Exercise 6-21 Complete the accounting cycle using inventory transactions (LO6-2, 6-3, 6-5, 6-6, 6-7) [The following information applies to the questions displayed below.] On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts. Inventory Land Accounts Payable Notes Payable (8%, due in 3 years) Common Stock Retained Earnings Totals Debit $ 24,900 Credit 44,000 $ 3,300 45,000 84,100 27,700 45,000 71,000 51,000 $198,000 $198,000 The $45,000 beginning balance of inventory consists of 450 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1,350 units for $145,800 on account ($108 each). January 8 Purchase 1,450 units for $163,850 on account ($113 each). January 12 Purchase 1,550 units for $182,900 on account ($118 each). January 15 Return 175 of the units purchased on January 12 because of defects. January 19 Sell 4,500 units on account for $675,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $661,000 from customers on accounts receivable.. January 24 Pay $440,000 to inventory suppliers on accounts payable. January 27 Write off accounts receivable as uncollectible, $2,400. January 31 Pay cash for salaries during January, $134,000.. The following information is available on January 31, 2021. 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 $5,500 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 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 $13,800. 3 Part 3 of 6 5 points Book Required information 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. At the end of January, $5,500 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. 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 $13,800. 3. Prepare an adjusted trial balance as of January 31, 2021. BIG BLAST FIREWORKS Adjusted Trial Balance January 31, 2021 Beferences Accounts Debit Credit Totals $ 0 $ D Book Print eferences Exercise 6-21 Part 4 4. Prepare a multiple-step income statement for the period ended January 31, 2021. BIG BLAST FIREWORKS Multiple-step Income Statement For the year ended January 31, 2021 Total operating expenses Operating income (loss) 0 Exercise 6-21 Part 5 5. Prepare a classified balance sheet as of January 31, 2021. (Amounts to be deducted should be indicated with a minus sign." Answer is not complete. BIG BLAST FIREWORKS Classified Balance Sheet January 31, 2021 Assets Liabilities S Cash Accounts receivable Inventory Less: Allowance Total current assets Land 111,900 Accounts payable $ 59,600 55,600 Interest payable 300 12,500 Income tax payable 13,800 4,155 4,155 184,155 Total current liabilities 73,700 84,100 Notes payable 45,000 Total liabilities 118,700 Stockholders' Equity Common stock 71,000 Retained eamings 70,245 Total stockholders' equity 141,245 $ Total assets Total liabilities and stockholders' equity: $259,945 268,255 6 Exercise 6-21 Part 6 Ook int D erences 6. Record closing entries. (If no entry is required for a transaction/event, select "No journal entry required" in the field.) View transaction list Journal entry worksheet < 1 2 Record the closing entry for revenue accounts. Note: Enter debits before credits. Date January 31, 2021 General Journal Debit Credit Record entry Clear entry View general journal > Ook rint erences 6. Record closing entries. (If no entry is required for a transaction/event, select "No journal entry required" in field.) View transaction list Journal entry worksheet 1 2 m Record the closing entry for expense accounts. Note: Enter debits before credits.. Date January 31, 2021 General Journal Debit Credit View general journal Record entry Clear entry