Question E8-16

E8-16 On January 1, 2018, the general ledger of ACME Fireworks includes the following account balances: Debit Credit Accounts 25,100 Cash 46,200 Accounts Receivable Allowance for Uncollectible Accounts 4,200 Inventory 20,000 Land 46,000 Equipment 15,000 Accumulated Depreciation 1,500 28,500 Accounts Payable Notes Payable (6%, due April 1, 2019) 50,000 Common Stock 35,000 Retained Earnings 33,100 Totals $152,300 $152,300 Page 403 During January 2018, the following transactions occur January 2 Sold gift cards totaling $8,000. The cards are redeemable for merchandise within one year of the purchase date January 6 Purchase additional inventory on account, $147,000 January 15 Firework sales for the first half of the month total $135,000. All of these sales are on account. The cost of the units sold is $73,800 January 23 Receive $125,400 from customers on accounts receivable. January 25 Pay $90,000 to inventory suppliers on accounts payable. January 28 Write off accounts receivable as uncollectible, $4,800. January 30 Firework sales for the second half of the month total $143,000 Sales include $11,000 for cash and $132,000 on account. The cost of the units sold is $79,500 January 31 Pay cash for monthly salaries, $52,000. Required: 1. Record each of the transactions listed above 2. Record adjusting entries on January 31 a. 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 $3,000 and a two-year service life b. At the end of January, $11,000 of accounts receivable are past due, and the company estimates that 30% of these accounts will not be collected Of the remaining accounts receivable, the company estimates that 5% will not be collected c. Accrued interest expense on notes payable for January. d. Accrued income taxes at the end of January are $13,000 e. By the end of January, $3,000 of the gift cards sold on January 2 have been redeemed