Question

On January 1, 2021, the general ledger of TNT Fireworks includes the following account balances: Credit Debit $ 59,900 27,400 $ 3,400 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Notes Receivable (5%, due in 2 years) Land Accounts Payable Common Stock Retained Earnings Totals 37,500 26,400 167,000 16,000 232,000 66,800 $318,200 $318,200 During January 2021, the following transactions occur: January 1 Purchase equipment for $20,700. The company estimates a residual value of $2,700 and a six-year service life. January 4 Pay cash on accounts payable, $10,700. January 8 Purchase additional inventory on account, $ 94,900. January 15 Receive cash on accounts receivable, $23,200. January 19 Pay cash for salaries, $31,000. January 28 Pay cash for January utilities, $17,700. January 30 Sales for January total $232,000. All of these sales are on account. The cost of the units sold is $121,000. The following information is available on January 31, 2021. a. Depreciation on the equipment for the month of January is calculated using the straight-line method. b. The company estimates future uncollectible accounts. The company determines $4,200 of accounts receivable on January 31 are past due, and 50% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 3% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) c. Accrued interest revenue on notes receivable for January. d. Unpaid salaries at the end of January are $33,800. e. Accrued income taxes at the end of January are $10,200. Require... General General Trial Income Balance Analysis | Journal | Ledger Balance Statem... Sheet Record each of the transactions listed above in the 'General Journal' tab (these are * shown as items 1 - 8) assuming a FIFO perpetual inventory system. The transaction on January 30 requires two entries: one to record sales revenue and one to record cost of goods sold. Review the 'General Ledger' and the 'Trial Balance' tabs to see the effect of the transactions on the account balances. Record adjusting entries on January 31 in the 'General Journal' tab (these are shown as 2 items 9-13). 3. Review the adjusted 'Trial Balance' as of January 31, 2021, in the 'Trial Balance' tab. Prepare a multiple-step income statement for the period ended January 31, 2021, in the 'Income Statement' tab. 5. Prepare a classified balance sheet as of January 31, 2021, in the 'Balance Sheet' tab. Record the closing entries in the 'General Journal' tab these are shown as items 14 and 6. 15). 7. Using the information from the requirements above, complete the 'Analysis' tab. < Requirement General Journal >

Answer 1

TNT Fireworks Journal Enteries Particulars 1.1.2021 Equipment a/c Debit in $Credit in $ Date 20700 Dr. To Cash 20700 |(Equipment purchased) 4.1.2021 Accounts Payable a/c 10700 Dr. To Cash 10700 (Accounts Payable paid in cash) 8.1.2021 Inventory a/c 94900 Dr. To Accounts Payable 94900 (Inventory purchased on account) 15.1.2021 Cash a/c Dr. 23200 To Accounts Receivable 23200 (Cash received from debtors) 19.1.2021 Salaries Expense a/c 31000 Dr. To Cash 31000 (Salary paid in cash) 28.1.2021 Utilities Expense a/c Dr. 17700 To Cash 17700 (Utilities paid in cash) 30.1.2021 Accounts Receivable a/c 232000 Dr. To Sales 232000 (Sales on account) Cost of goods sold a/c 121000 Dr. To Inventory (Cost of goods sold recorded) 121000

Adjusting Enteries Particulars 31.1.2021 Depreciation Expense - Equip a/c Dr. To Accum. Depre Equip |(Depreciation charged to equipment) (20700-2700)/72 Debit in $ Credit in $ Date 250 250 31.1.2021 Bad Debts a/c 5660 Dr. To Allowance for uncollectibles 5660 (Bad debts estimated) Past due 4200 2 2100 236200- 4200 232000 x 3% 6960 nt 2100 6960=9060 3400 = 5660 31.1.2021 Interest Receivable a/c Dr. 110 To Interest Income 110 (Interest Income accrued) 26400 x 5% x 1/12 =110 31.1.2021 Salaries Expense a/c To Salary Payable |(Salary paid in cash) Dr. 33800 33800 31.1.2021 Income Tax Expense a/c Dr. 10200 To Income Tax Payable 10200 (Income Tax accrued) Closing Enteries Particulars Debit in $ Credit in $ Date 31.1.2021 Income Summary a/c Dr. 219610 To Cost of goods sold To Salaries Expense 121000 64800 To Utilities Expense 17700 To Depreciation Expense - Equip 250 To Bad Debts 5660 To Income Tax Expense 10200 (Expense accounts closed) 31.1.2021 Interest Income a/c 110 Dr. Sales a/c 232000 Dr. To Income Summary 232110 (Revenue accounts closed) 31.1.2021 Income Summary a/c To Retained Earnings (Profits transferred) 12500 Dr. 12500

Worksheet For the month ending 31.1.2021 Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Particulars Cash 3000 3000 Accounts Receivable 236200 236200 Allowance for uncollectibles 3400 5660 9060 Note Receivable (5% due in 2 years) 26400 26400 Interest Receivable 110 110 Inventory 11400 11400 Land 167000 167000 Equipment Accum. Depre- Equip Accounts Payable 20700 20700 250 250 100200 100200 Salary Payable 33800 33800 Income Tax Payable 10200 10200 Common Stock 232000 232000 Retained Earnings 66800 66800 Interest Income 110 110 Sales 232000 232000 Cost of goods sold 121000 121000 Salaries Expense 31000 33800 64800 Utilities Expense 17700 17700 Depreciation Expense - Equip 250 250 Bad Debts 5660 5660 Income Tax Expense 10200 10200 Totals 50020 50020 634400 634400 684420 684420 0 Net Income/Avg. Total Assets = 12500 / (314800+455500) /2 a1.Return on Assets Ratio =12500 385150 =3.25% a.Since Industry average is 2%, at 3.25% TNT has performed exceptionally well b.Profit Margin = Net Income/Sales 12500 232000 5.39% a.Since Industry average is 5%, at 39% TNT has performed exceptionally well c1.Asset Turnover Ratio Sales/Avg. Total Assets 232000 385150 0.602

Statement of Income For the month ending 31.1.2021 Sales 232000 Cost of goods sold -121000 Gross Profit 111000 Expenses: Salaries Expense 64800 Utilities Expense 17700 Depreciation Expense - Equip 250 Bad Debts 5660 88410 Operating Income 22590 Non Operating Items Interest Income 110 22700 Less:Income Tax Expense -10200 Net Income 12500 Statement of Retained Earnings For the month ending 31.1.2021 Beginning 66800 Net Income 12500 79300

Balance sheet As at 31.1.2021 Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Assets Current Liabilities Current Assets Cash Accounts Payable 3000 100200 Salary Payable Accounts Receivable 236200 33800 Income Tax Payable Allowance for uncollectibles -9060 10200 144200 Note Receivable (5% due in 2 ye 26400 Interest Receivable 110 11400 Inventory 268050 Non Assets Land 167000 Shareholders Equity Common Stock Equipment 20700 232000 Accum. Depre - Equip 20450 Retained Earnings -250 79300 311300 455500 Total Liabilities & Equity Total Assets 455500