On January 1, 2018, the general ledger of Big Blast Fireworks includes the following account balances: Debit Credit Accounts Cash Accounts Receivable Inventory Land Allowance for Uncollectible Accounts Accounts Payable Notes Payable (12%, due in 3 years) Common Stock Retained Earnings s 22,968 39,808 35,808 69,188 4,188 29,988 35,808 61,8e8 36,888 $166,8ee 166,8e0 Totals The $35,000 beginning balance of inventory consists of 350 units, each costing $100. During January 2018, Big Blast Fireworks had the following inventory transact ons: anuary 3 Purchase 1,488 units for $154,808 on account ($118 each) anuary 8 Purchase 1,588 units for $172,588 on account ($115 each) January 12 Purchase 1,688 units for $192,808 on account ($128 each) January 15 Return 125 of the units purchased on January 12 because of defects January 19 Sell 4,680 units on account for $69e,880. The cost of the units sold is determined using a FIFO perpetual inventory system January 22 Receive $665,80 from customers on accounts receivable January 24 Pay $495,88e to inventory suppliers on accounts payable January 27 Write off accounts receivable as uncollectible, $3,88e January 31 Pay cash for salaries during January, $119,88 The following information is available on January 31, 2018. a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each b. At the end of January, $4,500 of accounts receivable are past due, and the company estimates that 40% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 4% will not be collected. c. Accrued interest expense on notes payable for January. Interest is expected to be paid each December 31. d. Accrued income taxes at the end of January are $12,800. General RequirementJournal General Ledger Income Statement Trial Balance Balance Sheet Analysis 1. Record each of the transactions listed above in the 'General Journal tab (these are shown as items 1 - 10) assuming a FIFO perpetual inventory system. Review the 'General Ledger and the 'Trial Balance' tabs to see the effect of the transactions on the account balances. 2. Record adjusting entries on January 31. in the General Journal tab (these are shown as items 11-14) 3. Review the adjusted Trial Balance' as of January 31, 2018, in the 'Trial Balance' tab. 4. Prepare a multiple-step income statement for the period ended January 31, 2018, in the Income Statement' tab. 5. Prepare a classified balance sheet as of January 31, 2018, in the 'Balance Sheet tab. 6. Record the closing entries in the 'General Journal' tab (these are shown as items 15-17) 7. Using the information from the requirements above, complete the 'Analysis' tab. General Journal> General General Ledger Requirement Journal Balance Sheet Analysis Trial Balance Statement Using the information from the requirements above, complete the 'Analysis'. (Enter your Inventory Turnover ratio and gross profit ratio value in one decimal place.) well Big Blast Fireworks (a) Calculate the inventory turnover ratio for the month of January. If the industry average of the inventory turnover ratio for the month of January is 19.3 times, is the company managing its inventory more or less efficiently than other companies in the same industry? imes its i more efficiently. (True or False) (b) Calculate the gross profit ratio for the month of January. If the average gross profit ratio is 31%, is the company more or less profitable per dollar of sales than other companies in the same e gross profit ratio is: Is the company more or less profitable per dollar of sales? (c) Used together, what might the inventory turnover ratio and gross profit ratio suggest about Big Blast Fireworks' business strategy? Is the company's strategy to sell a higher volume of less expensive items or does the company appear to be selling a lower volume of more expensive items? ased on the ry turnover ratio and the gross profit ratio, Big Blast Fireworks' business strategy appears to be selling a
