On January 1, 2021, the general ledger of 3D Family Fireworks includes the following account balances: Credit Debit $ 28,800 15,000 $ 1,900 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Supplies Notes Receivable (6%, due in 2 years) Land Accounts Payable Common Stock Retained Earnings Totals 3,300 26,400 59,800 5,900 78,500 48,500 $134,800 $133,300 During January 2021, the following transactions occur: 1. January 2 Provide services to customers for cash, $30,900. 2. January 6 Provide services to customers on account, $90,500. 3. January 15 Write off accounts receivable as uncollectible, $1,200. 4. January 20 Pay cash for salaries, $37,400. 5. January 22 Receive cash on accounts receivable, $83,300. 6. January 25 Pay cash on accounts payable, $4,670. 7. January 30 Pay cash for utilities during January, $11,700. The following information is available on January 31, 2021. 8. At the end of January, $4,200 of accounts receivable are past due, and the company estimates that 10% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 5% will not be collected. The note receivable of $19,000 is considered fully collectible and therefore is not included in the estimate of uncollectible accounts. 9. Supplies at the end of January total $720. 10. Accrued interest revenue on notes receivable for January. Interest is expected to be received each December 31. 11. Unpaid salaries at the end of January are $30,300. Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis 1. Record each of the transactions listed above in the 'General Journal' tab (these are shown as items 1 - 7). 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 8-11). 3. Review the adjusted 'Trial Balance' as of January 31, 2021, in the 'Trial Balance' tab. 4. Prepare an income statement for the period ended January 31, 2021, in the 'Income Statement' tab). 5. Prepare a classified balance sheet as of January 31, 2021, in the 'Balance Sheet' tab. 6. Record closing entries in the 'General Journal' tab (these are shown as items 12 and 13). 7. Using the information from the requirements above, complete the 'Analysis' tab. Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis Using the information from the requirements above, complete the 'Analysis' tab. (Enter your Accounts receivable turnover ratio in 1 decimal place and Ratio of allowance for uncollectible accounts in whole number.) Unadjusted Dates: Jan 02 to: Jan 30 Analyze how well 3D Family Fireworks manages its receivables (a) Calculate the receivables turnover ratio for the month of January (Hint: For the numerator, use total services provided to customers on account). If the industry average of the receivables turnover ratios for the month of January is 4.2 times, is the company collecting cash from customers more or less efficiently than other companies in the same industry? Accounts Receivable turnover: times The company is collecting more efficiently. (true or false) (b) Calculate the ratio of Allowance for Uncollectible Accounts to Accounts Receivable at the end of January. Based on a comparison of this ratio to the same ratio at the beginning of January, does the company expect an improvement or worsening in cash collections from customers on credit sales? Ratio of Allowance for Uncollectible Accounts to Accounts Receivable Should the company expect improving or worsening conditions?
