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Need help on the last portion Exercise 6-21 (Algo) Complete the accounting cycle using inventory transactions (LO6-2, 6-3, 6-5, 6-6, 6-7) (GL) On January 1,
Need help on the last portion
Exercise 6-21 (Algo) Complete the accounting cycle using inventory transactions (LO6-2, 6-3, 6-5, 6-6, 6-7) (GL)
On January 1, 2024, the general ledger of Big Blast Fireworks includes the following account balances:
Accounts | Debit | Credit |
---|---|---|
Cash | $24,300 | |
Accounts Receivable | 42,500 | |
Allowance for Uncollectible Accounts | $2,700 | |
Inventory | 42,000 | |
Land | 79,600 | |
Accounts Payable | 29,200 | |
Notes Payable (8%, due in 3 years) | 42,000 | |
Common Stock | 68,000 | |
Retained Earnings | 46,500 | |
Totals | $188,400 | $188,400 |
The $42,000 beginning balance of inventory consists of 420 units, each costing $100. During January 2024, Big Blast Fireworks had the following inventory transactions:
January 3 | Purchase 1,050 units for $115,500 on account ($110 each). |
---|---|
January 8 | Purchase 1,150 units for $132,250 on account ($115 each). |
January 12 | Purchase 1,250 units for $150,000 on account ($120 each). |
January 15 | Return 160 of the units purchased on January 12 because of defects. |
January 19 | Sell 3,600 units on account for $576,000 The cost of the units sold is determined using a FIFO perpetual inventory system. |
January 22 | Receive $529,000 from customers on accounts receivable. |
January 24 | Pay $359,000 to inventory suppliers on accounts payable. |
January 27 | Write off accounts receivable as uncollectible, $2,100. |
January 31 | Pay cash for salaries during January, $110,000. |
The following information is available on January 31, 2024.
- At the end of January, the company estimates that the remaining units of inventory purchased on January 12 are expected to sell in February for only $100 each. [Hint: Determine the number of units remaining from January 12 after subtracting the units returned on January 15 and the units assumed sold (FIFO) on January 19.]
- The company records an adjusting entry for $5,070. for estimated future uncollectible accounts.
- The company accrues interest on notes payable for January. Interest is expected to be paid each December 31.
- The company accrues income taxes at the end of January of $13,500.
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