Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Accounts Debit Credit Cash $101, 600 Accounts Receivable 34, 800

image text in transcribed

image text in transcribed
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Accounts Debit Credit Cash $101, 600 Accounts Receivable 34, 800 Inventory 152, 400 Land 71, 300 Buildings 124,000 Allowance for Uncollectible Accounts $ 2, 200 Accumulated Depreciation 10,000 Accounts Payable 22, 100 Bonds Payable 124,000 Discount on Bonds Payable 30, 400 Common Stock 204,000 Retained Earnings 152, 200 Totals $514, 500 $514, 500 During January 2021, the following transactions occurred: January 1 Borrowed $104,000 from Captive Credit Corporation. The installment note bears interest at 6: annually and matures in 5 years. Payments of $2, 010.61 are required at the end of each month for 60 months. January 1 Called the bonds at the contractual call price of $104,000. The 68 bonds pay interest semiannually each June 30 and December 31. January 4 Received $31, 400 from customers on accounts receivable. January 10 Paid cash on accounts payable, $15,000. January 15 Paid cash for salaries, $29,300. January 30 Firework sales for the month totaled $195,800. Sales included $65,400 for cash and $130, 400 on account. The cost of the units sold was $114,500. January 31 Paid the first monthly installment of $2,011 related to the $104,000 borrowed on January 1. Round your interest calculation to the nearest dollar. The following information is available on January 31, 2021. 1. 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 $24,400. 2. At the end of January, $3,400 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 2% will not be collected. No accounts were written off as uncollectible in January. 3. Unpaid salaries at the end of January are $26,500. 4. Accrued income taxes at the end of January are $5,400

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Financial Accounting

Authors: Fred Phillips, Robert Libby, Patricia Libby

6th edition

1259864235, 1259864230, 1260159547, 126015954X, 978-1259864230

More Books

Students also viewed these Accounting questions