On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Accounts Payable Notes Payable (8%, due in 3 years) Common Stock Retained Earnings Totals Debit Credit $ 24,900 44,000 $ 3,300 45,000 84,100 27,700 45,000 71,000 51,000 $198,000 $198,000 The $45,000 beginning balance of inventory consists of 450 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1,350 units for $145,800 on account ($108 each). January 8 Purchase 1,450 units for $163,850 on account ($113 each). January 12 Purchase 1,550 units for $182,900 on account ($118 each). January 15 Return 175 of the units purchased on January 12 because of defects. January 19 Sell 4,500 units on account for $675,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $661,000 from customers on accounts receivable. January 24 Pay $440,000 to inventory suppliers on accounts payable. January 27 Write off accounts receivable as uncollectible, $2,400. January 31 Pay cash for salaries during January, $134,000. 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 $5,500 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.) 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 $13,800. Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis Choose the appropriate accounts to complete the company's income statement. The unadjusted, adjusted, or post-closing balances will appear for each account, based on your selection. Unadjusted Big Blast Fireworks Multiple-Step Income Statement For the year ended January 31, 2021 Gross Profit $ Total Operating Expenses Operating Income Income Before Taxes Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis Prepare a classified balance sheet as of January 31, 2021. Choose the appropriate accounts to complete the company's balance sheet. The unadjusted, adjusted, or post-closing balances will appear for each account, based on your selection. Unadjusted Big Blast Fireworks Classified Balance Sheet January 31, 2021 Assets Liabilities Current Assets: Current Liabilities: $ 0 Total Current Liabilities Total Liabilities Total Current Assets Long-term Assets: Stockholders' Equity 0 Ololo O Total Stockholders' Equity 0 Total Liabilities & Stockholders' Equity Total Assets $ $ 0 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 Inventory Turnover ratio and gross profit ratio value in one decimal place. Analyze how well Big Blast Fireworks' manages its inventory: (a) Calculate the inventory turnover ratio for the month of January. If the industry average of the inventory turnover ratio for the month of January is 14 times, is the company managing its inventory more or less efficiently than other companies in the same 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 29%, is the company more or less profitable per dollar of sales than other companies in the same industry? The gross profit ratio is: 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
