Question

Required information [The following information applies to the questions displayed below.) On 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 (6%, due in 3 years) Common Stock Retained Earnings Totals Debit Credit $ 22,700 38,500 $ 3,900 34,000 67,600 30,400 34,000 60,000 34,500 $162,800 $162,800 The $34,000 beginning balance of inventory consists of 340 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1,300 units for $141,700 on account ($109 each). January 8 Purchase 1,400 units for $ 159,600 on account ($114 each). January 12 Purchase 1,500 units for $178,500 on account ($119 each). January 15 Return 120 of the units purchased on January 12 because of defects. January 19 Sell 4,300 units on account for $645,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $621,000 from customers on accounts receivable. January 24 Pay $451,000 to inventory suppliers on accounts payable. January 27 Write off accounts receivable as uncollectible, $2,900. January 31 Pay cash for salaries during January, $118,000. The following information is available on January 31, 2021. a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. b. The company estimates future uncollectible accounts. The company determines $4,400 of accounts receivable on January 31 are past due, and 35% 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.) C. Accrued interest expense on notes payable for January. Interest is expected to be paid each December 31. d. Accrued income taxes at the end of January are $12,700.

Answer 1

Date	Account title	Debit	credit
Jan 19	cost of goods sold	485240
	Merchandise Inventory (see working)		485240
Jan 22	Cash	621000
	Accounts receivable		621000
Jan 24	Accounts payable	451000
	cash		451000
Jan 27	Allowance for uncollectible account	2900
	Accounts receivable		2900
Jan 31	salaries expense	118000
	cash		118000

Working :

cost of goods sold for Jan 19:

Under FIFO units acquired first are sold first.

	Quantity	unit cost	Total
Beginning	340	100	34000
Jan 3	1300	109	141700
Jan 8	1400	114	159600
Jan 12	1260	119	149940
Total	4300		485240