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On January 1, 2024, the general ledger of Freedom Fireworks includes the following account balances: Accounts Cash $ 101,300 Accounts receivable 34,200 Inventory 152,100 Land
On January 1, 2024, the general ledger of Freedom Fireworks includes the following account balances:
Accounts
Cash $ 101,300
Accounts receivable 34,200
Inventory 152,100
Land 68,300
Buildings 121,000
Allowance for uncollectible accounts
$ 1,900
Accumulated depreciation 9,700
Accounts payable 18,800
Bonds payable 121,000
Discount on bonds payable 30,100
Common stock 201,000
Retained earnings 154,600
Totals $ 507,000 $ 507,000
During January 2024, the following transactions occurred:
January 1Borrowed $101,000 from Captive Credit Corporation. The installment note bears interest at 6% annually and matures in 5 years. Payments of $1,952.61 are required at the end of each month for 60 months.January 1Called the bonds at the contractual call price of $101,000. The 5% bonds pay interest semiannually each June 30 and December 31.January 4Received $31,100 from customers on accounts receivable.January 10Paid cash on accounts payable, $12,000.January 15Paid cash for salaries, $29,000.January 30Firework sales for the month totalled $195,200. Sales included $65,100 for cash and $130,100 on account. The cost of the units sold was $113,000.January 31Paid the first monthly installment of $1,953 related to the $101,000 borrowed on January 1.The following information is available on January 31, 2024.
- 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.
- At the end of January, $3,100 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.
- Unpaid salaries at the end of January are $26,200.
- Accrued income taxes at the end of January are $5,100.
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