Question

On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Credit Debit $101,700 35,000 152,500 72,300 125,000 Accounts Cash Accounts Receivable Inventory Land Buildings Allowance for Uncollectible Accounts Accumulated Depreciation Accounts Payable Bonds Payable Discount on Bonds Payable Common Stock Retained Earnings Totals $ 2,300 10,100 23,200 125,000 30,500 205,000 151,400 $517,000 $517,000 During January 2021, the following transactions occurred: January 1 Borrowed $105,000 from Captive Credit Corporation. The installment note bears interest at 6% annually and matures in 5 years. Payments of $2,029.94 are required at the end of each month for 60 months. January 1 Called the bonds at the contractual call price of $105,000. The 5% bonds pay interest semiannually each June 30 and December 31. January 4 Received $31,500 from customers on accounts receivable. January 10 Paid cash on accounts payable, $16,000. January 15 Paid cash for salaries, $29,400. January 30 Firework sales for the month totaled $196,000. Sales included $65,500 for cash and $130,500 on account. The cost of the units sold was $115,000. January 31 Paid the first monthly installment of $2,030 related to the $105,000 borrowed on January 1. Round your interest calculation to the nearest dollar. The following information is available on January 31, 2021. 1. Depreciation on the building for the month of January is calculated using the straight-line method. At the time the building was purchased, the company estimated a service life of 10 years and a residual value of $24,800. :2 At the end of January. $3.500 of accounts receivable are past due, and the company estimates that 50% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 3% will not be collected. No accounts were written off as uncollectible in January 3. Unpaid salaries at the end of January are $26.600. 4. Accrued income taxes at the end of January are $5.500. Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis 1. 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. 2. Record adjusting entries on January 31. in the 'General Journal' tab (these are shown as items 9-12). 3. Review the adjusted 'Trial Balance' as of January 31, 2021, in the Trial Balance' tab. 4. 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. 6. Record the closing entries in the 'General Journal' tab (these are shown as items 13-14). 7. Using the information from the requirements above, complete the 'Analysis' tab. ........ Requirement......... .....Generellowrnal........

Answer 1

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Cash
	Debit ($)		Credit ($)
To Opening Bal	1,01,700	Acount Payable	16,000
Acount Payable	105000	Salary	29,400
Acount Receivable	31,500	Interest	525
Sales	65,500	Acount Payable	1,505
		Closing Bal	2,56,270
Total	3,03,700	Total	3,03,700
Inventory
	Debit ($)		Credit ($)
To Opening Bal	1,52,500	Cost of goods sold	1,15,000
		Closing Bal	37,500
Total	1,52,500	Total	1,52,500
Account payable
	Debit ($)		Credit ($)
To Cash	16,000	To Opening Bal	23,200
To Cash	1,505	Acount Payable	1,05,000
Closing Bal	1,10,695
Total	1,28,200	Total	1,28,200

Freedom Fireworks - Journal Entries
	Details	Debit($)	Credit($)
Jan 1	cash	1,05,000
	Account Payable		1,05,000
	( borrow $ 105000 from capital credit
	Corporation . The installment bear
	Interest @6% yearly and payment in 5 years
	At the end of each month payment $ 2029.94 at the end of each month - 60 months
Jan 4	Cash	31,500
	Account Receivable		31,500
	( collected money fom Customer)
Jan 10	Account Payable	16,000
	Cash		16,000
	( Amount paid - Account payable)
Jan 15	Salary	29,400
	Cash		29,400
Jan 30	Cash	65,500
	Account Receiavble	1,30,500
	Sales		1,96,000
	( accounted Sales ..
	Cost of Goods Sold	1,15,000
	Inventory		1,15,000
	( accounted cost of goods sold)
Jan 31	Interest	525
	Account Payable	1,505
	Cash		2,030
	Interest =$ 105000*6%*1/12)=$525
Depreciation Entry
Need to use depreciation - Straight Line basis
Estimated service Year- 10 year
Residual value $ 24800
Need to claculate yearly depreciation		Amnt
	Building	1,25,000
	Less- Accumulated depreciation	24,800
	Net Building position	1,00,200
	Depreciation per year($100200/10)	10,020
	Depreciation per Month ($10020/12)	835
	Details	Debit($)	Credit($)
Jan 31	Depreciation	835
	Accumulated Depreciation		835

Account Receivable Balance
	Debit($)		Credit($)
To Opening Balance	35,000	Cash	31,500
Sales	1,30,500	Closing Bal	1,34,000
	1,65,500		1,65,500

Closing Account Balace $	1,34,000
Less - past due amount $	3,500
Balance amount $	1,30,500
3% Of $ 130500- Estimate not collectable $	3,915
50% of of $ 3500 not collectable $	1,750
Total Estmated doubtful$	5,665
Allowance for Uncollectable A/C	2,300
Entry to pass	3,365

Jan 31	Details	Debit($)	Credit($)
	Bad Debt	3,365
	Allowance for Uncollectable A/C		3,365
Jan 31	Salary Expenses	26,600
	Salary payable		26,600
	( accounted Salary Payable )
Jan 31	Income Tax expenses	5,500
	Income Tax Payable		5,500

			Adjustment		Total
Derived Closing Adjusted balance	Debit($)	Credit($)	Debit($)	Credit($)	Debit($)	Credit($)
Cash	2,56,270				2,56,270
Account Receiavble	1,34,000				1,34,000
Bad Debt Allowance		2,300		3,365		5,665
Inventory	37,500				37,500
Land ( as per Q)	72,300				72,300
Building ( as per Q)	1,25,000				1,25,000
Accumulated Depreciation		10,100		835		10,935
Account Payable		1,10,695				1,10,695
Salary payable				26,600		26,600
Income Tax Payable				5,500		5,500
Bond Payable		1,25,000				1,25,000
Discount on Bond Payable	30,500				30,500
Common Stock		2,05,000				2,05,000
Retained Earnings		1,51,400				1,51,400
Total	6,55,570	6,04,495	-	36,300	6,55,570	6,40,795

Income Statement Position	Debit($)	Credit($)	Debit($)	Credit($)	Debit($)	Credit($)
Sales		1,96,000				1,96,000
Cost of Goods Sold	1,15,000				1,15,000	-
Salaries	29,400		26,600		56,000
Interest Expesnes	525				525
Depreciation on Building			835		835
Bad Debt			3,365		3,365
Income Tax expenses			5,500		5,500
Total	1,44,925	1,96,000	36,300	-	1,81,225	1,96,000