Question

On January 1, 2021, the general ledger of 3D Family Fireworks includes the following account balances: Accounts Debit Credit $ 25,900 Cash Accounts Receivable Allowance for Uncollectible Accounts Supplies Notes Receivable (5%, due in 2 years) 14,600 2,800 3,500 30,000 78,000 Land Accounts Payable 9,800 106,000 33,400 Common Stock Retained Earnings $152,000 $152,000 Totals During January 2021, the following transactions occur: 2 Provide services to customers for cash, $45,100. 6 Provide services to customers on account, $82,400. January January January 15 Write off accounts receivable as uncollectible, $2,400. January 20 Pay cash for salaries, $32,400 January 22 Receive cash on accounts receivable, $80,000. January 25 Pay cash on accounts payable, $6,500. January 30 Pay cash for utilities during January, $14,700.

Answer 1

3D Family Fireworks Journal Enteries Debit in $ Credit in $ Particulars Date 2.1.2021 Cash a/c Dr. 45100 45100 To Service Revenue (Services provided for cash) Accounts Receivable a/c Dr. 6.1.2021 82400 82400 To Service Revenue on account) |(Services provided 15.1.2021 Allowance for uncollectible accounts 2400 To Accounts Receivable 2400 (Uncollectibles written off) 20.1.2021 Salary Expense a/c Dr. 32400 To Cash 32400 (Salary paid in cash) 22.1.2021 Cash a/c Dr. 80000 To A unts Receivable 0000 (Cash received from debtors) 25.1.2021 Accounts Payable a/c Dr 6500 To Cash 6500 (Creditors paid) 30.1.2021 Utilities Expense a/c Dr. 14700 To Cash 14700 (Utilities paid in cash)

Adjusting Enteries Debit in $ Credit in $ Particulars Date 31.1.2021 Bad Debts a/c Dr. 1230 To Allowance for uncollectible accounts 1230 (Bad debts estimated )6000 x 20% 1200 +430 = 1630 400 1230 14600 82400 2400-80000 6000 8600 x 5% 430 Allowance for Uncollectibles 2800 2400 400 31.1.2021 Supplies Expense a/c Dr. 2750 To Supplies 2750 (Supplies Expensed) 3500-750 2750 31.1.2021 Interest Receivable a/c Dr. 125 To Interest Income 125 (Interest Revenue accrued) 30000 x 5% x 1/12 125 31.1.2021 Salary Expense a/c Dr. 34500 To Salary Payable 34500 (Salary accrued)

Worksheet For the period ending 31.1.2021 Adjustments Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Unadjusted Adjusted Particulars Cash 97400 97400 Accounts Receivable 14600 14600 Allowance for uncollectible accounts 400 1230 1630 Interest Receivable 125 125 Supplies 3500 2750 750 30000 Notes Receivable 6% 30000 Land 78000 78000 Accounts Payable 3300 3300 Salary Payable 34500 34500 Common Stock 106000 106000 Retained Earnings 33400 33400 Service Revenue 127500 127500 Interest Income 125 125 Salary Expense 32400 34500 66900 Utilities Expense 14700 14700 Bad Debts 1230 1230 Supplies Expense 2750 2750 Totals 306455 27060 60 86 64

Statement of Income For the period ending 31.1.2021 Service Revenue 127500 Interest Income 125 Total Revenue 127625 Less: Salary Expense 66900 Utilities Expense 14700 Bad Debts 1230 Supplies Expense 2750 85580 Net Income 42045 Statement of Retained Earnings For the period ending 31.1.2021 Beginning 33400 Net Income 42045 75445

Balance sheet As at 31.1.2021 Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Assets Current Liabilities Current Assets Cash Accounts Payable 97400 3300 Accounts Receivable Salary Payable 14600 34500 37800 Allowance for uncollectible accounts -1630 Interest Receivable 125 Supplies 750 111245 Shareholders Equity Non Current Assets Notes Receivable 6% 30000 Common Stock 106000 78000 Retained Earnings Land 181445 75445 219245 Total Liabilities & Equity Total Assets 219245 Receivables Turnover Service Revenue / Avg. Receivables 127500 / (11800+ 12970)/2 127500 Days in Receivables 365/ 10.294 35.46 Days 12385 10.294 = Industry days in receivables is 365 /4.3 84.88 Days as compared to 35.46 Days of 3D..So 3D is collecting receivables more efficiently. ccounts Recei Ratio of allowance for uncollectibles bl. 1.1.2021 2800 14600 0.1918 31.1.2021 1630 /14600 0.1116 Company is improving.