On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Debit Credit Accounts Cash $26,000 48,000 Accounts Receivable Allowance for Uncollectible Accounts S 5,100 20,900 55,000 19,500 Inventory Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (6%, due April 1, 2022) 2,400 29,400 59,000 Retained Earnings 29,500 $169,400 $169,400 Totals During January 2021, the following transactions occur: 2 Sold gift cards totaling $9,800. The cards are redeemable for merchandise within one year of the purchase date. 6 Purchase additional inventory on account, $156,000. 15 Firework sales for the first half of the month total $144,000. All of these sales are on account. The cost of the units sold is $78,300. January January January January 23 Receive 20,300 from customers on accounts receivable. anuary 28 Write off accounts re uncollectibleS5.700. Tar January 30 Firework sales fo the second alf of the month total $152,000 $140,000 on account. The cost of the units sold is $84,000. Sales .ude $12,000 for cash and January 31 Pay cash for monthly salaries, $52,900 The following information is available on January 31. a. 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 $3,900 and a two-year service life. b. The company estimates future uncollectible accounts. The company determines $20,000 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 3% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) c. Accrued interest expense on notes payable for January. d. Accrued income taxes at the end of January are $13,900. e. By the end of January, $3,900 of the gift cards sold on January 2 have been redeemed (ignore cost of goods sold). No Date Jan 02 Account Title Debit Credit Cash Deferred Revenue. 9,80 1 9,80 156, 156 Jan 06 Inventory Accounts Payable 2 Jan 15 Accounts Receivable Sales Revenue 144, 3 144 Jan 15 78,3 78,30 Cost of Goods Sold Inventory 4 Cash 126, Jan 23 5 126, Accounts Receivable Accounts Payable Jan 25 99,0 6 |99,0 Cash Jan 28 Allowance for Uncollectible Ac Accounts Receivable 5,70 7 5,70 12,00 140,0 Jan 30 Cash Accounts Receivable 152 Sales Revenue Jan 30 Cost of Goods Sold Inventory 84,00 9 |84,00 |52,9 10 Jan 31 Salaries Expense Cash |52,9 65 11 Jan 31 Depreciation Expense Accumulated Depreciation 65 12 Jan 31 Bad Debt Expense Allowance for Uncollectible A 12,0 12,00 13 Jan 31 |Interest Expense Interest Payable 29V 29V 13,9 Income Tax Expense Income Taxes Payable 14 Jan 31 13.90 15 Jan 31 Deferred Revenue Sales Revenue 3,90 3,90 3,90X 16 Jan 31 Sales Revenue 3,900X 17 Jan 31 Cost of Goods Sold SSSIS Journal entry worksheet 12 13 14 10 16 17 11 15 Prepare the closing entry for revenue. Note: Enter debits before credits. Account Title Credit Date Debit Jan 31 LO Journal entry worksheet 12 13 14 15 16 10 11 Prepare the closing entry for expenses. Note: Enter debits before credits. Account Title Credit Date Debit Jan 31 17 LO ACME Fireworks Income Statement For the year ended January 31, 2021 Gross profit $ 0 Total operating expenses 10 Operating income 10 10 $ 10 ACME Fireworks Classified Balance Sheet January 31, 2021 Assets Liabilities Current Assets: Current Liabilities: 0 0 0 0 Total Current Liabilities 0 Total Liabilities Total Current Assets Stockholders' Equity Noncurrent Assets: | Analyze the following for ACME Fireworks: (a) Calculate the current ratio at the end of January. If the average current ratio for the industry is 1.8, is ACME Fireworks more or less liquid than the industry average? The current ratio is: Is the company more or less liquid than the industry average? (b) Calculate the acid-test ratio at the end of January. If the average acid-test ratio for the industry is 1.5, is ACME Fireworks more or less likely to have difficulty paying its currently maturing debts (compared to the industry average)? The acid-test ratio is: Is the company more or less likely to have difficulty paying its currently maturing debts? (c) 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, and indicate whether the revised ratio would increase, decrease, or remain unchanged compared to your answer in (a). The revised current ratio is