On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Debit 12,400 Credit Accounts Cash Accounts Receivable 36,400 Inventory 153,200 Land 79,300 Buildings 132,000 $ 3,000 10,800 Allowance for Uncollectible Accounts Accumulated Depreciation Accounts Payable Common Stock 30,900 212,000 Retained Earnings 156,600 $413,300 $413,300 Totals During January 2021, the following transactions occur: Borrow $112,000 from Captive Credit Corporation. The installment note bears interest at matures in 5 years. Payments of $2,165 are required at the end of each month for 60 months Receive $32 ,200 from customers on accounts receivable January 1 68 annually and January 4 January 10 Pay cash on accounts payable, $23,000. January 15 Pay cash for salaries, $30,100 January 30 Firework sales for the month total $201,000. Sales include $66,200 for cash and $134,800 on account. The cost of the units sold is $118,500 January 31 Pay the first monthly installment of $2,165 related to the $112,000 borrowed on January 1. Round your interest calculation to the nearest dollar. The following information is available on January 31, 2021. a. Depreciation on the building for the month of January is calculated using the straight-line method. At the time the building was purchased, the company estimated a service life of 10 years and a residual value of $25,200. b. The company estimates future uncollectible accounts. The company determines $4,200 of accounts receivable on January 31 are past due, and 50% 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. Unpaid salaries at the end of January are $27,300. d. Accrued income taxes at the end of January are $9,200. e. $19,901 of the long-term note payable balance will be paid over the next year. Journal entry worksheet 3 8 1 2 4 5 6 7 14. Borrow $112,000 from Captive Credit Corporation. The installment note bears interest at 6% annually and matures in 5 years. Payments of $2,165 are required at the end of each month for 60 months. Record the issuance of the long-term note payable. Note: Enter debits before credits. Credit Date Account Title Debit Jan 01 Record entry Clear entry View general journal LO Journal entry worksheet 8 2 3 4 7 14 Receive $32,200 from customers on accounts receivable. Note: Enter debits before credits. Debit Credit Date Account Title Jan 04 Record entry Clear entry View general journal CO LO Journal entry worksheet 3 1 2 4 6 7 8 14 Pay cash on accounts payable, $23,000 Note: Enter debits before credits. Debit Credit Date Account Title Jan 10 Record entry Clear entry View general journal LO Journal entry worksheet K1 > 3 2 4 5 6 7 8 14 Pay cash for salaries, $30,100 Note: Enter debits before credits. Account Title Debit Credit Date Jan 15 Record entry Clear entry View general journal LO Journal entry worksheet > 3 8 1 2 4 5 7 14. Record the firework sales of $201,000. Sales include $66,200 for cash and $134,800 on account. Note: Enter debits before credits. Debit Credit Date Account Title Jan 30 Record entry Clear entry View general journal CO Journal entry worksheet 8 1 2 3 4 5 6 7 14 Pay the first monthly installment of $2,165 related to the $112,000 long-term note payable borrowed in January 1. Round your interest calculation to the nearest dollar. Note: Enter debits before credits. Credit Date Account Title Debit Jan 31 Record entry Clear entry View general journal Journal entry worksheet 4 5 6 7 14 At the end of January, $4,200 of accounts receivable are past due, and the company estimates that 50% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 3% will not be collected. No accounts were written off as uncollectible in January. Note: Enter debits before credits. Date Account Title Debit Credit Jan 31 Record entry Clear entry View general journal OD Journal entry worksheet 8 5 6 7 10 14 Unpaid salaries at the end of January are $27,300. Prepare the adjusting entry for salaries Note: Enter debits before credits. Debit Credit Date Account Title Jan 31 Record entry Clear entry View general journal Journal entry worksheet 1 6 7 8 10 11 14 Accrued income taxes at the end of January are $9,200. Prepare the adjusting entry for income tax. Note: Enter debits before credits. Debit Credit Date Account Title Jan 31 Record entry Clear entry View general journal Journal entry worksheet > 1 7 8 9 10 11 14 Record the reclassification of $19,901 from long-term notes payable to current notes payable. Note: Enter debits before credits. Debit Credit Date Account Title Jan 31 Record entry Clear entry View general journal 12 Journal entry worksheet > 1 7 9 10 11 12 13 14 Prepare the closing entry for revenue. Note: Enter debits before credits. Date Debit Credit Account Title Jan 31 Record entry Clear entry View general journal Journal entry worksheet > 1 7 9 10 11 12 13 14 Prepare the closing entry for expenses Note: Enter debits before credits. Date Debit Credit Account Title Jan 31 Unadjusted Freedom Fireworks Multiple-Step Income Statement For the Month ended January 31, 2021 Gross profit Total operating expenses Operating income Unadjusted Freedom Fireworks Classified Balance Sheet January 31, 2021 Assets Liabilities Current Assets: Current Liabilities: Total Current Liabilities Long-term Liabilities Total Liabilities Total Current Assets Stockholders' Equity Noncurrent Assets: Total Stockholders' Equity Total Liabilities & Stockholders' Equity Total Assets Analyze the following for Freedom Fireworks: (a) Calculate the debt to equity ratio. If the average debt to equity ratio for the industry is 1, is Freedom Fireworks more or less leveraged than other companies in the same industry? The debt to equity ratio is: Is the company more or less leveraged than other companies? (b) Calculate the times interest earned ratio. If the average times interest earned ratio for the industry is 20 times, is the company more or less able to meet interest payments than other companies in the same industry? The times interest earned ratio is: Is the company more or less able to meet interest payments than other companies? (c) Based on the ratios calculated in (a) and (b), would Freedom Fireworks be more likely to receive a higher or lower interest rate than the average borrowing rate in the industry