Question

On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Debit Credit Accounts $ 26,400 48,800 Cash Accounts Receivable Allowance for Uncollectible Accounts 5,500 21,300 59,000 21,500 Inventory Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (6%, due April 1, 2022) Common Stock 2,800 29,800 63,000 48,000 27,900 Retained Earnings $177,000 Totals $177,000 During January 2021, the following transactions occur: 2 Sold gift cards totaling $10,600. The cards are redeemable for merchandise within one year of the purchase date 6 Purchase additional inventory on account, $160,000 January January January 15 Firework sales for the first half of the month total $148,000. All of these sales are on account. The cost of the units sold is $80,300 January 23 Receive $126,700 from customers on accounts receivable January 25 Pay $103, 000 to inventory suppliers on accounts payable January 28 Write off accounts receivable as uncollectible, $6,100 January 30 Firework sales for the second half of the month total $156,000. Sales include $15,000 for cash and $141,000 on account. The cost of the units sold is $86,000 January 31 Pay cash for monthly salaries, $53,300 The following information is available on January 31.

1) Create a Journal Entry Worksheet:

a) 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 a residual value of $4,700 and a two-year service life. Prepare the adjusting entry for depreciation.

b) The company estimates future uncollectible accounts. The company determines $24,000 of accounts receivable on January 31 are past due, and 30% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) Prepare the adjusting entry for uncollectible accounts.

c) Accrued interest expense on notes payable for January. Prepare the adjusting entry for interest.

d) Accrued income taxes at the end of January are $14,300. Prepare the adjusting entry for income tax.

e) By the end of January, $4,300 of the gift cards sold on January 2 have been redeemed. Prepare the adjusting entry for gift cards redeemed.

f) Prepare the closing entry for revenue.

g) Prepare the closing entry for expenses.

2) Prepare an Income Statement

3) Create a Balance Sheet

4) Analyze this

Answer 1

LIKE button if this helped. For any further explanation, please put your query in camment, will get back to you Please Ace Trial Balance Journal Entries: Beginning Transaction Unadjusted Adjustments Adjusted Debit Debit Credit Debit Credit Debit Credit Debit Credit Debit Credi Credit Date Account Accounts 4, Cash 10,G00 Reccivablo $156,200 . 20s n00 Jan 2 $ 5,500 6,100 Delerred Revenue Allawance tar Uncellectible Accounts 16.850 10,600 600 16.250 S 21,300 (To recod sule of uit cards! Inventory 5.300 S 15.000 15.000 21 500 S 160,a Jan. Inventory tquiament s 2,800 $ 86,800 $ 10.500 $ 160.000 s 2.800 s 29.800 Accounts Payable Accumulated Depreciation 500 To recud purthane uf inventory Acvounts Payaule 57,000 86.800 10,600 $ 1,300 ue lan 1+ Accounts Hecevable 148.) Interast payable 13 S 148.000 14,300 Sales Revenuc Income Tax Payable 14.200 To recrd sule Notes Payable 16 %, due April 1, 2022) S 63,000 63,000 63,000 ,3D Batained amings Cast of goads sold 290 s 214qD lan 15 S 4.200 S ga.300 Sales Revenur S304.000 S 308.2q0 Inventary To record cost of goods sold Cost at goods sold $ 125,700 ash Depreciation Expense Hod Deat xpense lan 23 z00 700 Accounts Rcccivable. S 124./D 16,0 16,80 (To record recinpt of payment 14 100 1M 100 eINe Accounts Payable 103.000 Jan 25 S 13, Cash $177,000 177,000 $381 ,900 $381,900 # To record payment) Totals 36,465 36,465 574,665 574,665 Allawance tor uneellectible accouts S.100 Jan 28 Multi-step Income statement Aecounts Receivable incard wnte nff 5 100 Revenue Accounts Receivable Cash Jan 30 141.000 Cost ot goods sold S-166,300 S 142.000 15.000 Gross Profiu S155,000 53. io record salel Ocoreciation Exc 200 penan Bad Debt Expense 16,850 70,850 Operalin Iore Cast ol ds yold 85.000 71.150 Jan 30 86,000 -315 Inventory Less: Interst Expense flo meord cast of geods soldl) Loct Inname Tax Exoense. 14 300 $ 53.300 $ 56,535 Jan 31 5alaries Cxpense Net Income Cesh 53.300 Statemat af Retained Earning (To record poyment of solaries)

Statemet of Retained Earning: Adjusting Entries: Retained Earning Beginning 27,900 Add: Net Incom 56,535 come 2.1 Depreciation Expense 700 Less; Dividend Retained Earning Ending $84,435 Accumulated depreciation -Equipment 700 (To record Dep Expense) ($21,500-$4,700)/24 Balance Sheet: 2.2 Bad Debt Expense 16,850 Assets: Allowance for Uncollectible Accounts Current assets: 16,850 Cash 22,400 $205,000 Accounts Receivable $-16,250 Unadjusted Accounts Receivable Balance Allowance for Uncollectible Accounts 205,000 188,750 Inventory 15,000 Uncollectible: Total Current Assets 226,150 $24,000*30% $ 7,200 Land 59,000 $172,000*5% $ 9,050 Equipment Accumulated Depreciation cudie Total Assets 21,500 $ -3,500 $ 18,000 Allowance Ending Balance Add: Unadjusted Allowance ending Balance Adjustment to be made 16,250 Credit 600 Debit $303,150 Liabilities S 16,850 Current liabilities: 2.3 $86,800 Interest Expense Accounts Payable Deferred Revenue 315 Interest Payable (To record interest expense) S63,000*6% / 12 315 6,300 Interest payable 315 S14,300 Income Tax Payable Total Current Liabilities 2.4 Income Tax Expense S $107,715 $63,000 14,300 Notes Payable (6%, due April 1, 2022 ) Income Tax Payable 14,300 (To record income Tax Expense) Total Liabilities 170,715 Stockholder's Equity $ 48,000 Common Stock Retained Earnings Deferred Revenue S 2.5 4,300 Sales Revenue $ 84,435 $132,435 4,300 ... Total Stockholder's Equity (To record revneue earned) Total Liabilities and equity 303,150 Closing Entries: Curent Ratio: Debit Credit Date Account Current Assets 226,150 a Current Liabilities b 107,715 $ 308.300 a/b Sales Revenue 2.10 c1 Current Ratio Acme Fireworks is more liquid Income Summary 308,300 (To close revenue account) Acid Test Ratio Quick Assets (Current-Inventory) 211,150 a $107,715 c2 251,765 Current Liabilities h Income Summary $166,300 a/b Cost of goods sold Acid Ratio 1.96 Salaries Expense Revised Curent Ratio: 53,300 Depreciation Expense 700 Current Assets 226,150 Current Liabilities Bad Debt Expense 16.850 170,715 b Interest Expense Revised Current Ratio a/b 315 1.32 will decrease Income Tax Expense S 14,300 (To close expense account) Income Summary C3 56,535 Retained Earning 56,535 (To close income summary)