COMPREHENSIVE PROBLEM

On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances:

Accounts	Debit	Credit
Cash	$25,100
Accounts Receivable	46,200
Allowance for Uncollectible Accounts		4,200
Inventory	20,000
Land	46,000
Building	50,000
Accumulated Depreciation Building		40,000
Equipment	15,000
Accumulated Depreciation Equipment		1,500
Accounts Payable		28,500
Common Stock		35,000
Retained Earnings		93,100
TOTALS	202,300	202,300

During January 2021, the following transactions occur:

January 1 Sold Building for $15,000 cash.

January 1 Received $50,000 cash in exchange for a 6%, 2-year Note Payable.

January 6 Purchase additional inventory on account, $147,000.

January 15 Fireworks for the first half of the month total $135,000. All of these sales are on account . The cost of the units sold is $73,800.

January 23 Receive $125,400 from customers on accounts receivable.

January 25 Pay $90,000 to inventory suppliers on accounts payable.

January 28 Write off accounts receivable as uncollectible, $4,800.

January 30 Firework sales for the second half of the month total $143,000. Sales include $11,000 for cash and $132,000 on account. The cost of the units sold is $79,500.

January 31 Pay cash for monthly salaries, $52,000.

Required:

1. Record each of the transactions listed above.
2. Record adjusting entries on January 31.
   1. 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 $3,000 and a two-year service life.
   2. At the end of January, $11,000 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 5% will not be collected.
   3. Accrued interest expense on Notes Payable for January. Interest payments are due semi-annually on June 30 and December 31 of each year.
   4. Accrued Income Taxes at the end of January are $13,000.
3. Prepare an adjusted trial balance as of January 31, 2021, after updating beginning balances (above) for the transactions during January (requirement 1) and adjusting entries at the end of January (requirement 2).
4. Prepare a multi-step income statement for the period ended January 31, 2021.
5. Prepare a classified balance sheet as of January 31, 2021.

Note: $25,000 of principle on the Note Payable is due on December 31, 2021. The other $25,000 of principle is due December 31, 2022.

6. Record Closing Entries.
7. Prepare a Post-Closing Trial Balance.