On January 1, 2018, the general ledger of TNT Fireworks includes the following account balances: Accounts Debit Credit
Cash 59,900
Accounts Reccivable 27,400
Inventory 37,500
Notes Receivable (5%, due in 2 years) 26,400
Land 167,000
Allowance for Uncollectible Accounts 66,800
Common Stock 3,400
Retained Earning 16,000
Totals $318,200 $318,200
During January 2018, 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 Firework 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, 2018.
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. The note receivable of$26,400 is considered fully collectible and therefore is not included in the estimate of uncollectible accounts. (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.
1. Record each of the transactions listed above in the 'General Journal' tab (these are shown as items 1 - 10) assuming a FIFO perpetual inventory system. 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 11-14).
3. Review the adjusted 'Trial Balance' as of January 31, 2018, in the 'Trial Balance' tab.
4. Prepare a multiple-step income statement for the period ended January 31, 2018, in the 'Income statement' tab.
5. Prepare a classified balance sheet as of January 31, 2018, in the 'Balance Sheet' tab.
6. Record the closing entries in the 'General Journal' tab (these are shown as items 15-17).
7. Using the information from the requirements above, complete the 'Analysis' tab.