On January 1, 2021, the general ledger of TNT Fireworks includes the following account balances: Credit Debit $ 60,300 28,200 $ 3,800 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Notes Receivable (58, due in 2 years) Land Accounts Payable Common Stock Retained Earnings Totals 37,900 31,200 171,000 16,400 236,000 72,400 $328,600 $328,600 During January 2021, the following transactions occur: January 1 Purchase equipment for $21,100. The company estimates a residual value of $3,100 and a five-year service life. January 4 Pay cash on accounts payable, $11,100. January 8 Purchase additional inventory on account, $98,900. January 15 Receive cash on accounts receivable, $ 23,600. January 19 Pay cash for salaries, $31,400. January 28 Pay cash for January utilities, $18, 100. January 30 Sales for January total $236,000. All of these sales are on account. The cost of the units sold is $123,000. The following information is available on January 31, 2021. a. Depreciation on the equipment for the month of January is calculated using the straight-line method. b. The company estimates future uncollectible accounts. The company determines $4,600 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. Accrued interest revenue on notes receivable for January. d. Unpaid salaries at the end of January are $34,200. e. Accrued income taxes at the end of January are $10,600. Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis Choose the appropriate accounts to complete the company's income statement. Select 'adjusted' from the dropdown, which will then populate the balances in those accounts from the adjusted trial balance. Unadjusted TNT FIREWORKS Multiple-Step Income Statement For the year ended January 31, 2021 Gross profit Total operating expenses Operating income Trial Balance Balance Sheet > Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis Choose the appropriate accounts to complete the company's balance sheet. Make sure to select 'adjusted from the dropdown, which will then populate the balances in those accounts from the adjusted trial balance. Unadjusted TNT FIREWORKS Balance Sheet January 31, 2021 Assets Liabilities Current Assets: Current Liabilities: Total Current Liabilities Total Current Assets Total Liabilities Noncurrent Assets: Stockholders' Equity Total Stockholders' Equity Total Liabilities & Stockholders' Equity Total Assets Income Statement Analysis > Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis Using the information from the requirements above, complete the 'Analysis' tab. (Round final answers to 1 decimal place.) Analyze how well TNT Fireworks manages its assets: (a) Calculate the return on assets ratio for the month of January. If the average return on assets for the industry in January is 2%, is the company more or less profitable than other companies in the same industry? The return on assets ratio is: The company is more profitable. (True or False) (b) Calculate the profit margin for the month of January. If the industry average profit margin is 5%, is the company more or less efficient at converting sales to profit than other companies in the same industry? The profit margin is: The company is more efficient at converting sales to profit. (True or False) (c) Calculate the asset turnover ratio for the month of January. If the industry average asset turnover is 0.4 times per month, is the company more or less efficient at producing revenues with its assets than other companies in the same industry? The asset turnover ratio is: times The company is more efficient at producing revenues with its assets. (True or False)
