56,000 20,000 Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (61, due April 1, 2022) Common Stock Retained Earnings Total 2,500 29.500 60,000 45.000 29.100 $171,300 5171,300 During January 2021, the following transactions occur January 2 sold gift cards totaling $10,000. The cards are redeemable for merchandise within one year of the purchase date January 6 Purchase additional inventory on account, $157,000. January 15 Firework sales for the first half of the month total $145,000. All of these sales are on account. The cost of the units sold to $78,800. January 23 Receive $126, 400 from customers on accounts receivable. January 25 Pay $100,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, 55,800. January 30 Firework sales for the second half of the month total $153,000. Sales include $16,000 for cash and $137,000 on account. The cost of the units sold is $84,500. January 31 Pay cash for monthly salarien, 553,000. 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 $4,400 and a two-year service life. The company estimates future uncollectible accounts. The company determines $21,000 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 4% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) Accrued interest expense on notes payable for January, Accrued income taxes at the end of January are $14,000. By the end of January, $4,000 of the gift cards sold on January 2 have been redeemed 3. Prepare an adjusted trial balance as of January 31, 2021. ACME Fireworks Adjusted Trial Balance January 31, 2021 Accounts Debit Credit Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Equipment Accumulated Depreciation Accounts Payable Deferred Revenue Interest Payable Income Tax Payable 4. Prepare a multiple-step income statement for the period ended January 31, 2021. ACME FIREWORKS Income Statement For the year ended January 31, 2021 Sales Revenue Cost of Goods Sold 163,300 Gross Profit $ (163,300) Bad Debt Expense Salaries Expense 53,000 Depreciation Expense Total operating expenses Operating Income Interest Expense Income Before Taxes Income Tax Expense Net Income 53,000 (216,300) 300 (216,600) 14,400 $ (231,000) 5. Prepare a classified balance sheet as of January 31, 2021. (Enter the Asset Accounts in order of liquidity. Amounts to be deducted should be indicated with a minus sign.) ACME FIREWORKS Classified Balance Sheet January 31, 2021 Assets Llabilities Lass: Allowance for Uncollectible Accounts 0 Total Current Assets 0 Total Current Liabilities 0 Total Liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Stockholders' Equity 0 0 $ Total Assets 0 $ Requirement 1: a-1. Calculate the current ratio at the end of January. Current Ratio Choose Numerator + Choose Denominator = Current Ratio 11 Current Ratio + 11 a-2. If the average current ratio for the industry is 1.80, is ACME Fireworks more or less liquid than the industry average? More liquid O Less liquid Requirement 2: b-1. Calculate the acid-test ratio at the end of January Acld-test Ratio Choose Denominator Choose Numerator Acld-test Ratio Acid-test Rati 56,000 20,000 Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (61, due April 1, 2022) Common Stock Retained Earnings Total 2,500 29.500 60,000 45.000 29.100 $171,300 5171,300 During January 2021, the following transactions occur January 2 sold gift cards totaling $10,000. The cards are redeemable for merchandise within one year of the purchase date January 6 Purchase additional inventory on account, $157,000. January 15 Firework sales for the first half of the month total $145,000. All of these sales are on account. The cost of the units sold to $78,800. January 23 Receive $126, 400 from customers on accounts receivable. January 25 Pay $100,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, 55,800. January 30 Firework sales for the second half of the month total $153,000. Sales include $16,000 for cash and $137,000 on account. The cost of the units sold is $84,500. January 31 Pay cash for monthly salarien, 553,000. 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 $4,400 and a two-year service life. The company estimates future uncollectible accounts. The company determines $21,000 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 4% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) Accrued interest expense on notes payable for January, Accrued income taxes at the end of January are $14,000. By the end of January, $4,000 of the gift cards sold on January 2 have been redeemed 3. Prepare an adjusted trial balance as of January 31, 2021. ACME Fireworks Adjusted Trial Balance January 31, 2021 Accounts Debit Credit Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Equipment Accumulated Depreciation Accounts Payable Deferred Revenue Interest Payable Income Tax Payable 4. Prepare a multiple-step income statement for the period ended January 31, 2021. ACME FIREWORKS Income Statement For the year ended January 31, 2021 Sales Revenue Cost of Goods Sold 163,300 Gross Profit $ (163,300) Bad Debt Expense Salaries Expense 53,000 Depreciation Expense Total operating expenses Operating Income Interest Expense Income Before Taxes Income Tax Expense Net Income 53,000 (216,300) 300 (216,600) 14,400 $ (231,000) 5. Prepare a classified balance sheet as of January 31, 2021. (Enter the Asset Accounts in order of liquidity. Amounts to be deducted should be indicated with a minus sign.) ACME FIREWORKS Classified Balance Sheet January 31, 2021 Assets Llabilities Lass: Allowance for Uncollectible Accounts 0 Total Current Assets 0 Total Current Liabilities 0 Total Liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Stockholders' Equity 0 0 $ Total Assets 0 $ Requirement 1: a-1. Calculate the current ratio at the end of January. Current Ratio Choose Numerator + Choose Denominator = Current Ratio 11 Current Ratio + 11 a-2. If the average current ratio for the industry is 1.80, is ACME Fireworks more or less liquid than the industry average? More liquid O Less liquid Requirement 2: b-1. Calculate the acid-test ratio at the end of January Acld-test Ratio Choose Denominator Choose Numerator Acld-test Ratio Acid-test Rati