On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Credit Debit $ 25,400 46,800 $ 4,500 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (6%, due April 1, 2022) Common Stock Retained Earnings Totals 20,300 49,000 16,500 1,800 28,800 53,000 38,000 31,900 $158,000 $158,000 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $8,600. The cards are redeemable for merchandise within one year of the purchase date. January 6 Purchase additional inventory on account, $150,000. January 15 Firework sales for the first half of the month total $138,000. All of these sales are on account. The cost of the units sold is $75,300. January 23 Receive $125,700 from customers on accounts receivable. January 25 Pay $93,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $5,100. January 30 Firework sales for the second half of the month total $146,000. Sales include $18,000 for cash and $128,000 on account. The cost of the units sold is $81,000. January 31 Pay cash for monthly salaries, $52,300. 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 $3,300 and a two-year service life. The company estimates future uncollectible accounts. The company determines $14,000 of accounts receivable on January 31 are past due, and 30% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) Accrued interest expense on notes payable for January Accrued income taxes at the end of January are $13,300. By the end of January, $3,300 of the gift cards sold on January 2 have been redeemed. 2. Record the adjusting entries on January 31 for the above transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list View journal entry worksheet No Date Debit Credit 1 January 31 General Journal Depreciation Expense Accumulated Depreciation 550 550 2 January 31 Bad Debt Expense Allowance for Uncollectible Accounts 3 January 31 265 Interest Expense Interest Payable 265 4 January 31 13,300 Income Tax Expense Income Tax Payable 13,300 5 January 31 3,300 Deferred Revenue Sales Revenue 3,300 3. Prepare an adjusted trial balance as of January 31, 2021. Credit ACME Fireworks Adjusted Trial Balance January 31, 2021 Accounts Debit Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Accumulated Depreciation Accounts Payable Deferred Revenue Sales Revenue Cost of Goods Sold 156,300 Interest Expense Interest Payable Bad Debt Expense Income Tax Expense Income Tax Payable Notes Payable Salaries Expense Land 49,000 Equipment 16,500 Depreciation Expense 550 Common Stock Retained Earnings Totals $ 222,350 38,000 31,900 69,900 $ 4. Prepare a multiple-step income statement for the period ended January 31, 2021. ACME FIREWORKS Income Statement For the year ended January 31, 2021 Sales Revenue Cost of Goods Sold Gross Profit $ Salaries Expense Depreciation Expense Bad Debt Expense 0 0 0 0 0 Total operating expenses Operating Income Insurance Expense Income Before Taxes Income Tax Expense Net Income 0 $ 0 5. Prepare a classified balance sheet as of January 31, 2021. (Enter the Asset Accounts in order of liquidity. Amounts to be deducted should be indicated with a minus sign.) ACME FIREWORKS Classified Balance Sheet January 31, 2021 Liabilities Assets Cash Accounts Receivable Less: Allowance for Uncollectible Accounts Inventory Accounts Payable Income Tax Payable 0 Income Tax Payable Deferred Revenue Total Current Assets 0 Total Current Liabilities 0 0 Total Liabilities Stockholders' Equity Common Stock Retained Earnings Land Equipment Accumulated Depreciation 0 Total Stockholders' Equity Total Liabilities and Stockholders' Equity Total Assets $ 0 $ 0 6. Record closing entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list View journal entry worksheet No Date General Journal Debit Credit 1 January 31, 2021 Sales Revenue Retained Earnings 2 January 31, 2021 Retained Earnings Salaries Expense Depreciation Expense Bad Debt Expense Income Tax Expense Interest Expense Cost of Goods Sold 7. Analyze the following for ACME Fireworks Requirement 1: I a-1. Calculate the current ratio at the end of January. Current Ratio Choose Numerator = Choose Denominator = Current Assets Current Liabilities Current Ratio Current Ratio 11 11 Requirement 2: b-1. Calculate the acid-test ratio at the end of January. Acid-test Ratio Choose Numerator = Choose Denominator = Quick Assets - Current Liabilities Acid-test Ratio Acid-test Ratio II 11 0 C-1. Assume the notes payable were due on April 1, 2021, rather than April 1, 2022. Calculate the revised current ratio at the end of January Current Ratio Choose Numerator Choose Denominator - Current Liabilities Current Assets Current Ratio Current Ratio 0 times