On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Debit Credit Cash $ 23,500 Accounts Receivable 40,500 Allowance for Uncollectible Accounts $ 4,700 Inventory 38,000 Land 73,600 Accounts Payable 28,400 Notes Payable (94, due in 3 years) 38,000 Common Stock 64,000 Retained Earnings 40,500 Totals $175,680 $175,600 The $38,000 beginning balance of inventory consists of 380 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1,700 units for $180,200 on account ($106 each). January 8 Purchase 1,800 units for $199,800 on account ($111 each). January 12 Purchase 1,900 units for $220,400 on account ($116 each). January 15 Return 140 of the units purchased on January 12 because of defects. January 19 Sell 5,500 units on account for $825,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $797,000 from customers on accounts receivable. January 24 Pay $580,000 to inventory suppliers on accounts payable. January 27 Write off accounts receivable as uncollectible, $3,300. January 31 Pay cash for salaries during January, $122,000. The following information is available on January 31, 2021. Required information 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, $4.800 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 5% 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 $13,100. 3. Prepare an adjusted trial balance as of January 31, 2021 Debit Credit BIG BLAST FIREWORKS Adjusted Trial Balance January 31, 2021 Accounts Inventory l'Accounts payable (Cash Accounts receivable Allowance for uncollectible accounts Land Cost of goods sold Salaries expense Bad debt expense interest expenso income tax expense Notes payable income tax payable Retained earnings Common stock Required information BIG BLAST FIREWORKS Adjusted Trial Balance January 31, 2021 Debit Accounts Credit Inventory Accounts payable Cash Accounts receivable Allowance for uncollectible accounts Land Cost of goods sold Salaries expense Bad debt expense Interest expense Income tax expense Notes payable Income tax payable Retained earnings Common stock Interest payable Totals $ 0 $ 0 : d. Accrued income taxes at the end of January are $13,100. Exercise 6-21 Part 4 4. Prepare a multiple-step income statement for the period ended January 31, 2021. BIG BLAST FIREWORKS Multiple-step Income Statement For the year ended January 31, 2021 825,000 608,160 Sales revenue Cost of goods sold Gross profit Salaries expense Bad debt expense $ 216,840 122,000 3,540 aces Total operating expenses Operating income (loss) Interest expense 125,540 91,300 Income before taxes Income tax expense Net income (13,100) Required information BIG BLAST FIREWORKS Adjusted Trial Balance January 31, 2021 Debit Accounts Credit Inventory Accounts payable Cash Accounts receivable Allowance for uncollectible accounts Land Cost of goods sold Salaries expense Bad debt expense Interest expense Income tax expense Notes payable Income tax payable Retained earnings Common stock Interest payable Totals $ 0 $ 0 : d. Accrued income taxes at the end of January are $13,100. Exercise 6-21 Part 4 4. Prepare a multiple-step income statement for the period ended January 31, 2021. BIG BLAST FIREWORKS Multiple-step Income Statement For the year ended January 31, 2021 825,000 608,160 Sales revenue Cost of goods sold Gross profit Salaries expense Bad debt expense $ 216,840 122,000 3,540 aces Total operating expenses Operating income (loss) Interest expense 125,540 91,300 Income before taxes Income tax expense Net income (13,100)
