ces On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances: Accounta Debit Credit Cash $ 23,300 Accounts Receivable 40,000 Allowance for Uncollectible Accounts $4,500 Inventory 37,000 Land 72,100 Accounts Payable 28,900 Notes Payable (6%, due in 3 years) 37,000 Common Stock 63,000 Retained Earnings 39,000 Totals $172,400 $172,400 The $37,000 beginning balance of inventory consists of 370 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1,600 units for $168,000 on account ($105 each). January 8 Purchase 1,700 units for $187,000 on account ($110 each). January 12 Purchase 1,800 units for $207,000 on account ($115 each). January 15 Return 135 of the units purchased on January 12 because of defects. January 19 Sell 5,200 units on account for $780,000. The cost of the units sold in determined using a FIFO perpetual inventory system. January 22 Receive $753,000 from customers on accounts receivable. January 24 Pay $520,000 to inventory suppliers on accounts payable. January 27 Write off accounts receivable as uncollectible, $3,200. January 31 Pay cash for salaries during January, $121,000. The following information is available on January 31, 2021. ences a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. b. The company estimates future uncollectible accounts. The company determines $4,700 of accounts receivable on January 31 are past due, and 35% 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) c. Accrued interest expense on notes payable for January, Interest is expected to be paid each December 31. d. Accrued Income taxes at the end of January are $13,000. General General Requirement Journal Ledger Trial Balance Income Statement Balance Sheet Analysis Choose the appropriate accounts to complete the company's Income statement. The unadjusted, adjusted, or post-closi balances will appear for each account, based on your selection. Adjusted Big Blast Fireworks Multiple-Step Income Statement For the year ended January 31, 2021 Sales Revenue 780,000 Cost of Goods Sold 567,950 Gross Profit Salaries Expense 121,000 Bad Debt Expense 4,700 Interest Expense 0 Total Operating Expenses Operating Income Income Before Taxes $ $ 212,050 125,700 86,350 86,350 86,350 General General Requirement Journal Trial Balance Income Statement Balance Sheet Analysis Ledger Using the Information from the requirements above, complete the 'Analysis' tab. Enter your Inventory Turnover ratio and gross profit ratio value in one decimal plac Analyze how well Big Blast Fireworks' manages its inventory: (a) Calculate the inventory tumover ratio for the month of January. If the industry average of the inventory turnover ratio for the month of January is 19.5 times, is the company managing its inventory more or less efficiently than other companies in the same industry? The inventory tumover ratio is times The company managing its inventory more efficienty. (True or False) (b) Calculate the gross profit ratio for the month of January. If the industry average gross profit ratio is 32%, is the company more or less profitable per dollar of sales than other companies in the same industry? The gross profit ratio is Is the company more or less profitable per dollar of sales? (c) Used together, what might the inventory tumover ratio and gross profit ratio suggest about Big Blast Fireworks' business strategy? Is the company's strategy to sell a higher volume of less expensive items or does the company appear to be selling a lower volume of more expensive items? Based on the inventory turnover ratio and the gross profit ratio, Big Blast Fireworks' business strategy appears to be selling a
