Check my work On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Credit Debit $ 25,600 47,200 $ 4,700 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (68, due April 1, 2022) Common Stock Retained Earnings Totals 20,500 51,000 17,500 2,000 29,000 55,000 40,000 31,100 $161,800 $ 161,800 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $9,000. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $152,000. January 15 Firework sales for the first half of the month total $140,000. All of these sales are on account. The cost of the units sold is $76,300. January 23 Receive $125,900 from customers on accounts receivable. AAAAA During January 2021, the following transactions occur: January 2 Sold gift cards totaling $9,000. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $152,000. January 15 Firework sales for the first half of the month total $140,000. All of these sales are on account. The cost of the units sold is $76,300. January 23 Receive $125, 900 from customers on accounts receivable. January 25 Pay $95,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $5,300. January 30 Firework sales for the second half of the month total $148,000. Sales include $10,000 for cash and $138,000 on account. The cost of the units sold is $82,000. January 31 Pay cash for monthly salaries, $52,500. The following information is available on January 31. a. 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 $3,700 and a two-year service life. b. The company estimates future uncollectible accounts. The company determines $16,000 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 The following information is available on January 31. a. 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 $3,700 and a two-year service life. b. The company estimates future uncollectible accounts. The company determines $16,000 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.) c. Accrued interest expense on notes payable for January d. Accrued income taxes at the end of January are $13,500. e. By the end of January, $3,500 of the gift cards sold on January 2 have been redeemed (ignore cost of goods sold). Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis 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. The transactions on January 15 and January 30 require two entries: one to record salg revenue and one to record cost of goods sold. Review the 'General Ledger' and the 'Trial Balance' tabs to see the effect the transactions on the account balances. 2. Record adjusting entries on January 31. in the 'General Journal' tab (these are shown as items 11-15). 3. Review the adjusted 'Trial Balance' as of January 31, 2021, in the 'Trial Balance' tab. 4. Prepare a multiple-step income statement for the period ended January 31, 2021, in the 'Income Statement' tab. 5. Prepare a classified balance sheet as of January 31, 2021, in the 'Balance Sheet' tab. 6. Record the closing entries in the 'General Journal' tab (these are shown as items 16 and 17). 7. Using the information from the requirements above, complete the 'Analysis' tab. Requirement General Journal > View transaction list View journal entry Worksheet Account Title Credit No 1 Date Jan 02 Debit 9,000 Cash Deferred Revenue 9,000 2 Jan 06 152,000 Inventory Accounts Payable 152,000 3 Jan 15 140,000 Accounts Receivable Sales Revenue 140,000 Jan 15 Cost of Goods Sold 76,300 Inventory 76,300 5 Jan 23 125,900 Cash Accounts Receivable 125,900 6 Jan 25 95,000 Accounts Payable Cash 95,000 7 Jan 28 5,300 Allowance for Uncollectible Accounts Accounts Receivable 5,300 Jan 30 Cash Accounts Receivable Sales Revenue 10,000 138,000 148,000 9 Jan 30 cost of Goods Sold 82,000 Inventory 82,000 10 Jan 31 52,500 Salaries Expense Cash 52,500 11 11 Jan 31 Depreciation Expense Accumulated Depreciation 12 Jan 31 Bad Debt Expense Allowance for Uncollectible Accounts Jan 31 Interest Expense Interest Payable 14 Jan 31 Income Tax Expense Income Taxes Payable 15 Jan 31 Deferred Revenue Sales Revenue 16 Jan 31 Sales Revenue Retained Earnings 17 Jan 31 Retained Earnings Cost of Goods Sold Salaries Expense Bad Debt Expense Depreciation Expense Interest Expense Income Tax Expense Post-closing- ACME Fireworks Income Statement For the year ended January 31, 2021 Gross profit Total operating expenses Operating income ACME Fireworks Classified Balance Sheet January 31, 2021 Assets Liabilities Current Assets: Current Liabilities: 0 Total Current Liabilities 0 Total Liabilities Total Current Assets Noncurrent Assets: Stockholders' Equity Total Stockholders' Equity Total Liabilities & Stockholders' Equity Total Assets Income Statement Analysis > Analyze the following for ACME Fireworks: (a) Calculate the current ratio at the end of January. If the average current ratio for the industry is 1.8, is ACME Fireworks more or less liquid than the industry average? The current ratio is: Is the company more or less liquid than the industry average? (b) Calculate the acid-test ratio at the end of January. If the average acid-test ratio for the industry is 1.5, is ACME Fireworks more or less likely to have difficulty paying its currently maturing debts (compared to the industry average)? The acid-test ratio is: Is the company more or less likely to have difficulty paying its currently maturing debts? (c) Assume the notes payable were due on April 1, 2021, rather than April 1, 2022. Calculate the revised current ratio at the end of January, and indicate whether the revised ratio would increase, decrease, or remain unchanged compared to your answer in (a). The revised current ratio is Indicate whether the revised ratio would increase, decrease, or remain unchanged compared to your answer in (a).