On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances Accounts Debit Credit Cash $24,500 43,000 a sReceivable Allowance for Uncollectible Accounts 2,900 43,000 Inventory Land 81,100 Accounts Payable Notes Payable (68, due in 3 years) 28,700 43,000 69,000 Common Stock Retained Earnings 48,000 $191,600 $191,600 Totals The $43,000 beginning balance of inventory consists of 430 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: ($106 each). 3 Purchase 1,150 units for $121,900 on account January 8 Purchase 1,250 units for $138,750 on account ($111 each). 12 Purchase 1,350 units for $156,600 on account 15 Return 165 of the units purchased on January 12 because of defects 19 Sell 3,900 units on account for $624,000. The cost of the units sold is determined using a FIFO perpetual inventory system January ($116 each) January January January January 22 Receive $573,000 from customers on accounts receivable. 24 Pay $380,000 to inventory suppliers on accounts le. Janua January 27 Write off accounts receivable as uncollectible, $2,200 January 31 Pay cash for salaries during January, $132,000 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 $5,300 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 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. Interest is expected to be paid each December 31 d. Accrued income taxes at the end of January are $13,600. Accrued interest expense on notes payable for January. Interest is expected to be paid each December 31. Record the adjusting entry for interest. Note: Enter debits before credits. Date Account Title Debit Credit Jan 31 Accrued income taxes at the end of January are $13,600. Record the adjusting entry for income tax. Note: Enter debits before credits. Debit Date Account Title Credit Jan 31 Record the closing entry for revenue. Note: Enter debits before credits. Debit Date Account Title Credit Jan 31 Record the closing entry for expenses. Note: Enter debits before credits. Debit Date Account Title Credit Jan 31 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 Adjusted Big Blast Fireworks Multiple-Step Income Statement For the year ended January 31, 2021 Gross Profit S 0 Total Operating Expenses Operating Income C Income Before Taxes Big Blast Fireworks Classified Balance Sheet January 31, 2021 Liabilities Assets Current Assets: Current Liabilities: $ 0 0 Total Current Liabilities 0 Total Current Assets Total Liabilities Stockholders' Equity Long-term Assets: Total Stockholders' Equity T | |0 Analyze how well Big Blast Fireworks' manages its inventory: (a) Calculate the inventory turmover ratio for the month of January. If the industry average of the inventory turnover ratio for the month of January is 13.2 times, is the company managing its inventory more or less efficiently than other companies in the same industry? times The inventory turnover ratio is: 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 33%, 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
