Adjusted 3D Family Fireworks Trial Balance January 31, 2021 Account Title Credit $ Debit 89,400 14,600 1,630 Cash Accounts Receivable Allowance for Uncollectible Accounts Notes Receivable Interest Receivable Supplies 30,000 125 750 78,000 Land Accounts Payable Salaries Payable Common Stock Retained Earnings Service Revenue Interest Revenue Supplies Expense Salaries Expense Utilities Expense Bad Debt Expense Total 3,300 34,500 106,000 33,400 119,500 125 2,750 66,900 14,700 1,230 298,455 $ 298,455 On January 1, 2021, the general ledger of 3D Family Fireworks includes the following account balances: Credit $ 25, 900 14, 600 $ 2, 800 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Supplies Notes Receivable (5%, due in 2 years) Land Accounts Payable Common Stock Retained Earnings Totals 3,500 30,000 78,000 9,800 106,000 33, 400 $152,000 $152,000 During January 2021, the following transactions occur January 2 Provide services to customers for cash, $45, 100. January 6 Provide services to customers on account, $82, 400. January 15 Write off accounts receivable as uncollectible, $2,400. 20 Pay cash for salaries, $32, 400. 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. The following information is available on January 31, 2021. a. The company estimates future uncollectible accounts. The company determines $6,000 of accounts receivable on January 31 are past due, and 20% 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.) b. Supplies at the end of January total $750. c. Accrued interest revenue on notes receivable for January. Interest is expected to be received each December 31. d. Unpaid salaries at the end of January are $34,500. Journal entry worksheet 10 Record the closing entry for revenue. Note: Enter debits before credits. Credit Date General Journal Jan 31, 2021 Service Revenue Interest Revenue Debit 119,500 Record entry Clear entry View general journal Journal entry worksheet 3D Family Fireworks Balance Sheet January 31, 2021 Assets Liabilities Current Assets Current Liabilities: 01 0 Total Current Liabilities 0 Total Current Assets Long-term assets: Total Liabilities Stockholders' Equity Total Stockholders' Equity 0 Total Liabilities & Stockholders' Equity Total Assets $ Enter your Accounts Receivable turnover value in 1 decimal place and Ratio of Allowance for Uncollectible Accounts in Whole Analyze how well 3D Family Fireworks manages its receivables (a) Calculate the receivables turnover ratio for the month of January (Hint: For the numerator, use total services provided to customers on account). If the industry average of the receivables turnover ratios for the month of January is 4.3 times, is the company collecting cash from customers more or less efficiently than other companies in the same industry? Accounts Receivable turnover times The company is collecting more efficiently. (true or false) (b) Calculate the ratio of Allowance for Uncollectible Accounts to Accounts Receivable at the end of January. Based on a comparison of this ratio to the same ratio at the beginning of January, does the company expect an improvement or worsening in cash collections from customers on credit sales? Ratio of Allowance for Uncollectible Accounts to Accounts Receivable Should the company expect improving or worsening conditions?
