Question
Exercise 9-21 Complete the accounting cycle using long-term liability transactions (LO9-2, 9-8) [The following information applies to the questions displayed below.] On January 1, 2021,
Exercise 9-21 Complete the accounting cycle using long-term liability transactions (LO9-2, 9-8)
[The following information applies to the questions displayed below.] On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances:
Accounts | Debit | Credit | |||||
Cash | $ | 11,200 | |||||
Accounts Receivable | 34,000 | ||||||
Allowance for Uncollectible Accounts | $ | 1,800 | |||||
Inventory | 152,000 | ||||||
Land | 67,300 | ||||||
Buildings | 120,000 | ||||||
Accumulated Depreciation | 9,600 | ||||||
Accounts Payable | 17,700 | ||||||
Common Stock | 200,000 | ||||||
Retained Earnings | 155,400 | ||||||
Totals | $ | 384,500 | $ | 384,500 | |||
During January 2021, the following transactions occur:
January 1 | Borrow $100,000 from Captive Credit Corporation. The installment note bears interest at 7% annually and matures in 5 years. Payments of $1,980 are required at the end of each month for 60 months. | |
January 4 | Receive $31,000 from customers on accounts receivable. | |
January 10 | Pay cash on accounts payable, $11,000. | |
January 15 | Pay cash for salaries, $28,900. | |
January 30 | Firework sales for the month total $195,000. Sales include $65,000 for cash and $130,000 on account. The cost of the units sold is $112,500. | |
January 31 | Pay the first monthly installment of $1,980 related to the $100,000 borrowed on January 1. Round your interest calculation to the nearest dollar. |
Exercise 9-21 Part 5
5. Prepare a classified balance sheet as of January 31, 2021. (Hint: The carrying value of notes payable on January 31, 2021 is $98,603; $17,411 is reported as notes payable in the current liabilities section and $81,192 is reported as notes payable in the long-term liabilities section ($17, 411 + $81,192 = $98,603). (Amounts to be deducted should be indicated with a minus sign.)
9 Required information iassitied Baiance She January 31, 2021 Assets Liabilities Total Current Liabilities Total Liabilities Stockholder's Equity Total Current Assets Total Stockholders' Equity Total Liabilities and Stockholders' Equity Total Assets
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