Question
On January 1, 2024, the general ledger of Freedom Fireworks includes the following account balances: Accounts Debit Credit Cash 12,300 Accounts Receivable 36,200 Allowance
On January 1, 2024, the general ledger of Freedom Fireworks includes the following account balances: Accounts Debit Credit Cash 12,300 Accounts Receivable 36,200 Allowance for Uncollectible Accounts $2,900 Inventory 153,100 Land 78,300 Buildings 131,000 Accumulated Depreciation 10,700 Accounts Payable: 29,000 Common Stock 211,000 Retained Earnings 156,500 Totals $410,900 $410,900 During January 2024, the following transactions occur. January 1 Borrow $111,000 from Captive Credit Corporation. The installment note bears interest at 6s annually and matures in 5 years. Payments of $2,146 are required at the end of each month for 60 months. Receive $32,100 from customers on accounts receivable. January January 10 Pay cash on accounts payable, $22,000. January 15 Pay cash for salaries, $30,000. January 30 Firework sales for the month total $200,000. The coat of the units sold is $110,000. January 31 Pay the first monthly installment of $2,146 related to the $111,000 borrowed on January 1. The following information is available on January 31, 2024. 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 $26,600. b. The company estimates additional future uncollectible accounts of $1,844 c. Unpaid salaries at the end of January are $27,200 d. Accrued income taxes at the end of January are $9,100. e. The portion of Notes Payable (long-term) due within the next 12 months is reclassified as Notes Payable (current). The amount of the reclassification is $19,723.
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