On January 1, 2021, the general ledger of TNT Fireworks includes the following account balances: Credit Debit $ 60,600 28,800 $ 4,100 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Notes Receivable (5%, due in 2 years) Land Accounts Payable Common Stock Retained Earnings Totals 38,200 34,800 174,000 16,700 239,000 76,600 $336,400 $336,400 During January 2021, the following transactions occur: January 1 Purchase equipment for $21,400. The company estimates a residual value of $3,400 and a five-year service life. January 4 Pay cash on accounts payable, $11,400. January 8 Purchase additional inventory on account, $101,900. January 15 Receive cash on accounts receivable, $23,900. January 19 Pay cash for salaries, $31,700. January 28 Pay cash for January utilities, $18,400. January 30 Sales for January total $239,000. All of these sales are on account. The cost of the units sold is $124,500. 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 $4,900 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.) c. Accrued interest revenue on notes receivable for January. d. Unpaid salaries at the end of January are $34,500. e. Accrued income taxes at the end of January are $10,900. Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis Prepare the journal entries for transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 5 6 7 8 ..... 15 Purchase equipment for $21,400. The company estimates a residual value of $3,400 and a five-year service life. Note: Enter debits before credits. General Journal Debit Credit Date Jan 01 Record entry Clear entry View general journal Journal entry worksheet Pay cash on accounts payable, $11,400. Note: Enter debits before credits. Date General Journal Debit Credit Jan 04 Record entry Clear entry View general journal Journal entry worksheet Receive cash on accounts receivable, $23,900 Note: Enter debits before credits. Date General Journal Debit Credit Jan 15 Record entry Clear entry View general journal Journal entry worksheet Pay cash for salaries, $31,700. Note: Enter debits before credits. Date General Journal Debit Credit Jan 19 Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 6 7 8 ..... 15 Pay cash for January utilities, $18,400. Note: Enter debits before credits. Date General Journal Debit Credit Jan 28 Record entry Clear entry View general journal Journal entry worksheet Sales for January total is $124,500. Note: Enter debits before credits. Date General Journal Debit Credit Jan 30 Record entry Clear entry View general journal Journal entry worksheet Record the closing entry for revenue. Note: Enter debits before credits. Date General Journal Debit Credit Jan 31 Record entry Clear entry View general journal Journal entry worksheet 1 ..... 8 9 10 11 12 13 14 15 Record the closing entry for expenses. Note: Enter debits before credits. Date General Journal Debit Credit Jan 31 Record entry Clear entry View general journal Unadjusted TNT FIREWORKS Multiple-Step Income Statement For the year ended January 31, 2021 Gross profit Total operating expenses Operating income Unadjusted TNT FIREWORKS Balance Sheet January 31, 2021 Liabilities Current Liabilities: Assets Current Assets: Total Current Liabilities Total Current Assets Total Liabilities Noncurrent Assets: Stockholders' Equity Total Stockholders' Equity Total Liabilities & Stockholders' Equity Total Assets 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 4%, 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) On January 1, 2021, the general ledger of TNT Fireworks includes the following account balances: Credit Debit $ 60,600 28,800 $ 4,100 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Notes Receivable (5%, due in 2 years) Land Accounts Payable Common Stock Retained Earnings Totals 38,200 34,800 174,000 16,700 239,000 76,600 $336,400 $336,400 During January 2021, the following transactions occur: January 1 Purchase equipment for $21,400. The company estimates a residual value of $3,400 and a five-year service life. January 4 Pay cash on accounts payable, $11,400. January 8 Purchase additional inventory on account, $101,900. January 15 Receive cash on accounts receivable, $23,900. January 19 Pay cash for salaries, $31,700. January 28 Pay cash for January utilities, $18,400. January 30 Sales for January total $239,000. All of these sales are on account. The cost of the units sold is $124,500. 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 $4,900 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.) c. Accrued interest revenue on notes receivable for January. d. Unpaid salaries at the end of January are $34,500. e. Accrued income taxes at the end of January are $10,900. Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis Prepare the journal entries for transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 2 3 4 5 6 7 8 ..... 15 Purchase equipment for $21,400. The company estimates a residual value of $3,400 and a five-year service life. Note: Enter debits before credits. General Journal Debit Credit Date Jan 01 Record entry Clear entry View general journal Journal entry worksheet Pay cash on accounts payable, $11,400. Note: Enter debits before credits. Date General Journal Debit Credit Jan 04 Record entry Clear entry View general journal Journal entry worksheet Receive cash on accounts receivable, $23,900 Note: Enter debits before credits. Date General Journal Debit Credit Jan 15 Record entry Clear entry View general journal Journal entry worksheet Pay cash for salaries, $31,700. Note: Enter debits before credits. Date General Journal Debit Credit Jan 19 Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 6 7 8 ..... 15 Pay cash for January utilities, $18,400. Note: Enter debits before credits. Date General Journal Debit Credit Jan 28 Record entry Clear entry View general journal Journal entry worksheet Sales for January total is $124,500. Note: Enter debits before credits. Date General Journal Debit Credit Jan 30 Record entry Clear entry View general journal Journal entry worksheet Record the closing entry for revenue. Note: Enter debits before credits. Date General Journal Debit Credit Jan 31 Record entry Clear entry View general journal Journal entry worksheet 1 ..... 8 9 10 11 12 13 14 15 Record the closing entry for expenses. Note: Enter debits before credits. Date General Journal Debit Credit Jan 31 Record entry Clear entry View general journal Unadjusted TNT FIREWORKS Multiple-Step Income Statement For the year ended January 31, 2021 Gross profit Total operating expenses Operating income Unadjusted TNT FIREWORKS Balance Sheet January 31, 2021 Liabilities Current Liabilities: Assets Current Assets: Total Current Liabilities Total Current Assets Total Liabilities Noncurrent Assets: Stockholders' Equity Total Stockholders' Equity Total Liabilities & Stockholders' Equity Total Assets 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 4%, 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)