Required information Exercise 6-21 Complete the accounting cycle using inventory transactions (L06-2, 6-3, 6-5, 6-6, 6-7) [The following information applies to the questions displayed below.) On January 1, 2021, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Cash Accounts Receivable Allowance for Uncollectible Accounts Inventory Land Accounts Payable Notes Payable (88, due in 3 years) Common Stock Retained Earnings Totals Debit Credit $ 24,300 42,500 $ 2,700 42,000 79,600 29,200 42,000 68,000 46,500 $188, 400 $188, 400 The $42,000 beginning balance of inventory consists of 420 units, each costing $100. During January 2021, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1,050 units for $115,500 on account ($110 each). January 8 Purchase 1,150 units for $132,250 on account ($115 each). January 12 Purchase 1,250 units for $150,000 on account ($120 each). January 15 Return 160 of the units purchased on January 12 because of defects. January 19 Sell 3,600 units on account for $576,000. The cost of the units sold is determined using a FIFO perpetual inventory system. January 22 Receive $529,000 from customers on accounts receivable. January 24 Pay $359,000 to inventory suppliers on accounts payable. January 27 Write off accounts receivable as uncollectible, $2,100. January 31 Pay cash for salaries during January, $110,000. The following information is available on January 31, 2021. a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. b. At the end of January, $5,200 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. Interest is expected to be paid each December 31. d. Accrued income taxes at the end of January are $13,500. 3. Prepare an adjusted trial balance as of January 31, 2021. BIG BLAST FIREWORKS Adjusted Trial Balance January 31, 2021 Accounts Debit Credit $ 20,000 42,500 42,000 79,600 2,700 Cash Accounts receivable Inventory Land Allowance for uncollectible accounts Salaries expense Accounts payable Common stock Retained earnings income tax expense Sales revenue Notes payable Income tax payable Bad debt expense Cost of goods sold Interest expense 29,200 68,000 + 46,500 13,500 42,000 valul VIGE ! Required information 42,500 42,000 79,600 2,700 Accounts receivable Inventory Land Allowance for uncollectible accounts Salaries expense Accounts payable Common stock Retained earnings Income tax expense Sales revenue Notes payable Income tax payable Bad debt expense Cost of goods sold Interest expense 29,200 68,000 46,500 13,500 42,000 + Totals $ 197,600 $ 188,400
