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

Accounts	Debit			Credit
Cash	$	25,700
Accounts Receivable		47,400
Allowance for Uncollectible Accounts				$	4,800
Inventory		20,600
Land		52,000
Equipment		18,000
Accumulated Depreciation					2,100
Accounts Payable					29,100
Notes Payable (6%, due April 1, 2019)					56,000
Common Stock					41,000
Retained Earnings					30,700
Totals	$	163,700		$	163,700

During January 2018, the following transactions occur: January 2. Sold gift cards totaling $9,200. The cards are redeemable for merchandise within one year of the purchase date. January 6. Purchase additional inventory on account, $153,000. January 15. Firework sales for the first half of the month total $141,000. All of these sales are on account. The cost of the units sold is $76,800. January 23. Receive $126,000 from customers on accounts receivable. January 25. Pay $96,000 to inventory suppliers on accounts payable. January 28. Write off accounts receivable as uncollectible, $5,400. January 30. Firework sales for the second half of the month total $149,000. Sales include $13,000 for cash and $136,000 on account. The cost of the units sold is $82,500. January 31. Pay cash for monthly salaries, $52,600.

1	January 02	Cash	9,200
1		Deferred revenue		9,200
2	January 06	Inventory	153,000
2		Accounts payable		153,000
3	January 15	Accounts receivable	141,000
3		Sales revenue		141,000
4	January 15	Cost of goods sold	76,800
4		Inventory		76,800
5	January 23	Cash	126,000
5		Accounts receivable		126,000
6	January 25	Accounts payable	96,000
6		Cash		96,000
7	January 28	Allowance for uncollectible accounts	5,400
7		Accounts receivable		5,400
8	January 30	Cash	$13,000
8		Accounts receivable	136,000
8		Sales revenue		149,000
9	January 30	Cost of goods sold	$82,500
9		Inventory		82,500
10	January 31	Salaries expense	$52,600
10		Cash		52,600

1

January 31

Depreciation expense

600

1

Accumulated depreciation

600

2

January 31

Bad debt expense

6,012

2

Allowance for uncollectible accounts

6,012

3

January 31

Interest expense

280

3

Interest payable

280

4

January 31

Income tax expense

13,600

4

Income tax payable

13,600

Adjusting Entries

5

January 31

Deferred revenue

$3,600

5

Sales revenue

3. Prepare an adjusted trial balance as of January 31, 2018.

4. Prepare a multiple-step income statement for the period ended January 31, 2018.

5. Prepare a classified balance sheet as of January 31, 2018. (Enter the Asset Accounts in order of liquidity. Amounts to be deducted should be indicated with a minus sign.)

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

7. Analyze the following for ACME Fireworks

Requirement 1:

a-1. Calculate the current ratio at the end of January.

a-2. If the average current ratio for the industry is 1.80, is ACME Fireworks more or less liquid than the industry average?

	more liquid
	less liquid

Requirement 2:

b-1. Calculate the acid-test ratio at the end of January.

b-2. If the average acid-test ratio for the industry is 1.50, is ACME Fireworks more or less likely to have difficulty paying its currently maturing debts (compared to the industry average)?

	more likely
	less likely

Requirement 3:

c-1. Assume the notes payable were due on April 1, 2018, rather than April 1, 2019. Calculate the revised current ratio at the end of January.

3,600