On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances Accounts Debit Credit Cash $ 26,700 Accounts Receivable 49,400 Allowance for Uncollectible Accounts $ 5,800 Inventory 21,600 Land 62,000 Equipment 23,000 Accumulated Depreciation 3,100 Accounts Payable 30,100 Notes Payable (6 , due April 1, 2019) 66,000 Common Stock 51,000 Retained Earnings 26,700 Totals $ 182,700 $ 182,700 During January 2018, the following transactions occur January 2 Sold gift cards totaling $11,200 The cards are redeemable for merchandise within one year of the purchase date January 6 Purchase additional inventory on account, $163,000 January 15 Firework sales for the first half of the month total $151,000 All of these sales are on account The cost of the units sold is $81,800 January 23 Receive $127,000 from customers on accounts receivable January 25 Pay $106,000 to inventory suppliers on accounts payable January 28 Write off accounts receivable as uncollectible, $6,400 January 30 Firework sales for the second half of the month total $159,000 Sales include $13,000 for cash and $146,000 on account The cost of the units sold is $87,500 January 31 Pay cash for monthly salaries, $53,600 The following information is available on January 31, 2018 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 $5,000 and a two year service life The company estimates future uncollectible accounts At the end of January, considering the total ending balance of the accounts receivable account shown in the general ledger, $27,000 is now past due (older than 90 days), while the remainder of the balance is current (less than 90 days old) The company estimates that 30 of the past due balance will be uncollectible and only 4 of the current balance will become uncollectible Please record the estimated bad debt expense Accrue the interest expense on notes payable for January (Hint recognize the expense and add as a liability, since the interest expense has not been paid yet) Accrue income taxes at the end of January are $14,600 (Hint recognize the expense and add as a liability, since the income taxes have not been paid yet) By the end of January, $4,600 of the gift cards sold on January 2 have been redeemed

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Oct 07, 2024

On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances:

Accounts	Debit		Credit
Cash	$	26,700
Accounts Receivable		49,400
Allowance for Uncollectible Accounts			$	5,800
Inventory		21,600
Land		62,000
Equipment		23,000
Accumulated Depreciation				3,100
Accounts Payable				30,100
Notes Payable (6%, due April 1, 2019)				66,000
Common Stock				51,000
Retained Earnings				26,700

Totals	$	182,700	$	182,700

During January 2018, the following transactions occur:

January 2	Sold gift cards totaling $11,200. The cards are redeemable for merchandise within one year of the purchase date.
January 6	Purchase additional inventory on account, $163,000.
January 15	Firework sales for the first half of the month total $151,000. All of these sales are on account. The cost of the units sold is $81,800.
January 23	Receive $127,000 from customers on accounts receivable.
January 25	Pay $106,000 to inventory suppliers on accounts payable.
January 28	Write off accounts receivable as uncollectible, $6,400.
January 30	Firework sales for the second half of the month total $159,000. Sales include $13,000 for cash and $146,000 on account. The cost of the units sold is $87,500.
January 31	Pay cash for monthly salaries, $53,600.

The following information is available on January 31, 2018.

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 $5,000 and a two-year service life.
The company estimates future uncollectible accounts. At the end of January, considering the total ending balance of the accounts receivable account shown in the general ledger, $27,000 is now past due (older than 90 days), while the remainder of the balance is current (less than 90 days old). The company estimates that 30% of the past due balance will be uncollectible and only 4% of the current balance will become uncollectible. Please record the estimated bad debt expense.
Accrue the interest expense on notes payable for January. (Hint: recognize the expense and add as a liability, since the interest expense has not been paid yet)
Accrue income taxes at the end of January are $14,600. (Hint: recognize the expense and add as a liability, since the income taxes have not been paid yet)
By the end of January, $4,600 of the gift cards sold on January 2 have been redeemed.