Chapter 9 General Ledger Accounting Cycle

On January 1, 2018, the general ledger of Freedom Fireworks includes the following account balances:

Accounts		Debit		Credit
Cash		$ 11,200
Accounts Receivable		34,000
Inventory		152,000
Land		67,300
Buildings		120,000
Allowance for Uncollectible Accounts				$ 1,800
Accumulated Depreciation				9,600
Accounts Payable				17,700
Common Stock				200,000
Retained Earnings				155,400
Totals		$384,500		$384,500

During January 2018, the following transactions occur:

January 1	Borrow $100,000 from Captive Credit Corporation. The installment note bears interest at 7% annually and matures in 5 years. Payments of $1,980 are required at the end of each month for 60 months.
January 4	Receive $31,000 from customers on accounts receivable.
January 10	Pay cash on accounts payable, $11,000.
January 15	Pay cash for salaries, $28,900.
January 30	Firework sales for the month total $195,000. Sales include $65,000 for cash and $130,000 on account. The cost of the units sold is $112,500.
January 31	Pay the first monthly installment of $1,980 related to the $100,000 borrowed on January 1. Round your interest calculation to the nearest dollar.

Record each of the transactions listed above in the 'General Journal' tab (these are shown as items 1 - 7) 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 8-11).

a.		Depreciation on the building for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a service life of ten years and a residual value of $24,000.
b.		At the end of January, $3,000 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 2% will not be collected. No accounts were written off as uncollectible in January.
c.		Unpaid salaries at the end of January are $26,100.
d.		Accrued income taxes at the end of January are $8,000.

3.		Review the adjusted 'Trial Balance' as of January 31, 2018.
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 12 and 13).
7.