One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts Receivable Allowance for Doubtful Accounts Inventories Deferred Revenue (40 units) Accounts Payable Note Payable (long-term) Common Stock Retained Earnings $ 14,600 15,780 470* 4,000 6,800 1,640 12,000 9,000 4, 470 * credit balance. The following information is relevant to the first month of operations in the following year: OTP will sell inventory at $170 per unit. OTP's January 1 inventory balance consists of 50 units at a total cost of $4,000. OTP's policy is to use the FIFO method, recorded using a perpetual inventory system. In December, OTP received a $6,800 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,460 was unpaid and recorded in Accounts Payable at December 31. OTP's note payable matures in three years, and accrues interest at a 10% annual rate. January Transactions a. Included in OTP's January 1 Accounts Receivable balance is a $1,200 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $1,200 balance at this time. On 01/01, OTP arranges with Jeff to convert the $1,200 balance to a six-month note, at 10% annual interest. Jeff signs the promissory note, which indicates the principal and all interest will be due and payable to OTP on July 1 of this year. b. OTP paid a $380 insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. C. OTP purchased an additional 200 units of inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n/30. d. OTP paid a courier $400 cash on 01/05 for same-day delivery of the 200 units of inventory. e. The 40 units that OTP's customer paid for in advance in December are delivered to the customer on 01/06 f. On 01/07, OTP received a purchase allowance of $1,200 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of inventory (in c). 9. Sales of 60 units of inventory occurring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are n/30. h. Collected payments on 01/14 from sales to customers recorded on 01/10. 1. OTP paid the first 2 weeks' wages to the employees on 01/16. The total paid is $3,390. j. Wrote off a $1,030 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method. k. Paid $2,920 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. 1. OTP recovered $320 cash on 01/26 from the customer whose account had previously been written off on 01/18. m. An unrecorded $190 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. n. Sales of 70 units of inventory during the period of 01/10-01/28, with terms n/30, are recorded on 01/28. o. Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The inventory is not damaged and can be resold. OTP charges sales returns directly against Sales Revenue. p. On 01/31, OTP records the $3,390 employee salary that is owed but will be paid February 1. q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) r. Accrue interest for January on the note payable on 01/31. s. Accrue interest for January on Jeff Letrotski's note on 01/31 (see a). | No Date Debit Credit 1 Jan 01 General Journal Notes Receivable (short-term) Accounts Receivable 1,200 1,200 2 Jan 02 380 Insurance Expense Cash 380 3 Jan 05 8,000 Inventory Accounts Payable 8,000 4 Jan 05 400 Inventory Cash 400 5 Jan 06 6,800 Deferred Revenue Sales Revenue 6,800 6 Jan 06 Cost of Goods Sold Inventory 7 Jan 07 1,200 Accounts Payable Inventory 1,200 8 Jan 07 Accounts Payable Cash 9 Jan 10 Accounts Receivable Sales Revenue 10 Jan 10 Cost of Goods Sold Inventory 11 Jan 14 Cash Accounts Receivable 12 Jan 16 Salaries and Wages Expense Cash 13 Jan 18 Allowance for Doubtful Accounts Accounts Receivable 14 Jan 19 Rent Expense Accounts Payable 1,460 1,460 Cash 2,920 15 Jan 26 320 Accounts Receivable Allowance for Doubtful Accounts 320 16 Jan 26 320 Cash Accounts Receivable 320 17 Jan 27 190 Utilities Expense Accounts Payable 190 18 Jan 28 Accounts Receivable Sales Revenue 19 Jan 28 Cost of Goods Sold Inventory 20 Jan 30 Sales Revenue Accounts Receivable 21 Jan 30 Inventory Cost of Goods Sold 22 Jan 31 3,390 Salaries and Wages Expense Salaries and Wages Payable 3,390 23 Jan 31 Bad Debt Expense Allowance for Doubtful Accounts 24 Jan 31 Interest Expense Interest Payable 25 Jan 31 Interest Receivable Interest Revenue Choose the appropriate accounts to be reported on the income statement. Select the 'adjusted' from the dropdown, which will then populate the balances in those accounts from the trial balance. However, you will need to calculate and enter the amount of the net income or loss for the period. Adjusted ONE TRICK PONY Income Statement For the Month Ended January 31 $ 0 0 $ $ 0 0 0 0 0 0 $ 0 Income from Operations Interest Revenue (Expense), net 0 0 Prepare the statement of retained earnings at the end of January 31. You will need to determine and enter the accounts and balances to prepare the Statement of Retained Earnings. Adjusted ONE TRICK PONY Statement of Retained Earnings For the Month Ended January 31 Balance, January 1 4,470 Balance, December 1 4,470 Use the dropdowns to select the accounts properly included on the classified balance sheet. The unadjusted, adjusted, or post-closing balances will appear for each account, based on your selection. You will need to determine and enter the balance of the Common Stock and Retained Earnings accounts in the Stockholders' Equity section. Adjusted ONE TRICK PONY Balance Sheet At December 31 Assets 11,220 14,580 (790) 11,200 0 1 1,200 $ 37,410 Current Assets Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Interest Receivable Notes Receivable (short-term) Total Assets Liabilities Current Liabilities Accounts Payable Notes Payable (long-term) Interest Payable Total Current Liabilities Salaries and Wages Expense Total Liabilities Stockholders' Equity Additional Paid-In Capital, Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 7,170 12,000 0 19,170 3,390 $ 22,560 0 4,470 $ 4,470 27,030 $ For the month ended January 31, indicate the (0) gross profit percentage, (ii) number of units in ending inventory, and (iii) cost per unit of ending inventory. (Round percentage answer to 1 decimal place.) Gross profit percentage Number of units in ending inventory Cost per unit of ending inventory % Units per Unit If OTP had used the percentage of sales method (using 2% of Net Sales) rather than the aging method, what amounts would OTC's January financial statements have reported for (i) Bad Debt Expense and (ii) Accounts Receivable, net? Bad Debt Expense Accounts Receivable, net If OTP had used LIFO rather than FIFO, what amount would OTC have reported for Cost of Goods Sold on 01/10? Cost of Goods Sold