Exercise 8-18 Complete the accounting cycle (LO8-1, 8-2, 8-4, 8-6)

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

Accounts	Debit				Credit
Cash	$	26,200
Accounts Receivable		48,400
Allowance for Uncollectible Accounts					$	5,300
Inventory		21,100
Land		57,000
Equipment		20,500
Accumulated Depreciation						2,600
Accounts Payable						29,600
Notes Payable (6%, due April 1, 2022)						61,000
Common Stock						46,000
Retained Earnings						28,700
Totals	$	173,200			$	173,200

During January 2021, the following transactions occur:

January		2		Sold gift cards totaling $10,200. The cards are redeemable for merchandise within one year of the purchase date.
January		6		Purchase additional inventory on account, $158,000.
January		15		Firework sales for the first half of the month total $146,000. All of these sales are on account. The cost of the units sold is $79,300.
January		23		Receive $126,500 from customers on accounts receivable.
January		25		Pay $101,000 to inventory suppliers on accounts payable.
January		28		Write off accounts receivable as uncollectible, $5,900.
January		30		Firework sales for the second half of the month total $154,000. Sales include $17,000 for cash and $137,000 on account. The cost of the units sold is $85,000.
January		31		Pay cash for monthly salaries, $53,100.

Exercise 8-18 Part 1

1. Record each of the transactions listed above. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

• 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 $4,300 and a two-year service life.

• The company estimates future uncollectible accounts. The company determines $22,000 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 3% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)

• Accrued interest expense on notes payable for January.

• Accrued income taxes at the end of January are $14,100.

• By the end of January, $4,100 of the gift cards sold on January 2 have been redeemed.

2. Record the adjusting entries on January 31 for the above transactions.

3.Prepare an adjusted trial balance as of January 31, 2021.

4. Prepare a multiple-step income statement for the period ended January 31, 2021.

. Prepare a classified balance sheet as of January 31, 2021. (Enter the Asset Accounts in order of liquidity. Amounts to be deducted should be indicated with a minus sign.)

Record closing entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Calculate the current ratio at the end of January.