Exercise 8-19 The beginning trial balance has been entered in the general ledger for you. The amounts in this exercise have been changed from those in the text to help ensure that you are truly going through the process and not using an online tool for help. On January 1, 2024, the general ledger of ACME Fireworks includes the following account balances: January 2 Sold gift cards totaling $12,000. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, \$164,000. ACME uses the perpetual inventory system. January 15 Firework sales for the first half of the month total $125,400. All of these sales are on account. The cost of the units sold is $76,000. January 23 Receive $112,000 from customers on accounts receivable. January 25 Pay $48,500 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $3,600. January 30 Firework sales for the second half of the month total $132,000. Sales include $61,000 for cash and $71,000 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 in the general journal and post to the general ledger. 2 Record adjusting entries on January 31 in the general journal and post to the general ledger. A worksheet has been provided to help you organize your work. This is not required but bonus points will be awarded for completing the worksheet. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, a. the company estimated a residual value of $2,000 and a four-year service life. b. The company records an adjusting entry for $10,700 for estimated future uncollectible accounts. c. The company has accrued interest on notes payable for January. d. The company accrued income taxes at the end of January of $6,150. e. By the end of January, $6,000 of the gift cards sold on January 2 have been redeemed (ignore cost of goods sold). 3 Prepare an adjusted trial balance as of January 31, 2024. The worksheet provided satisfies this requirement. 4 Prepare a multi-step income statement for the period ended January 31, 2024. 5 Prepare a statement of stockholders equity for the period ended January 31,2024. 6 Prepare a classified balance sheet as of January 31, 2024. 7 Record the closing entries on January 31 in the general journal and post to the general ledger. 8 Analyze the following for ACME Fireworks: 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 a. industry average? 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 b. have difficulty paying its currently maturing debts (compared to the industry average)? Assume the notes payable were due on April 1, 2024, rather than April 1, 2025. Calculate the revised current ratio at the end of January, and c. indicate whether the revised ratio would increase, decrease, or remain unchanged compared to your answer in (a). GENERAL LEDGER Accounta Rereivahle ACCOINT NO- Allowance for Uncollectible Accounts ACCOUNT NO: ACCOUNT: Land ACCOUNT NO: ACCOUNT: Equipment ACCOUNT NO: ACCOUNT: Accumulated Depreciation, Equipment ACCOUNT NO: Notes Payable (6\%, due April 1,2025) ACCOUNT NO: Deferred Revenue ACCOINT NO. arrailsit MIn. ACCOUNT: Retained Earnings ACCOUNT NO: ACCOINTT. Galariac Funence ACCOIINT NR. ACCOUNT: Depreciation Expense, Equipment ACCOUNT NO: ACCOUNT: Bad Debt Expense ACCOUNT NO: ACME Fireworks Income Statement Fevenue the month ended January 31,2024 Sales Revenue Cost of Goods Sold Gross profit Operating Expenses Salaries Expense Depreciation Expense, Equipment Bad Debt Expense Total Operating Expenses Operating Income Interest Expense Income before Income Taxes Income tax Expense Net Income (Loss) \begin{tabular}{lcc} \hline \multicolumn{3}{c}{ ACME Fireworks } \\ \hline & Statement of Stockholders' Equity \\ \hline & & \\ \hline \end{tabular} Exercise 8-19 The beginning trial balance has been entered in the general ledger for you. The amounts in this exercise have been changed from those in the text to help ensure that you are truly going through the process and not using an online tool for help. On January 1, 2024, the general ledger of ACME Fireworks includes the following account balances: January 2 Sold gift cards totaling $12,000. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, \$164,000. ACME uses the perpetual inventory system. January 15 Firework sales for the first half of the month total $125,400. All of these sales are on account. The cost of the units sold is $76,000. January 23 Receive $112,000 from customers on accounts receivable. January 25 Pay $48,500 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $3,600. January 30 Firework sales for the second half of the month total $132,000. Sales include $61,000 for cash and $71,000 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 in the general journal and post to the general ledger. 2 Record adjusting entries on January 31 in the general journal and post to the general ledger. A worksheet has been provided to help you organize your work. This is not required but bonus points will be awarded for completing the worksheet. Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, a. the company estimated a residual value of $2,000 and a four-year service life. b. The company records an adjusting entry for $10,700 for estimated future uncollectible accounts. c. The company has accrued interest on notes payable for January. d. The company accrued income taxes at the end of January of $6,150. e. By the end of January, $6,000 of the gift cards sold on January 2 have been redeemed (ignore cost of goods sold). 3 Prepare an adjusted trial balance as of January 31, 2024. The worksheet provided satisfies this requirement. 4 Prepare a multi-step income statement for the period ended January 31, 2024. 5 Prepare a statement of stockholders equity for the period ended January 31,2024. 6 Prepare a classified balance sheet as of January 31, 2024. 7 Record the closing entries on January 31 in the general journal and post to the general ledger. 8 Analyze the following for ACME Fireworks: 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 a. industry average? 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 b. have difficulty paying its currently maturing debts (compared to the industry average)? Assume the notes payable were due on April 1, 2024, rather than April 1, 2025. Calculate the revised current ratio at the end of January, and c. indicate whether the revised ratio would increase, decrease, or remain unchanged compared to your answer in (a). GENERAL LEDGER Accounta Rereivahle ACCOINT NO- Allowance for Uncollectible Accounts ACCOUNT NO: ACCOUNT: Land ACCOUNT NO: ACCOUNT: Equipment ACCOUNT NO: ACCOUNT: Accumulated Depreciation, Equipment ACCOUNT NO: Notes Payable (6\%, due April 1,2025) ACCOUNT NO: Deferred Revenue ACCOINT NO. arrailsit MIn. ACCOUNT: Retained Earnings ACCOUNT NO: ACCOINTT. Galariac Funence ACCOIINT NR. ACCOUNT: Depreciation Expense, Equipment ACCOUNT NO: ACCOUNT: Bad Debt Expense ACCOUNT NO: ACME Fireworks Income Statement Fevenue the month ended January 31,2024 Sales Revenue Cost of Goods Sold Gross profit Operating Expenses Salaries Expense Depreciation Expense, Equipment Bad Debt Expense Total Operating Expenses Operating Income Interest Expense Income before Income Taxes Income tax Expense Net Income (Loss) \begin{tabular}{lcc} \hline \multicolumn{3}{c}{ ACME Fireworks } \\ \hline & Statement of Stockholders' Equity \\ \hline & & \\ \hline \end{tabular}