Question 3

Required information [The following information applies to the questions displayed below.] On January 1, 2021, the general ledger of ACME Fireworks includes the following account balances: Credit Debit $ 25,800 47,600 $ 4,900 Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Equipment Accumulated Depreciation Accounts Payable Notes Payable (6%, due April 1, 2022) Common Stock Retained Earnings Totals 20,700 53,000 18,500 2,200 29, 200 57,000 42,000 30, 300 $ 165,600 $ 165,600 During January 2021, the following transactions occur: January 2 Sold gift cards totaling $9,400. The cards are redeemable for merchandise within one year of the purchase late January 6 Purchase additional inventory on account, $154,000. January 15 Firework sales for the first half of the month total $142,000. All of these sales are on account. The cost of the units sold is $77,300. January 23 Receive $126,100 from customers on accounts receivable. January 25 Pay $97,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $5,500. January 30 Firework sales for the second half of the month total $150,000. Sales include $15,000 for cash and $135,000 on account. The cost of the units sold is $83,000. January 31 Pay cash for monthly salaries, $52,700. 1. Record each of the transactions listed above. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) 1 January 02 Cash 9,400 Deferred Revenue 9,400 2 January 06 154,000 Inventory Accounts Payable 154,000 3 January 15 Accounts Receivable 142,000 Sales Revenue 142,000 4 January 15 Cost of Goods Sold 77,300 Inventory 77,300 5 January 23 Cash 126,100 Accounts Receivable 126,100 6 January 25 Accounts Payable 97,000 Cash 97,000 7 January 28 Allowance for Uncollectible Accounts 5,500 Accounts Receivable 5,500 8 January 30 Cash 15,000 Accounts Receivable 135,000 Sales Revenue 150,000 9 January 30 Cost of Goods Sold 83,000 Inventory 83,000 10 January 31 Salaries Expense 52,700 Cash 52,700 Depreciation on the equipment for the month of January is calculated using the straight-line method. At the time the equipment was purchased, the company estimated a residual value of $4,700 and a two-year service life. The company estimates future uncollectible accounts. The company determines $18,000 of accounts receivable on January 31 are past due, and 30% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 5% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.) Accrued interest expense on notes payable for January. Accrued income taxes at the end of January are $13,700. By the end of January, $3,700 of the gift cards sold on January 2 have been redeemed. 2. Record the adjusting entries on January 31 for the above transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) . View transaction list View journal entry worksheet No Date General Journal Debit Credit 1 January 31 575 Depreciation Expense Accumulated Depreciation 575 2 January 31 14,750 Bad Debt Expense Allowance for Uncollectible Accounts 14,750 3 January 31 285 Interest Expense Interest Payable 285 4 January 31 13,700 Income Tax Expense Income Tax Payable 13,700 5 January 31 3,700 Deferred Revenue Sales Revenue 3,700 3. Prepare an adjusted trial balance as of January 31, 2021. ACME Fireworks Adjusted Trial Balance January 31, 2021 Accounts Debit Credit Cash $ 26,600 Accounts Receivable 193,000 Allowance for Uncollectible Accounts 9,050 Inventory 14,400 Land 53,000 Equipment 18,500 Accumulated Depreciation 2,867 Accounts Payable 86,200 Deferred Revenue 5,700 Interest Payable 285 Income Tax Payable 13,700 Notes Payable 57,000 Common Stock 42,000 Retained Earnings 30,300 Sales Revenue 295,700 Cost of Goods Sold 160,300 Salaries Expense 52,700 Depreciation Expense 667 Bad Debt Expense 9,650 Interest Expense 285 Income Tax Expense 13,700 Totals $ 542,802 $ 542,802