On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Debit $ 25,700 46,000 Credit Cash Accounts Receivable Allowance for Uncollectible Accounts 4,100 Inventory 49,000 90,100 Land 25,700 49,000 Accounts Payable Notes Payable (6%, due in 3 years) Common Stock 75,000 Retained Earnings 57,000 $210,800 $210,800 Totals The $49,000 beginning balance of inventory consists of 490 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: 3 Purchase 1,750 units for $196,000 on account ($112 each). 8 Purchase 1,850 units for $216,450 on account ($117 each) January January January 12 Purchase 1,950 units for $237,900 on account ($122 each). January 15 Return 195 of the units purchased on January 12 because of defects. January 19 Sell 5,700 units on account for $855,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $837,000 from customers on accounts receivable. January 24 Pay $620,000 to inventory suppliers on accounts payable January 27 Write off accounts receivable as uncollectible, $2,800. January 31 Pay cash for salaries during January, $138,000. The following information is available on January 31, 2021. 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. The company estimates future uncollectible accounts. The company determines $5,900 of accounts receivable on January 31 are past due, and 35% 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.) 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 $14,200. Journal entry worksheet 4 6 16 1 2 3 5 Record the cost of the units sold, which is determined using a FIFO perpetual inventory system Note: Enter debits before credits. Date Account Title Debit Credit 855,000 Jan 19 Cost of Goods Sold 855,000 Inventory Record entry Clear entry View general journal Journal entry worksheet 10 12 13 14 16 1 11 15 Record the closing entry for revenue. Note: Enter debits before credits. Date Account Title Debit Credit Salaries Expense Jan 31 Record entry Clear entry View general journal Journal entry worksheet 15 12 10 16 11 13 14 Record the closing entry for expenses Note: Enter debits before credits. Date Account Title Debit Credit No Journal Entry Required Jan 31 Record entry Clear entry View general journal LO Big Blast Fireworks Classified Balance Sheet January 31, 2021 Assets Liabilities Current Assets Current Liabilities: $ 0 0 Total Current Liabilities 0 0 Total Current Assets 0 Total Liabilities 0 Stockholders' Equity Long-term ASsets: Total Stockholders' Equity $ Total Liabilities & Stockholders' Equity $ 0 0 Total Assets Analyze how well Big Blast Fireworks' manages its inventory: (a) Calculate the inventory turnover ratio for the month of January. If the industry managing its inventory more or less efficiently than other companies in the same verage of the inventory turnover ratio for the month of January is 17.5 times, is the co industry? The inventory turnover ratio is: times The company managing its inventory more efficiently. (True or False) (b) Calculate the gross profit ratio for the month of January. If the industry average gross profit ratio is 31%, other companies in the same industry? the company more or less profitable per dollar f sales tha The gross profit ratio 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? Based on the inventory turnover ratio and the gross profit ratio, Big Blast Fireworks' business strategy appears to be selling a On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Debit $ 25,700 46,000 Credit Cash Accounts Receivable Allowance for Uncollectible Accounts 4,100 Inventory 49,000 90,100 Land 25,700 49,000 Accounts Payable Notes Payable (6%, due in 3 years) Common Stock 75,000 Retained Earnings 57,000 $210,800 $210,800 Totals The $49,000 beginning balance of inventory consists of 490 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: 3 Purchase 1,750 units for $196,000 on account ($112 each). 8 Purchase 1,850 units for $216,450 on account ($117 each) January January January 12 Purchase 1,950 units for $237,900 on account ($122 each). January 15 Return 195 of the units purchased on January 12 because of defects. January 19 Sell 5,700 units on account for $855,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $837,000 from customers on accounts receivable. January 24 Pay $620,000 to inventory suppliers on accounts payable January 27 Write off accounts receivable as uncollectible, $2,800. January 31 Pay cash for salaries during January, $138,000. The following information is available on January 31, 2021. 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. The company estimates future uncollectible accounts. The company determines $5,900 of accounts receivable on January 31 are past due, and 35% 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.) 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 $14,200. Journal entry worksheet 4 6 16 1 2 3 5 Record the cost of the units sold, which is determined using a FIFO perpetual inventory system Note: Enter debits before credits. Date Account Title Debit Credit 855,000 Jan 19 Cost of Goods Sold 855,000 Inventory Record entry Clear entry View general journal Journal entry worksheet 10 12 13 14 16 1 11 15 Record the closing entry for revenue. Note: Enter debits before credits. Date Account Title Debit Credit Salaries Expense Jan 31 Record entry Clear entry View general journal Journal entry worksheet 15 12 10 16 11 13 14 Record the closing entry for expenses Note: Enter debits before credits. Date Account Title Debit Credit No Journal Entry Required Jan 31 Record entry Clear entry View general journal LO Big Blast Fireworks Classified Balance Sheet January 31, 2021 Assets Liabilities Current Assets Current Liabilities: $ 0 0 Total Current Liabilities 0 0 Total Current Assets 0 Total Liabilities 0 Stockholders' Equity Long-term ASsets: Total Stockholders' Equity $ Total Liabilities & Stockholders' Equity $ 0 0 Total Assets Analyze how well Big Blast Fireworks' manages its inventory: (a) Calculate the inventory turnover ratio for the month of January. If the industry managing its inventory more or less efficiently than other companies in the same verage of the inventory turnover ratio for the month of January is 17.5 times, is the co industry? The inventory turnover ratio is: times The company managing its inventory more efficiently. (True or False) (b) Calculate the gross profit ratio for the month of January. If the industry average gross profit ratio is 31%, other companies in the same industry? the company more or less profitable per dollar f sales tha The gross profit ratio 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? Based on the inventory turnover ratio and the gross profit ratio, Big Blast Fireworks' business strategy appears to be selling a