021, the following transactions occur:

January

2

Issue an additional 2,300 shares of $1 par value common stock for $46,000.

January

9

Provide services to customers on account, $20,400.

January

10

Purchase additional supplies on account, $6,900.

January

12

Purchase 1,100 shares of treasury stock for $19 per share.

January

15

Pay cash on accounts payable, $18,500.

January

21

Provide services to customers for cash, $51,100.

January

22

Receive cash on accounts receivable, $18,600.

January

29

Declare a cash dividend of $0.20 per share to all shares outstanding on January 29. The dividend is payable on February 15. (Hint: Grand Finale Fireworks had 20,000 shares outstanding on January 1, 2021, and dividends are not paid on treasury stock.)

January

30

Resell 800 shares of treasury stock for $21 per share.

January

31

Pay cash for salaries during January, $44,000.

The following information is available on January 31, 2021.

  1. Unpaid utilities for the month of January are $8,200.
  2. Supplies at the end of January total $7,100.
  3. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated the service life of three years and a residual value of $12,000.
  4. Accrued income taxes at the end of January are $3,100.

This is the Journal entry I got (please verify). I am stuck on the income statement, balance sheet, and the analysis:

Credit Date Jan 02 Debit 46,000 Account Title Cash Common Stock Additional Paid-in Capital 2,300 43,700 Jan 31 8,200 Utilitie

Analyze the following for Grand Finale Fireworks: (a) Calculate the return on equity for the month of January. If the average

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Answer #1

In the books of Grand Finale Fireworks:

Date Account Titles Debit Credit
$ $
Jan 2 Cash 46,000
Common Stock 2,300
Additional Paid-in Capital 43,700
Jan 9 Accounts Receivable 20,400
Service Revenue 20,400
Jan 10 Supplies 6,900
Accounts Payable 6,900
Jan 12 Treasury Stock 20,900
Cash 20,900
Jan 15 Accounts Payable 18,500
Cash 18,500
Jan 21 Cash 51,100
Service Revenue 51,100
Jan 22 Cash 18,600
Accounts Receivable 18,600
Jan 29 Dividends 4,240
Dividends Payable 4,240
Jan 30 Cash 16,800
Treasury Stock 15,200
Additional Paid-in Capital 1,600
Jan 31 Salaries Expense 44,000
Cash 44,000
Adjusting Entries
Jan 31
a. Utilities Expense 8,200
Accounts Payable 8,200
b. Supplies Expense 9,300
Supplies 9,300
c. Depreciation Expense 2,000
Accumulated Depreciation 2,000
d. Income Tax Expense 3,100
Income Taxes Payable 3,100
Closing Entries
Jan 31
a. Service Revenue 71,500
Income Summary 71,500
b. Income Summary 66,600
Salaries Expense 44,000
Supplies Expense 9,300
Utilities Expense 8,200
Depreciation Expense 2,000
Income Tax Expense 3,100
c. Income Summary 4,900
Retained Earnings 4,900
d. Retained Earnings 4,240
Dividends 4,240

2.

Grand Finale Fireworks
Income Statement
For the month ended January 31, 2021
Revenues
Service Revenue $ 71,500
Operating Expenses
Salaries Expense 44,000
Supplies Expense 9,300
Utilities Expense 8,200
Depreciation Expense 2,000
Total Operating Expenses 63,500
Income before Taxes 8,000
Income Tax Expense 3,100
Net Income $ 4,900

3.

Grand Finale Fireworks
Balance Sheet
January 31, 2021
Assets
Current Assets
Cash $ 93,800
Accounts Receivable 50,300
Supplies 7,100
Total Current Assets $ 151,200
Property Plant and Equipment
Equipment, at cost 84,000
Accumulated Depreciation (13000)
Property Plant and Equipment, net 71,000
Total Assets $ 222,200
Liabilities
Current Liabilities
Accounts Payable 13,200
Incoe Taxes Payable 3,100
Dividends Payable 4,240
Total Current Liabilities 20,540
Long Term Liabilities 0
Total Liabilities 20,540
Stockholders' Equity
Common Stock 22,300
Additional Paid-in Capital 145,300
Retained Earnings 39,760
Treasury Stock, at cost (5,700)
Total Stockholders' Equity 201,660
Total Liabilities and Stockholders' Equity $ 222,200
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