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On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances: Accounts Debit Credit Cash $ 12,100 Accounts Receivable 35,800 Inventory
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances:
Accounts | Debit | Credit | |||||
Cash | $ | 12,100 | |||||
Accounts Receivable | 35,800 | ||||||
Inventory | 152,900 | ||||||
Land | 76,300 | ||||||
Buildings | 129,000 | ||||||
Allowance for Uncollectible Accounts | $ | 2,700 | |||||
Accumulated Depreciation | 10,500 | ||||||
Accounts Payable | 27,600 | ||||||
Common Stock | 209,000 | ||||||
Retained Earnings | 156,300 | ||||||
Totals | $ | 406,100 | $ | 406,100 | |||
During January 2021, the following transactions occur:
January 1 | Borrow $109,000 from Captive Credit Corporation. The installment note bears interest at 6% annually and matures in 5 years. Payments of $2,107 are required at the end of each month for 60 months. | |
January 4 | Receive $31,900 from customers on accounts receivable. | |
January 10 | Pay cash on accounts payable, $20,000. | |
January 15 | Pay cash for salaries, $29,800. | |
January 30 | Firework sales for the month total $200,400. Sales include $65,900 for cash and $134,500 on account. The cost of the units sold is $117,000. | |
January 31 | Pay the first monthly installment of $2,107 related to the $109,000 borrowed on January 1. Round your interest calculation to the nearest dollar. |
The following information is available on January 31, 2021.
- 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 $26,400.
- The company estimates future uncollectible accounts. The company determines $3,900 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.)
- Unpaid salaries at the end of January are $27,000.
- Accrued income taxes at the end of January are $8,900.
- $19,368 of the long-term note payable balance will be paid over the next year
Things Needed:
13.Prepare the closing entry for revenue. 14.Prepare the closing entry for expenses (for journal entry. )
Income statement,balance sheet,and analysis
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